OTTAWA (Reuters) - Retail sales in Canada dipped during the holiday shopping season, but the economy is still performing relatively well and should hold up in early 2012, analysts said.
Statistics Canada data showed retail sales dipped by 0.2 percent in December from November, the first fall in five months.
The decline, led by lower gas and auto sales as well as a weak performance at most stores, matched analysts' expectations.
"The key is not to overweight the December figures since sales may well have been brought forward to earlier in the holiday season on more aggressive discounting," said Derek Holt and Dov Zigler of Scotia Capital.
Holt and Zigler noted that retail sales grew 5.3 percent on an annualized basis in the fourth quarter, up from a 1.8 percent annualized gain in the third quarter.
The Canadian economy slowed in the second half of 2011, hit by uncertainty in the United States - by far Canada's biggest export market - and Europe.
Yet recent signs of a U.S. recovery and a deal to solve endless turmoil over Greece's debt could now help Canada.
"Looking out into 2012, we expect that the pace of consumer spending will grow at a moderate rate against a backdrop of modest employment growth," said Mazen Issa of TD Securities.
"Net exports should play a greater role moving forward however, if U.S. economic momentum proves sustainable and the European sovereign debt crisis is contained."
For graphic on Canadian retail sales please see: link.reuters.com/jac76s
The Canadian dollar was virtually unchanged and at 10:30 am (1530 GMT) stood at C$0.9961 to the U.S. dollar, or $1.0039, off slightly from Friday's North American finish at C$0.9957 versus the U.S. dollar, or $1.0043.
"The drop in December retail sales should not be considered the start of a deteriorating trend," said Jonathan Basile of Credit Suisse, noting that January vehicle sales were set to post the biggest monthly advance in over 14 years.
Douglas Porter of BMO Capital Markets economic was more cautious, and said he did not expect much from consumers in the year ahead despite the expected January autos surge.
"Slower job growth, weak wage gains, and public sector restraint will leave households income-constrained," he said.
Retail sales increased by 3.6 percent in 2011 from 2010. Sales at gasoline stations were up by 17.3 percent, while motor vehicles and parts dealer sales grew by 4.8 percent.
Separately, Statscan said wholesale sales in December rose by 0.9 percent in December on higher auto and food sales.
The increase was greater than the 0.6 percent advance forecast by market operators.
On an annual basis, wholesale sales were up 7.4 percent from 2010. This was slightly smaller than the 8.1 percent year-on-year advance posted in 2010, which marked the strongest annual growth since 1997.
The motor vehicle and parts subsector, which accounted for most of the 2010 increase, recorded slower growth in 2011. Statscan said this could be a result of the Japan earthquake and tsunami, which disrupted supply chains.
Reporting by David Ljunggren; Editing by Janet Guttsman