HomeContributorsFundamental AnalysisCanadian Retail Sales Kick Off the Year with a Bang

Canadian Retail Sales Kick Off the Year with a Bang

Retail sales kicked off 2017 on a strong note, with January’s 2.2% increase in sales more than recouping December’s loss. In real terms, sales were up by a robust 1.3%.

January’s gains were widespread, with sales at health and personal care stores (+6%), motor vehicle and parts dealers (+3.8%) and electronics and appliance stores (+3.7%) leading the way – all of which bounced back from a decline in December.

Regionally, sales were up across the board, led by PEI (+4.3%), Saskatchewan (+3.7%) and B.C. (+2.9%).

Key Implications

This was a good report all around. The bounce back in retail sales in January is in line with our outlook for consumer spending growth of around 2.5% in the first quarter, and puts overall economic growth on track to record a pace of 3% (annualized) or more in the first quarter.

Supported by robust job creation and wealth effects related to home price gains, consumers will remain a key driver of economic activity this year. Nonetheless, the strength is likely to fade somewhat in the coming quarters. A gradual rise in longer-term interest rates consistent with higher borrowing costs stateside, and some signs of a cooling in the housing market, will likely prompt highly-indebted Canadian consumers to rein in spending. That said, at close to 2%, overall consumer spending growth will remain at a healthy level.

TD Bank Financial Group
TD Bank Financial Grouphttp://www.td.com/economics/
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.

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