OTTAWA (Reuters) - Canadian retail sales slipped unexpectedly in July, falling 0.1 percent from June’s record level after six straight monthly increases, as strong auto sales failed to offset weakness elsewhere, data showed on Tuesday.
This was the last major data point before gross domestic product figures for July are released next Tuesday. Figures from Statistics Canada have already shown strong exports and manufacturing sales for the month but a 0.3 percent fall in wholesale trade.
Economists said that growth for the third quarter overall remains on track to come in around 3 percent, roughly in line with the previous quarter’s 3.1 percent growth.
“This would be a stark contrast to the Bank of Canada’s 2.3 percent estimate and would imply growth well above potential,” Mazen Issa, senior Canada macro strategist at TD Securities, wrote in a note.
Motor vehicle and parts sales rose 1.6 percent during the month and were 8.1 percent higher than a year earlier, Statistics Canada said. Excluding the auto sector, retail sales were down 0.6 percent on the month.
The median forecast in a Reuters survey of analysts was for a 0.5 percent increase overall and no change in sales excluding autos.
Canadians appeared to be going to the shopping mall less, with sales at general merchandise stores down 2.7 percent, while clothing and accessories stores saw a 2.3 percent decrease.
The Bank of Canada has been looking for a rotation of demand from the overstretched household sector to exports and business investment.
“The Canadian consumer has done some heavy lifting in supporting Canadian growth, even in the face of a disappointing labor market,” Nick Exarhos, an economist at CIBC World Markets, wrote in a note. “But because spending was driven by drawing down savings, Canadian pocket books may be running on fumes.”
The Canadian dollar pared gains against the greenback after the release of the data. [CAD/]
Editing by Peter Galloway