Canada: Not everything was bad in August’s retail sales – NFB

Data released today showed retail sales in Canada came in below expectations in August with unexpected negative numbers. According to Jocelyn Paquet, analyst at National Bank of Canada explains that consumption spending should contribute to growth during the third quarter. 

Key Quotes:

“The Canadian retail data came in weaker than expected in August, with a 0.3% drop in prices contributing in sapping the headline result. The pullback in prices was especially acute in the gasoline stations segment (-3.1%) where nominal outlays fell despite a sizeable increase in sales volumes. Lower pump prices generally allow consumers to spend their money on things other than fuel but that doesn’t seem to have been the case this time with discretionary sales mustering only a 0.1% gain in the month.”

“The 0.2% increase in total sales volumes could hardly be described as a catastrophe and should translate into a positive contribution to GDP growth in August (due to come out on October 31st). With one month of data still to come, real consumption on goods also looks poised to add to quarterly growth, albeit modestly.”

“An upward revision to the prior month’s data from +0.4% to +0.6% provided some consolation.”

“With the price effect removed, retails sales progressed 0.2% countrywide.”