• Retail sales edged down 0.1% (both nominal and real)
  • Sales volumes were up an annualized 1.9% in Q3
  • Building material stores posted a solid gain; autos down

September’s retail sales were weighed down by lower gasoline prices and a pullback in auto sales. The latter have generally been soft this year–while housing has clearly gotten a boost from lower interest rates, auto sales have not. That strength in housing was evident in rising sales at building material stores, which hit a record high on a volumes basis in October (the only category that can make such a claim).

Despite a soft end to the quarter, retail sales volumes rose an annualized 1.9% in Q3, the best pace in a year. We expect overall consumer spending (part of next week’s Q3 GDP report) rose at a similar pace. The BoC is keeping its eye on the household sector, with strength there essential to offset headwinds to investment and exports. It looks like both consumer spending and housing made solid contributions to growth last quarter.

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