Krishen Rangasamy, a Senior Economist at National Bank of Canada (NBC), suggests that the rebound in consumption likely allowed Canada’s economic expansion to continue in the third quarter despite the drag from trade.

• “Canada’s retail sales fell 0.1% in September, better than the -0.3% print expected by consensus. Moreover, the prior month was revised up to +0.1% (from -0.1%). Sales were down in 6 of the 11 subsectors in September, including a 1% drop for autos/parts dealers.
• In real terms, Canada’s retail sales fell 0.1% in September. For Q3 as a whole, however, retail volumes were up 1.9% annualized.
• September’s retail report was better than expected, more so considering the prior month’s upward revisions. While retail volumes were down slightly during the month, the quarterly picture is much more positive. Note that real retail spending grew 1.9% annualized in Q3, contrasting sharply with the prior quarter’s weakness.
• The improved performance from consumers in Q3 was made possible by a resilient labour market (recall that 110K net new jobs were created in the quarter according to the Labour Force Survey), Canada Child Benefit payments to households (which were enhanced in July), and savings from belowseasonal pump prices.”