- Canadian retail sales rose a stronger than expected 1.0% in September 2013 following a 0.1 % (was 0.2%) increase in August and a 0.5% gain in July. Market expectations had been for a smaller 0.3% increase in September.
- Excluding the effect of prices, the volume of sales also rose 1.0% following unrevised 0.2% and 0.4% increases in August and July, respectively.
Retail sales rose a stronger than expected 1.0% in September 2013 following a 0.1% (was 0.2%) gain in August and a 0.5% rise in July. Most of the increase in September was the result of a 4.7% jump in sales at motor vehicle dealerships. Earlier reported unit auto sales had pointed to an increase in sales at auto dealerships in the month, although not as large as the increase in today’s report. Outside of the auto sector, sales were unchanged in September although following relatively solid increases of 0.5% and 0.9% in August and July, respectively. Sales at gasoline stations (0.8%), furniture stores (0.5%), and building material stores (0.8%) all rose, but offset was provided by lower sales at clothing (-0.6%), food (-0.3%), and electronics (-1.1%) stores.
Excluding the effect of prices, the volume of retail sales also rose 1.0% in September. This marked a third consecutive increase in the measure following 0.2% and 0.4% increases in August and July, respectively.
Three consecutive monthly gains in the volume of retail sales, including the stronger than expected jump in September, left the measure up an annualized 2.4% in the third quarter of 2013 as a whole. That, however, is still down from a sizeable 6.3% surge in the second quarter and is still consistent with our monitoring that overall consumer spending growth, which includes spending on services not captured in the monthly retail report, slowed to slightly below a 2% rate in the third quarter following a 3.8% jump in the second quarter. With that said, despite some slowing in consumer spending growth, strength in other sectors of the economy, including a rebound in construction spending following weakness in June related to a strike in Quebec and flooding in Alberta, boosted monthly GDP growth by 0.6% and 0.3% in July and August, respectively, following a 0.5% drop in June. Today’s September retail report, along with earlier reported increases in the volume of wholesale and manufacturing sales, suggested that monthly GDP may have increased a further 0.3% in September, which even suggests some modest upside risk to our forecast that GDP growth strengthened to a 2.8% rate in the third quarter as a whole from the 1.7% gain reported in the second quarter.
RBC