VOT Research Desk
Retail sales in Canada decreased by 0.5% in September, according to data released on Tuesday.
The biggest drop, according to CIBC analysts, is in gasoline sales, which did somewhat better in volume terms with a 0.1% loss due to reduced pricing over the month.
They also point out that the preliminary estimate for October reveals a positive rebound of 1.5%, indicating that consumer spending on goods is still fairly strong. Although retail sales volumes may have moderately weakened in the third quarter, consumer spending is still anticipated to have contributed positively to overall GDP growth in Q3 as services spending continues to rebound.
The fourth quarter has started with a little more momentum than we had anticipated, according to the advance estimates for October’s retail, wholesale, and manufacturing.
This has put some upward pressure on our forecast for GDP for Q4 (+0.5% annualised) and that of the Bank of Canada. However, it is still early, and in the upcoming months and quarters, the effect of previous interest rate hikes on consumer spending will only intensify.
