What is the impact of November sales on the economy?
New data from Statistics Canada has revealed receipts for retailers were flat last month. This follows an increase of 0.7% a month earlier. However, both months are below a median estimate of 0.8% as in a Bloomberg survey of economists.
According to a Bloomberg report, high interest rates may have driven the slowdown in spending in November - although, it said retailers still had a strong month in October, with sales up in seven of nine subsectors, which had been led by a 1.1% gain in the automobile sector. Retail sales roles 0.6%, excluding autos, compared to estimates of 0.5%. In volume terms, retail sales increased by 1.4%.
Strong October sales keeping the economy equitable
The second highest contributor to retail sales were general merchandise retailers, with a 2% gain in October, while health and personal care sales were up 1.5% and clothing sales were up 2.4%. Meanwhile, gasoline and fuel sales were down 3.1%.
“Retail sales were solid in October, with the details even firmer than the headline,” said Shelly Kaushik, an economist with Bank of Montreal, in a report to investors. “However, indicators of weakness for November suggest consumer spending could slow meaningfully in the rest of the fourth quarter.”
Earlier this month, the Bank of Canada kept its benchmark overnight rate at 5%. The Canadian economy has shown signs of stagnation, according to the Bloomberg report. In a separate release, Statistics Canada said payroll employment decreased by 44,600 in October, offsetting gains made in September and following little variation in July and August.
Tiff Macklem, governor of the Bank of Canada, told BNN Bloomberg Television that he expects to cut rates next year. However, he noted he needs to see several months of sustained downward momentum in core inflation first.
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