Car buyers drive up September retail sales
By Louise Egan
OTTAWA (Reuters) - Despite troubles in the auto industry, Canadians bought a lot of new cars in September, helping to push up overall retail sales in the month by an unexpectedly strong 1.1 percent from August.
Statistics Canada said on Tuesday the increase in retail sales was largely due to the first rise in new vehicle purchases since January. Car dealers in Canada forecast that 2008 will be the second or third best year on record for new vehicle sales, even as auto manufacturers complain of plummeting U.S. sales.
The September gain more than offset August's 0.3 percent decline in retail sales and made economists look excessively downbeat with their median forecast of a 0.3 percent increase.
"In all frankness, all economists are eating some humble pie on this one as growth in total sales nearly tripled estimates, while growth in core sales ex autos quadrupled consensus predictions," said Derek Holt, economist at Scotia Capital.
The rise in car sales does not mean smooth sailing for the Canadian auto manufacturing industry, however, as about one in nine cars made in Canada is exported to the United States, where car sales are at depressed levels.
Excluding the auto sector, which accounts for about a third of the total, Canadian retail sales still expanded by a robust 0.8 percent in September. Volumes rose 0.7 percent.
The sales growth is the latest in a series of strong third-quarter data, leading economists to predict economic growth of above 1 percent in the quarter.
The good news is unlikely to last through the fourth quarter as the impact of the global financial crisis hit the Canadian economy in full force in October. Continued...