Canadian retail sales rose less than expected in June, as sales increases in appliance and electronics stores were offset by lower receipts at gasoline stations.
Sales increased 0.1 percent to C$35.9 billion ($33.9 billion), Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg anticipated a 0.4 percent rise, according to the median of 16 estimates. Falling prices crimped growth, as sales in volume terms rose 0.9 percent.
The report supports the Bank of Canada prediction that the economy slowed in the second quarter after growing at a 6.1 percent pace in the first quarter, the fastest in a decade. The central bank lowered its projection for second-quarter growth last month to a 3 percent pace from its April forecast of 3.8 percent, and said there is a risk Canadian consumers will reduce purchases to boost savings.
“Overall, not as bad as it looks,” Avery Shenfeld, chief economist with Canadian Imperial Bank of Commerce in Toronto, said in a note to clients, citing the increase in sales volume.
Shenfeld said the economy likely expanded 0.3 percent in June, pushing the quarterly increase to 2.6 percent.
“That’s about a half point shy of the Bank of Canada’s forecast, but hardly a signpost of recession risks,” he said.
The next decision by Bank of Canada policy makers, who have raised interest rates twice since June, is on Sept. 8. Shenfeld said he sees “enough momentum for the Bank of Canada to carry on with a final rate hike for 2010 in September.”
The Canadian currency, known as the loonie for the bird’s image on the one-dollar coin, fell 0.7 percent to C$1.0596 per U.S. dollar at 10:41 a.m. in Toronto. It ended at C$1.0522 yesterday. One Canadian dollar buys 94.38 U.S. cents.
The retail sales gain in June was led by a 5.1 percent rise at electronics and appliance stores and a 2.3 percent increase for furniture and home furnishing stores. Motor vehicle and parts dealers recorded a 2.1 percent improvement. Five of the measurement’s 11 components posted gains, the agency said.
Sales at gasoline stations were down 2.7 percent on lower prices, the government’s statistics agency said. Excluding car and parts dealers, retail sales fell 0.5 percent to C$28.1 billion, compared with the 0.1 percent increase expected by economists surveyed by Bloomberg. Sales excluding the automotive industry and gasoline stations fell 0.1 percent.
Retail sales in June were 3.8 percent higher than a year earlier, the report said. It was the smallest annual increase since November.
“Consumer spending, the driving force behind the economic recovery in Canada so far, had largely been expected to moderate alongside rising interest rates and a stalling housing market,” Francis Fong, an economist with Toronto-Dominion Bank, said in a note to clients. “Retail spending data for the first two months of the quarter had already pointed to that and June’s marginal improvement only completes the picture.”
The yield on the June 2011 bankers’ acceptance futures contract fell 5 basis points today to 1.2 percent, the fourth straight trading session in which investors have lowered interest-rate expectations.
The statistics agency revised its estimate for May’s retail sales decline to 0.4 percent from the 0.2 percent initially reported.