Retail sales jump on autos, weather
By Louise Egan
OTTAWA (Reuters) - Consumer spending in Canada showed no sign of slowing in January as retail sales posted a third straight month of big gains thanks to a cut in the sales tax and an appetite for new passenger cars.
Statistics Canada reported a 1.5 percent jump in January retail sales on Tuesday, beating analysts' expectations of a 1.2 percent increase and following a revised 0.8 percent gain in December.
"Domestic demand remains strong in Canada, and there's no sign yet of any serious cracks --- certainly no sign in this report," said Doug Porter, deputy chief economist at BMO Capital Markets, in an email note to clients.
The news sparked a shortlived rally in the Canadian dollar, which rose to C$1.0140 to the U.S. dollar, or 98.62 U.S. cents, from C$1.0179, or 98.24 U.S. cents at Monday's close. The currency later gave back the gains as investors turned their focus to the sagging U.S. economy.
Automotive sector sales rose 1.8 percent in the month as buyers took advantage of discounts, a one-percentage-point reduction in the federal sales tax and better financing, Statscan said.
Passenger car sales skyrocketed in January, up 16.2 percent compared with December, according to a separate Statscan survey.
But even excluding the auto sector, which accounts for about a third of the total, retail sales grew 1.3 percent amid strength in all sectors.
Unusually heavy snowfalls in January likely caused the 3.2 percent surge in sales by building and outdoor home supplies stores as Canadians invested in shovels, snow blowers and home repair supplies, Statscan said. Continued...