Weak autos drag down Canada's December retail sales

Tue Feb 22, 2011 3:44pm EST
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By Randall Palmer

OTTAWA (Reuters) - Lower auto sales helped push Canadian retail sales down by 0.2 percent in December, but November's strong growth was revised up by the same amount, Statistics Canada reported on Tuesday.

The soggy numbers will weigh on the reading for December gross domestic product, due out at 8:30 a.m. February 28.

"The only positives that are lining up for the month are coming through net trade and wholesale trade," Scotia Capital economists Derek Holt and Gorica Djeric said in a note to clients.

Analysts still expect annualized fourth quarter growth to be at or above the Bank of Canada's 2.3 percent forecast.

Canadian consumers are also upbeat, according to a new poll that showed confidence in the economy is higher than in any other of the Group of Eight advanced economies.

Excluding auto sales, which were down 2.8 percent from November, retail sales actually rose by 0.6 percent, as expected by analysts. A Reuters survey of analysts had predicted no change for overall retail sales.

In volume terms, used to calculate real GDP, December sales declined by 0.4 percent, but November's figure was also revised up by 0.2 percentage points. All figures are adjusted for seasonal factors such as Christmas sales.

Data for December has tentatively painted a picture in which growth in demand shifted to exports from domestic consumption, though retail sales had grown solidly for six straight months. Statscan revised November's gain to 1.5 percent from 1.3 percent.   Continued...