Statistics Canada announced retail sales to have surged more than estimated in November. Canadian retail sales were recorded at 0.9% on Friday that helped regain much of October’s loss. The report further highlighted the motor vehicle and food/beverage sectors to have contributed the most in the upbeat data for November.
The decline in retail sales was posted at 1.2% in October, following which, analysts had forecast a 0.4% gain for November. As of Friday, October’s data was also reported to have been revised to an even lower 1.1% by Statistics Canada. Printing significantly better than the experts’ estimate, the economic data on Friday stirred a sharp movement in loonie (USD/CAD).
Bank Of Canada Hints At An Imminent Rate Cut In The Upcoming Months
Excluding the auto sector, retail sales surged 0.2% in November that fell shy of the 0.4% forecast. The Bank of Canada also hinted at the prospect of a rate cut in the upcoming months if domestic growth fails to pick up. The BoC has kept the overnight interest rate unchanged for over a year.
The bank highlighted that the recent economic data has given mixed signals and the policymakers are now keenly seeking reports from the housing market. Data concerning business investment and consumer spending is also expected to play a major role in BoC’s decision regarding monetary policy. As per the survey of the money markets, probability of a rate cut from the BoC in March 2020 is currently at 24%.
Economist Nathan Janzen of RBC appreciated the Friday’s data for having broken the streak of negative economic figures for November including poor than expected wholesale trade and manufacturing activity. The senior economist, however, suggested that the data is not yet sufficient to change the BoC’s stance regarding an imminent rate cut in the upcoming months.
Six Out Of 11 Sub-Sectors Posted An Increase In Retail Sales In November
Statistics Canada also highlighted a 3.0% increase in the sales of motor vehicle and parts dealer in November. Much of the surge (2.8%) was attributed to the new car dealers. Food and beverages, on the other hand, climbed 0.9% in November with sales at grocery stores contributing the most (1.3%).
Friday’s data also accentuated six out of the total of 11 subsectors to have posted an increase in retail sales in November. These six sectors, as per Statistics Canada, account for as much as 70% of the total retail sales. In volume terms, the gain in retail sales was posted at 0.7%.
The forex market didn’t respond significantly to the Canadian retail sales report on Friday.