Canada' retail sales slump, cementing Bank of Canada rate pause
Canadians are rolling back their goods purchases as more households face mortgage payment renewals
Canadian consumers are tightening their purse strings, cementing a case for the Bank of Canada to hold interest rates steady next week.
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Receipts for retailers were flat in September, according to an advance estimate from Statistics Canada released Friday. That followed a 0.1 per cent decline a month earlier, which matched the median estimate from economists in a Bloomberg survey.
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Sales were down in six of nine subsectors, including car dealers, and furniture, electronics and appliances retailers. Excluding autos, retail sales rose 0.1 per cent, versus expectations for a decrease of 0.1 per cent.
In volume terms, retail sales dropped 0.7 per cent in August.
The report shows Canadians are quickly rolling back their goods purchases as more households face mortgage payment renewals. It’s also in line with the Bank of Canada’s consumer survey earlier this week, which suggested Canadians who expect more adverse effects ahead from rate hikes are more likely to spend on discretionary items than buy items usually financed with loans, such as cars and appliances.
Governor Tiff Macklem and his officials kept borrowing costs at 5 per cent in early September, saying recent evidence showed higher rates are working to slow the economy and consumption. Policymakers are widely expected to hold for the second straight meeting on Wednesday, counting on softening demand to translate into a slower rate of inflation in the coming months.
Regionally, sales decreased in six of 10 provinces in August, with British Columbia seeing the largest provincial decrease. In Vancouver, sales were down 1.6 per cent.
About 12 per cent of Canadian retailers reported that their business activities in August had been affected by the strike at the ports in British Columbia, according to Statistics Canada.
The agency didn’t provide details on the September estimate, which was based on responses from 36.5 per cent of companies surveyed.
Bloomberg.com
