Week In Review

Canada – Retail sales were flat in March after growing a downwardly revised 0.7% in February (previously 0.8%). Nonetheless, sales were up in 6 of the 11 subsectors, including autos, where sales jumped 0.7% after registering strong gains the two previous months. Excluding autos, sales retreated 0.2%. Gasoline (-1.3%) was the primary source of drag on ex-auto sales, although weakness was observed also in electronics (-0.9%), alcoholic beverages (-0.3%), general merchandise and miscellaneous stores. These more than offset higher sales in building material/garden equipment, food, clothing/accessories, and sporting goods. In real terms, overall retail sales rose 0.7% after holding steady the month before. It need be said, however, that the March report was not as bad as suggested by the headline results. The slump in gasoline prices did much of the damage on nominal retail sales. Excluding gasoline, these actually swelled 0.2% for a third consecutive positive monthly showing, which is consistent with the sharp increase recorded in real retail sales. This, together with previously reported gains in real manufacturing and real wholesale trade, means that we have a winning trifecta, which should be supportive of March GDP. With March results in, retail volumes grew at an annualized rate of 1.75% in 2013Q1, up from 2012Q4’s lazy pace of 0.9%.

According to the ISQ, Quebec real GDP at basic prices grew 0.1% in February (vs. 0.3% for Canada) after expanding 0.9% in January. Quebec goods production progressed 0.9% in February, the same as it did in January, thus making up the ground lost in November and December. The gain was driven by a 1.1% increase in manufacturing output (vs. 0.8% for Canada) fuelled above all by chemical products (+9.1%). Services output, meanwhile, declined 0.2%. Contractions were reported in 8 of the 15 service industry groups, with most of drag coming from two sources, namely, administrative and support, waste management and remediation services (−2.2%) and health care and social assistance (−1.7%).

United States – Existing-home sales sprang 0.6% in April to 4.97 million units from an upwardly revised 4.94 million units the month before. The higher sales in the month were entirely due to single-family units (+1.2%), which more than offset a 3.3% drop in multiple units. The months supply of single-family homes at the current sales rate climbed to 5.3, its highest level in seven months. The percentage of distressed sales, however, continued to fall, reaching just 18% of the total (compared with 28% a year earlier). This explains why the median resale price for single-family homes reached $192,800, its highest mark since 2008.

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