Canadian Retail Sales up Marginally in August and GDP on Track for 1% Growth in Third Quarter

Canadian Retail Sales up Marginally in August but Miss Expectations Canadian Retail Sales up Marginally in August but Miss Expectations 

Canadian retail sales increased by 0.4% in August, primarily due to higher sales at motor vehicle and parts dealers, according to Statistics Canada’s latest report. The sales reached $66.6 billion, but fell below the projected headline gain of 0.5%. In volume terms, retail sales increased 0.7%.

Motor vehicle and parts dealers led with a 3.5% increase, with sales of new cars up 4.3% and used cars up 2.1%. Sales of building material, garden equipment, and supplies declined for the second consecutive month. Ontario had the largest provincial increase, with 0.9% rise, mainly attributed to auto sales. In Toronto, sales rose 0.6%. 

Core retail sales, without motor vehicle and parts dealers, decreased for the first time in three months, dropping to 0.4% in August. This decline was led by lower food and beverage sales, which were down 1.5%. Alberta was the most affected by the decline in food and beverage sales, which dropped by 1.1%. 

Source: Financial Post
Source: Reuters
Source: Statistics Canada

Canadian GDP on Track for 1% Growth in Third Quarter

The Canadian economy’s growth remained unchanged in August, with GDP forecasting a 1% annualized rate in the third quarter. This puts the Bank of Canada on track for another cut in December. 

The Bank of Canada revised its forecast for Q3 GDP down to 1.5%, but growth is still expected to fall below that. Governor Tiff Macklem expressed a desire for economic growth to strengthen after a 50-basis-point cut to its policy rate last week. Douglas Porter, chief economist at the Bank of Montreal, believes the latest GDP growth numbers will support another interest rate cut by the central bank, but more data is needed to determine whether it will be a 50- or 25-basis-point cut. 

Andrew DiCapua, a senior economist with the Canadian Chamber of Commerce, said economic momentum at the start of the summer doesn’t seem to be holding.

“There are signs that September growth is going to be positive, but if you look at a variety of different indicators, like hours worked being down, or even retail sales when you take out automotive vehicles, those are all pointing towards downward trends,” Mr. DiCapua said.

The goods-producing sector contracted by 0.4% in August, reaching its lowest level since December 2021. Manufacturing led the monthly decline, with extended maintenance shutdowns in the auto industry in Ontario contributing to the decline. Other industries that reported declines include utilities (1.9%) and wholesale trade (0.6%).

Source: Financial Post
Source: Globe and Mail
Source: The Star
Source: Statistics Canada