Retail sales edged down 0.1% to $50.4 billion in December, StatsCan reported today. Lower sales at gas stations were partly offset by higher sales at motor vehicle and parts dealers, it says.
Economists had expected a contraction of 0.3% for the month, according to Thomson Reuters Eikon. In a report, Royce Mendes, senior economist at CIBC Capital Markets, said the modest surprise was “somewhat supportive” of the loonie today.
Excluding gasoline stations, retail sales increased 0.4%.
Sales at gas stations fell 3.6% in December, and sales at motor vehicle and parts dealers rose 1.0%, led by a 1.2% increase at new car dealers.
Sales at electronics and appliance stores decreased 4.0%.
In volume terms, retail sales increased 0.2%. That modest increase is enough to move monthly GDP tracking forecasts out of negative territory, Mendes said. CIBC will be looking for a flat reading for December’s GDP (to be released next Friday) and just below 1% growth for the fourth quarter of 2018.
StatsCan says retail sales declined 0.5% for the fourth quarter. The drop follows a 0.7% increase in the third.
Despite the stance by the governor of the Bank of Canada that interest rates will be headed higher at some point, a hike likely isn’t imminent (the next rate announcement is March 6). Soft readings for interest-rate-sensitive sectors such as consumer spending and housing will leave the central bank standing pat on rates “for some time,” Mendes says in the report. CIBC forecasts one rate hike from the central bank in 2019, in the third quarter.