Core retail sales in Canadian dollars as a key economic indicator

Basic retail sales in Canadian dollars (monthly) refers to the monthly change in the total value of retail sales in Canada, excluding auto sales. It is an important economic indicator that provides insight into the patterns of consumer spending and general economic activity in the country.

Here are the key points about core retail sales CAD m/m:

Definition: Core retail sales measure the change in the total value of retail sales at the consumer level, excluding car sales. Car sales are excluded because they tend to fluctuate and can distort the overall trend in retail sales.

Monthly change: The indicator shows the percentage change in retail sales from the previous month. A positive value indicates an increase in sales, while a negative value indicates a decrease.

Consumer spending: Retail sales are a critical component of consumer spending and are a key driver of economic growth. Higher retail sales generally indicate increased consumer confidence, higher disposable income, and a strong economy. Conversely, lower retail sales can indicate economic weakness and lower consumer spending..

Economic Index: Core retail sales in Canadian dollars are closely monitored by policymakers, economists, and market participants as they provide insight into the health of the Canadian economy. It helps gauge the strength of domestic demand, consumer sentiment and potential inflationary pressures.

Market reaction: Core retail sales CAD m/m is a high-impact economic indicator that can affect financial markets. Positive surprises, such as higher-than-expected retail sales growth, could increase optimism and possibly strengthen the Canadian dollar. Conversely, weaker-than-expected retail sales figures may have a negative impact on the currency.

In short, CAD’s core retail sales provide valuable information about consumer spending trends in Canada, excluding auto sales. It is an important economic indicator used by policymakers and market participants to assess the public health and performance of the Canadian economy.

Retail sales rise in April, boosted by fuel, food

Retail sales rose 0.7% to $66.8 billion in April. Sales rose in seven of the nine sub-sectors and were led by increases at petrol stations and fuel vendors as well as food and beverage retailers. Core retail sales – which excludes petrol stations, fuel vendors and car and parts dealers – rose 1.4 percent in April. In terms of volume, retail sales rose 0.5% in April. Sales are rising at petrol stations and fuel vendors, while sales at car and parts dealers are falling.

The largest increase in retail sales was recorded in April at petrol stations and fuel vendors (+4.5%), rising for the first time in three months. In terms of volume, sales at petrol stations and fuel vendors rose 1.7% in April.

The largest decline in retail sales was recorded in April by car and parts dealers (-2.2%) due to lower sales at new car dealers (-2.9%). Auto parts and accessories and tire retailers (+1.6%) were the only type of store in this sub-segment to record an increase in April.

Core retail sales rose on strength at food and beverage retailers

After a 0.7% decline in March, core retail sales rose 1.4% in April due to higher sales at food and beverage retailers (+1.9%), led by gains in supermarkets and other grocery retailers (excluding retailers) (+1.6%). Higher revenues at beer, wine and alcoholic retailers (+5.5%), which rose for the first time in four months, also contributed to an increase in food and beverage retailers in April.

Sales also reported in April in sporting goods, hobbies, musical instruments, books, miscellaneous stores (+3.4%) and health and personal care retailers (+1.9%).

Bank of Canada’s rate cut expectations are increasing after weak data

The Bank of Canada’s July decision shifts more decisively towards a rate cut after weak retail sales and PPI figures today. The market now presents a 73% chance of consecutive reductions.

Retail sales matched April’s +0.7% estimate but May’s advance report showed a decline of 0.6% and the March reading was revised to -0.3% from -0.2%. Add that and point to consumer weakness, which was also seen in RBC’s Canada card data .

Inflation also appears to be slowing, and today’s PPI reading of 0.0% was below +0.5% expected. Raw materials also fell 1.0% during the month (although this follows a 5.3% rise in the previous month).

It is worth noting that the Canadian dollar did not weaken as the Bank of Canada reduced the odds of an increase. This may just be a divergence in the FX market and in response to rising oil prices, but I think the Bank of Canada is lagging behind the curve and the market could eventually welcome the effects of a rate cut as there is still a chance for McClim to avoid a sharp fall.

The Bank of Canada, the country’s central bank, takes into account retail sales data, including core retail sales, when formulating monetary policy decisions. Strong retail sales could signal strong economic activity, which could affect the central bank’s stance on interest rates

Basic retail sales data CAD is usually released by Statistics Canada, a government agency, around the middle of each month. They are accompanied by additional details, such as sector-specific sales figures, allowing for a more comprehensive analysis of consumer spending patterns.

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