Data released on Thursday showed retail sales in Canada stagnated in March against expectations of a 1.4% increase. Analysts at CIBC, point out the headline number disappointed but the details of the report were stronger with growth in ten out of 11 subsectors.

Key Quotes: 

“Headline retail sales disappointed in March, but the details of the report were stronger with growth in 10 out of 11 subsectors. Nominal retail sales were flat in March, much weaker than the consensus and advance estimate for 1.4% growth, as lower sales of motor vehicles offset gains elsewhere.”

“Excluding auto sales, receipts were up by a healthy 2.4%, but some of those gains would be driven mainly by higher prices. In volume terms, overall retail sales were down 1%.”

“The advance estimate for April suggests that sales grew 0.8%, which, given continued inflationary pressures, would not be very impressive in volume terms.”

“Motor vehicle sales look to have limited overall spending on goods in Q1, despite decent contributions from other goods consumption. The April advanced estimate from this release, combined with previously released data for manufacturing sales (+1.6%) and wholesale trade (+0.2%), suggests little help in real terms from these sectors for monthly GDP, which will rely on the continued growth in services. Overall, the impact of surging inflation on household disposable incomes will likely be a stronger headwind to sales volumes in Q2.”