Highlights:
- October retail sales jumped 1.5% in nominal terms and 1.4% excluding price impacts.
- E-commerce sales (not all of which are included in the retail sales totals) were up 19.4% over the past year ending in October. That was much faster than the 7.5% increase in overall retail sales but still down from 40%+ readings earlier this year
Our Take:
Retail sales jumped 1.5% in October to end a string of 3 subpar monthly reports. Sale volumes (excluding the impact of prices) rose a similar 1.4% to more than reverse smaller declines over the last three months. Motor vehicle sales jumped 3% in October although sales also rose 0.8% excluding autos. The monthly data is volatile but the bounce-back in spending in the latest month is more consistent with what should still be a relatively solid backdrop for consumer spending. Interest rates have started to tick higher but labour markets have continued to improve and measures of consumer confidence remain high. year-over-year retail spending is still up a very strong 5.0% in volume terms in October compared to 4.6% in September.
Today’s retail report along with yesterday’s stronger-than-expected wholesale sales report suggest October GDP — to be released tomorrow as part of a compressed holiday data release schedule — probably posted a slightly stronger 0.2% increase than the 0.1% gain we previously assumed. We continue to think growth in the economy has slowed from the unsustainable 3-1/2% pace from mid-2016 to mid-2017 but the recent data flow should go a long way towards reassuring the Bank of Canada that the economy continues to grow at the modestly above-potential pace expected.
