Highlights:
- Retail sales fell 1.2% in nominal terms and 1.4% excluding the impact of prices in April
- Much of the weakness came from a big pullback in auto sales in Ontario that was probably weather-related.
- We are tracking a flat reading for overall April GDP following the stronger 0.4% and 0.3% increases in February and March, respectively.
Our Take:
Much of the big 1.2% drop in nominal retail sales —1.4% controlling for the impact of price changes — was accounted for by a 4.3% plunge in auto and parts sales. Statistics Canada noted that most of that decline came from Ontario, where bad weather may have played a role in keeping shoppers at home. Soft sales at building material and clothing stores also could have been impacted by a late spring in parts of the country. If true, that should mean a bounce-back in May and June sales. For now, though, the retail sales data combined with an earlier reported drop in manufacturing sale volumes suggest that overall economic output was little changed in April. That in itself probably won’t worry the Bank of Canada too much given the April data is following strong 0.4% and 0.3% increases in GDP in February and March, respectively. The combination of somewhat slower economic growth, softer inflation data (also released this morning) and the sharp deterioration in the tone of trade discussions with the U.S. also aren’t all that encouraging, though, making a July Bank of Canada interest rate hike look like a closer call than previously thought.
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