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Canadian Retail Sales Rose 0.4% In March

ByThe National Bank of Canada
Published 05/24/2012, 01:58 AM
Updated 05/14/2017, 06:45 AM
FACTS:

Canadian retail sales rose 0.4% in March, close to consensus expectations. Auto dealership revenues rose 1.2% despite the earlier reported drop in unit auto sales. Excluding autos, however, retail sales were much weaker than expected, rising just 0.1% (top chart). Gains in sales of building materials, electronics, clothing and sporting goods were largely offset by declines elsewhere, including the 1.6% drop in gasoline sales. Both headline and ex-autos sales growth were revised down one tick for the prior month. In real terms, retail sales rose 0.4% in March. Looking at provinces, Alberta continues to lead the nation with retail sales up 9% from March last year.
Canada Retail sales rise in March
OPINION: The March retail report was softer than expected, considering the downward revisions to the prior month and the weak ex-autos print. For the first quarter as a whole headline retail sales were up just 1.2%, with autos driving the gains (middle chart). Excluding autos, sales contracted in Q1 for the first time since 2010. The overall weakness in Q1 can be partly explained by elevated gas prices but also by a significant ramp down in the savings rate in the prior quarters.
Canada Retail sales nominal growth by category in Q1
Even with March's advance, real retail sales rose just 0.2% annualized in the first quarter of 2012, the weakest since Q1 of 2011. That suggests limited contribution to GDP by consumers in the quarter (bottom chart).

The earlier reported gains in real manufacturing and now retailing should offset the softness seen in wholesaling, allowing March GDP to grow by around 0.2%. Still, that's likely to leave Q1 growth well short of the Bank of Canada's estimate of 2.5% annualized.
Canada Growth in consumption spending moderated in Q1

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