Canadian retail sales up 0.7 percent in May to new record
By Randall Palmer
OTTAWA (Reuters) - Strong car sales helped push Canadian retail trade up by 0.7 percent in May to a new record C$41.98 billion ($39.23 billion), Statistics Canada reported on Wednesday, pointing to continued energy in the economy despite a weak first quarter.
Sales by motor vehicle and parts dealers, which account for just under one quarter of total retail sales, were up 2.5 percent. Excluding this sector, retail sales rose 0.1 percent, and excluding the auto sector and gasoline, retail sales were down 0.3 percent. The figures are adjusted for seasonal factors.
Statistics Canada's New Motor Vehicle Sales Survey had reported a record 197,740 units sold in May.
The median forecasts in a Reuters survey of analysts were for a 0.6 percent rise in overall retail sales and a 0.3 percent gain excluding autos and parts. On Friday, Statistics Canada had reported a 2.2 percent gain in wholesale trade, marked by a 9.8 percent jump in motor vehicles and parts.
"Canada's labor market indicators were still soft in the second quarter, but activity indicators have clearly turned a corner, the most recent evidence of this being May's strong retail sales," said Bill Adams, senior international economist for PNC Financial Services Group.
"Canada's second quarter upswing is a sign that the Canadian economy was not nearly as weak as the winter's data suggested."
With the concern authorities have placed over high household debt, it remains to be seen how sustainable the retail spending is, given a year-on-year rise of 4.0 percent.
"Spending is rising faster than income, suggesting debt burdens continue to increase," Benjamin Reitzes, senior economist at BMO Capital Markets said. Continued...