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Canadian retail sales recover in December

by SuperiorInvest

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Canadian consumers jumped into holiday shopping late last year after limiting their spending just a month earlier.

Retailer revenue rose 0.8 per cent in December, the biggest increase since April, according to an advance estimate from Statistics Canada released Friday. This followed a 0.2 percent decline in November, which missed the median estimate of a flat reading in a Bloomberg survey. In volume terms, retail sales also fell 0.2 percent that month.

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Sales declined in four of the nine subsectors in November, while motor vehicle and parts dealers saw the largest increase, for the third month in a row. Excluding autos, retail sales fell 0.5 percent, versus expectations for a 0.1 percent drop.

Core retail sales, which exclude gas stations and auto dealerships, fell 0.6 percent, driven by lower revenue at supermarkets, grocery stores and liquor stores.

After the release, two-year Canadian government bond yields fell about one basis point to 4.076 percent. The Canadian dollar was little changed at $1.345 per US dollar as of 8:50 a.m. Easter time.

While sales rose sharply in December, the decline in November still highlights some weakness in spending by consumers, who face higher interest rates and many of whom are due to renew their mortgages this year. Friday’s report, combined with accelerating core inflation and worse-than-expected employment growth in December, point to the Bank of Canada keeping policy rates steady at five per cent next week.

“Canadian consumers are increasingly struggling with higher interest rates as November retail sales data showed a drop in spending,” said Katherine Judge, an economist at the Imperial Bank of Commerce of Canada.

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