Canadian retail sales bounced back in March after a weak February but the rise outside the motor vehicle sector looked soft and the figures sent mixed signals about first-quarter economic growth.
The 0.4-per-cent increase in retail sales reported by Statistics Canada on Wednesday showed consumers spending more after a weak start to the year, but not quite resuming their 2011 role as the main drivers of growth.
Prompted by unusually warm weather, especially in the province of Ontario, Canadians bought more cars and recreational vehicles such as boats and motorcycles in March. They also invested in clothing, footwear, sporting goods and garden and building equipment.
The increase was a notch above the 0.3 per cent gain forecast by market operators in a Reuters poll and followed a 0.2 per cent decline in February.
But stripping out the motor-vehicle and parts dealers, sales were up just 0.1 per cent. Gasoline sales actually fell, to the surprise of analysts, and there were gains in just seven of the 11 retail sub-sectors that Statistics Canada tracks.
Analysts were heartened though by the 0.4-per-cent rise in the volume of total retail sales, used to calculate gross domestic product.
“The volume gains should translate into decent support for March GDP, which is on track for a roughly 0.4 percent advance at this point,” said Avery Shenfeld at CIBC World Markets.
Mr. Shenfeld sees first-quarter growth at below 2 per cent on an annualized basis, below the Bank of Canada’s 2.5 per cent estimate, but said the second quarter looks set for a stronger performance based on strong jobs gains and other data.
Motor-vehicle and parts dealers reported a 1.2 per cent increase in sales in March, largely because of a 0.7 per cent rise in new car sales and a 7.7 per cent jump in “other motor vehicle dealers,” which includes boats, motorcycles and other recreational vehicles.
Sales at general merchandise stores rose for the third straight month, up 1.1 per cent in the month. Receipts increased by 1.8 per cent at building-material and garden-equipment dealers and by 1.3 per cent at clothing and accessories outlets.
Strong sales of sports equipment boosted sales by 1.9 per cent at sporting-goods, hobby, book and music stores, Statscan said.
Compared with March 2011, overall retail sales were up 4.1 per cent.
In a separate release on Wednesday, Statscan said the composite leading indicator rose 0.3 per cent in April from March for the 10th consecutive monthly increase.
The components of the index related to household demand supported the increase in April, while manufacturing was lackluster.
Statscan said it will discontinue the composite leading indicator following the release for April. No immediate explanation was given for the change.