Canada: Retail Sales data consistent with softer GDP growth  - NBF

Jocelyn Paquet, an analyst at National Bank of Canada, points out that the Canadian February Retail Sales report will no be enough to salvage the performance of the economy during the first quarter. 

Key Quotes:

“Canada’s retail sales increased a consensus-matching 0.4% in February. That result came after a downwardly-revised +0.1% print the prior month (initially reported as a 0.3% advance).”

“Discretionary sales, i.e. sales excluding gasoline, groceries and health products, had a decent month, climbing 0.7%. In real terms, Canada’s retail spending was up 0.3% in February, following three straight monthly declines.”

“The retail results for February came in line with consensus expectations. The increase registered for motor vehicles and parts was certainly encouraging after that category recorded the worst 3-month performance since 2008 between October and January (-9.0% in total). The below-consensus reading for ex-auto retail sales should not be overly concerning.”

“The relatively good monthly result will likely not be sufficient to salvage Q1’s performance.”

“Real retail sales are on pace to decline 5.8% in annualized terms in the quarter. That would be the worst print registered since the recession and it may have translated into the first negative contribution to GDP from consumption spending on goods since 2015Q1.”

“Whatever its cause, the deceleration of consumption growth in Q1 is consistent with our view that Canadian real GDP growth softened to roughly 1.5% annualized in the first quarter of the year.”