• Retail sales rose 0.6% in nominal terms in January — marking a third straight monthly gain.
  • Volume sales rose 0.8% to mark a second consecutive monthly increase. The measure was still down 4.0% at an annualized rate in Q1 but a return to positive growth in the last two months increases the odds that an upward trend resumes in Q2.
  • E-commerce sales, which represents 2.6% of overall retail sales, were up 11.1% from a year ago.

Our Take:

The nominal sales increase was a touch stronger than expected and sale volumes increased a larger 0.8% in March. Even with that gain, earlier weakness left volume sales down 4.0% at an annualized rate in the first quarter. Some ’payback’ was probably due, though, after sale volumes posted their strongest rise since 2004 last year as a whole. Stronger increases over the last two months bode well for a return to positive growth in the second quarter. To be sure, the latest increase in March was heavily concentrated in motor vehicle and parts sales but sales of clothing, furniture and general merchandise sales also increased solidly . The volume of gasoline station sales and food store sales both fell sharply for a third straight month.

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The retail sales data follows already reported increases in manufacturing activity and exports. Labour markets have also continued to improve. We continue to expect GDP increased about 0.2% in March. That would leave growth in Q1 at a still-respectable 1.8% — right in line with the Bank of Canada’s estimate of ‘potential’ growth despite transitory disruptions that weighed on overall economic output in January.



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