By Ketki Saxena
Investing.com -- Statics Canada reported today that Canadian retail sales rebounded 0.7% in October, beating forecasts for a 0.2% gain and preliminary estimates from the statistics agency for a 0.4% increase.
The gain in retail sales was led by grocery and auto sales, with sales rising in six of 11 subsectors in August, representing 65% of retail trade.
In volume terms, sales jumped 1.1%. in August.
The report indicates that although there was a boost in August to household purchasing power as gasoline prices fell, it was short-lived, as the Bank of Canada’s rate hikes continued to eat into consumer spending.
Despite the increase in August, positive sentiment was overshadowed by StatsCan’s flash-forward reading for September, which showed a 0.5% contraction that would largely erase August's gains.
Economists at Desjardins note, “While the August retail sales data may have had a lot to be positive about, the dismal outlook for September and Q3 retail sales volumes more generally suggests consumers are in no mood to spend”
“With Statistics Canada’s flash estimate pointing to a 0.5% decline in nominal retail sales in September and seasonally-adjusted goods prices being flat on the month according to the CPI, Q3 looks to have ended on a sour note. Indeed, this points to a substantial contraction in retail sales volumes in Q3 of more than 4% annualized.”
Recent economic data suggest the Canadian economy has already begun to slow down from a strong first half of 2022. Economists are now widely calling for a recession in the first half of 2023, and real GDP flatlining next year.