Canada Retail Sales Stall as Autos Gain and Fuel Drops

Canadian retail sales stalled in March after gains in the prior two months, as increases in auto and clothing receipts were offset by lower gasoline prices.

Sales were little changed at C$39.5 billion ($38.4 billion), Statistics Canada said today in Ottawa, following a revised 0.7 percent increase in the prior month. The volume of sales, which strips out the impact of price changes, rose 0.7 percent.

“The March report wasn’t as bad as suggested by the headline results,” Krishen Rangasamy, senior economist at National Bank Financial in Montreal, wrote in a note to clients. After adjusting for prices, first-quarter retail sales growth accelerated to 1.8 percent from 0.9 percent at the end of last year, he said.

The data is one of the last before Statistics Canada reports first quarter growth on May 31, and economists surveyed by Bloomberg say it will show acceleration to a 2 percent annualized pace from 0.6 percent at the end of last year. Bank of Canada Governor Mark Carney is counting on moderate consumer spending to support growth, even as he says households need to stabilize record debt burdens.

Economists surveyed by Bloomberg News forecast a 0.1 percent gain in retail sales, based on the median of 24 projections.

Currency Reaction

Canada’s dollar initially sold off after the report, dropping to as low as C$1.0329 per U.S. dollar, the lowest since March 7, before rebounding to C$1.0273, little changed on the day, at 10:17 a.m. in Toronto. One Canadian dollar buys 97.31 U.S. cents.

Sales at clothing and accessory stores increased 3.1 percent to C$2.27 billion, Statistics Canada said.

Motor vehicle and parts dealer receipts grew 0.7 percent to C$8.91 billion in March. Excluding that category, sales decreased 0.2 percent, while economists predicted an increase of the same magnitude.

Gasoline station sales fell 1.3 percent to C$5 billion in March, as prices declined. Sales of food, the largest category, fell 0.l percent to C$9 billion.

Sales in March advanced 1.1 percent from a year earlier, Statistics Canada said.

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