OTTAWA (Reuters) - Disappointing car sales led to a surprise 0.2 percent fall in Canada’s retail trade in February, the same month that the motor vehicle business had actually boosted wholesale trade, Statistics Canada said on Tuesday.
Making for an even less optimistic reading, the volume of sales, used in calculating real gross domestic product (GDP), slumped by 0.6 percent from January, while January’s retail sales gain was revised down to 0.2 percent from 0.5 percent.
Excluding the auto sector, February sales were up 0.5 percent compared with a 0.8 percent fall in January, which was revised from a 0.5 percent fall. February sales at motor vehicle and parts dealers fell 2.4 percent, with new car sales down 2.8 percent, after a strong January.
Analysts surveyed by Reuters had expected no change in overall retail sales in February and a 0.4 percent rise excluding autos.
Wholesale trade data released on Monday had shown an unexpected 1.6 percent rise in February, largely due to motor vehicles. That had led analysts to suggest February GDP data, to be released on April 30, could be robust. But the retail data has forced market watchers to review their forecasts.
“Today’s print helps provide a better sense of how the monthly industry level GDP print is shaping up. While this will take some shine off the GDP print, we still track that the economy expanded at a modest 0.1 percent month-on-month pace,” Mazen Issa, Canada macro strategist for TD Securities, said in a note to clients.
“Provided that the economy expands at an above-trend pace this year (which we and the Bank of Canada expect), we still view this as consistent with a rate hike in the fall of this year.”
Even so, the Canadian dollar slipped against its U.S. counterpart after the unexpectedly weak retail report. The currency dipped to C$0.9919 against the greenback, or $1.0082, from around C$0.9895 just before the report’s release.
Adding to the negative economic news, an index of consumer confidence produced by the Conference Board of Canada fell in April after three consecutive monthly increases. The index stood at 75, 4.5 points lower than in March.
The share of respondents who said they expect more jobs in their communities in six months’ time rose 1 point to 20 percent. But that was more than offset by a 5.3-point increase to 27.8 percent in the share of those who expect fewer jobs over the same period.
The survey was conducted between April 4 and 12, with a margin of error of plus or minus 2.2 percent.
With additional reporting by Jeffrey Hodgson; Editing by Peter Galloway