Retail sales rose 0.2% in November, marking the third straight month of gains. In real terms, sales were up 0.3%.
Sales were up in about half of the major industries, led by electronics and appliance stores (+13%) and gasoline stations (+6%), the latter of which was driven by higher prices. On the flip side, sales at motor vehicle and parts dealers (-3.6%) provided some offset.
Regionally, the picture was also mixed, with sales up in half the provinces. Quebec (+0.9%) led the way, followed by Manitoba (+0.4%) and Ontario (+0.3%). Sales in Alberta and Saskatchewan were down 0.3%, while B.C.’s were relatively unchanged during the month.
The gains in retail sales volumes in October and November suggest that sales will be up in the fourth quarter as a whole. This bodes well for overall consumer spending and by extension, economic growth during the quarter – the latter of which is currently tracking around 2.5% annualized.
Going forward, we expect consumer spending to remain a key source of strength for the Canadian economy, particularly in light of the recent gains in employment and wages. Recent interest rate increases, however, will likely serve to keep consumer spending in check.
Today’s report adds to the economic picture that the data dependent Bank of Canada is watching as it determines its next move. While it is supportive of higher interest rates, the tightening cycle is likely to be slow and gradual, giving the Bank time to assess the impact of higher rates and other uncertainties such as the new B-20 guidelines and any changes to NAFTA.