By Promit Mukherjee
OTTAWA (Reuters) -Canada's retail sales were flat in November as consumers purchased less from supermarkets, grocery stores, alcohol outlets and furniture shops but the numbers were buoyed by car sales, data showed on Thursday.
Analysts polled by Reuters had forecast retail sales to rise by 0.2% and 0.1% excluding the automotive sector on a monthly basis in November.
Excluding the automotive sector, the sales were down 0.7%, Statistics Canada said.
Retail sales are considered an early indicator of Gross Domestic Product growth and contribute almost 40% to total consumer spending, which was primarily responsible for keeping Canada's economy growing in the third quarter.
The November GDP numbers will be released end of this month.
The muted retail sales, which clocked C$67.57 billion ($46.96 billion), was largely led by a drop in across sectors with purchases down in six out of nine subsectors.
However, economists see the November numbers as more of a blip.
"A late Black Friday and a mid-December start to the GST/HST (sales tax) holiday kept consumers on the sidelines in the latter part of the month," Shelly Kaushik, senior economist at BMO Capital Markets, wrote in a note.
Consumer spending has been picking up in the second half of last year led by falling interest rates, and is likely to support spending this year too, Kaushik said, adding that a threat of a unilateral tariff from the U.S. could pose as a major headwind.
Bank of Canada will announce its monetary policy decision next week and money markets see a 83% chance of a 25 basis point rate cut to 3.0%.
The Canadian dollar was trading down 0.08% to 1.4387 to the U.S. dollar, or 69.51 U.S. cents.
December's retail numbers, based on surveys of only half of the respondents for a preliminary estimate, showed sales were likely surged by 1.6%, Statscan said.
Food and beverage retailers, the second biggest contributor to retail sales with a fifth of the share, fell 1.6% in November on a monthly basis, Statscan said.
The third biggest contributor general merchandise retailers saw their sales slump by 1%.
In volume terms, retail sales dropped by 0.4%.
Most of the loss in sales was largely covered up by sales at motor vehicle and parts dealers, which accounts for the biggest share of retail sales in Canada. The sales of this category jumped by 2% led by a rush amongst consumers to buy new cars Statscan said.
($1 = 1.4388 Canadian dollars)