Canadian retail sales jumped in November despite predictions they would stall, giving a boost to economic growth but not changing expectations that the pace of increases in consumer spending will continue to slow.
Retail sales climbed 0.2 per cent to a record high of $39.4-billion, with new cars and electronics contributing most to the gains, Statistics Canada said on Tuesday.
Analysts said the adoption of U.S.-style “Black Friday” events in November to persuade Canadian shoppers to spend cash at home instead of across the border in U.S. malls may have helped retailers.
“Retailers can once again thank a stronger Black Friday push in November for helping to gussy up their bottom lines,” said Emanuella Enenajor, economist at CIBC.
The average forecast in a Reuters survey was for sales to remain flat. Retail sales have risen for five consecutive months and were up 1.4 per cent in November from a year earlier.
In volume terms, which is used to calculate gross domestic product growth, sales rose 0.8 per cent. November GDP data is due for release on Jan. 31 GDP looks set to grow by about 0.2 per cent in November based on the new data, analysts said. But while retail sales likely increased in the fourth quarter, growth is expected to be slower than in the third quarter and that trend is expected to continue into 2013.
Consumer spending has been a key engine of growth in Canada since the 2008-09 recession. But the Bank of Canada and other economists see it contributing less this year, while the housing market will also cool. Exports and manufacturing sales have yet to recover to pre-recession levels.
“Following a strong showing in Q3, we expect the pace of consumer spending will expand at a more modest sub-2 per cent rate in the final quarter of 2012. This will help to mitigate the expected drag from net exports,” said Mazen Issa, a strategist with TD Securities.
In a report due on Wednesday, the Bank of Canada will likely revise down its fourth-quarter economic forecast from a previous estimate of 2.5 per cent, annualized. Economists polled by Reuters unanimously expect it to keep its key interest rate unchanged at 1.0 per cent.
Sales at motor vehicle dealers grew 1.8 per cent in November, and sales at electronics and appliance stores jumped 8.9 per cent.
Statscan said the electronics sales “could be affected by the timing of new product releases,” but it would not comment on specific products. Apple released its iPad mini in November.
Overall, sales were up only in four of 11 subsectors representing 32 per cent of total retail trade, Statscan said, and excluding the auto sector, they fell 0.3 per cent in the month.