Retail sales advanced 1% in April after a pause in the previous two months. All retail sectors, except drug stores, posted higher sales.

Economists continue to be surprised by the resilience of the Canadian consumer. The rebound in retailing activity is helping hold the year-over-year trend above 5% for the sixth month in a row. “Consumers stormed back into stores in April to make up for weakness in the past two months,” says RBC Financial.

BMO Nesbitt Burns notes that the strength is even more evident when the auto component is removed. “Sales, excluding the auto sector, rose a solid 1.6% in April, the biggest monthly gain in over three years,” it says. “Sales registers were humming away in nearly every major sector in April. The hot housing market is definitely a plus for furniture dealers. Clothing stores were exceptionally busy, sewing up a 3.9% rise in sales, the biggest in a year. Not to be outdone, food and general merchandisers also enjoyed a healthy run-up.”

CIBC World Markets says that this latest strong report is making, “evidence of a Canadian recovery increasingly difficult to tune out”. It notes that monthly retail advances were recorded in eight of the ten provincial jurisdictions in April. Everywhere except New Brunswick and Nova Scotia.

“Higher prices were a big part of April’s retail gain, but the 0.3% real advance will combine with blowout results for manufacturers and wholesalers to produce an impressive April GDP advance (likely in the neighbourhood of 0.7% or better),” says CIBC. “With the quarter getting off to a much better-than-expected start, the downshift from Q1’s blowout 6% will be much easier to swallow.”

Along with strong retail spending, RBC notes that Finance Minister John Manley’s spring update yesterday set the stage for expectations of further government spending. “The first new forms of spending stimulus that are expected include increased farm aid coming on the heels of expanded U.S. farm aid programs in the global agricultural subsidy wars, and higher foreign aid to developing countries,” it says, noting that the strong retail report strengthens the case for the Bank of Canada to be shifting aggressively towards hiking short-term interest rates and is a plus for the Canadian dollar.

CIBC says that thee robust economic results we’ve seen of late are, “clearly enough to keep the Bank tightening. And while the odds of a more aggressive move in July are growing, the central bank will want to see the June employment results before deciding on the ultimate size of its next hike.”