Canada's retail sales up 0.7% thanks to auto surge in October

Canada's retail sales witnessed a 0.7 per cent increase month-on-month in October, driven by a surge in the automotive sector, according to data from Statistics Canada released on Thursday. The total sales for October reached C$66.95 billion ($50.19 billion), with notable growth reported in motor vehicle and parts dealers. 

Out of nine subsectors, seven experienced positive growth, constituting 84.1 per cent of retail trade. In terms of volume, retail sales saw a 1.4 per cent increase. However, the agency's preliminary estimate for November suggests that sales likely remained unchanged, aligning with market expectations of a sluggish fourth-quarter growth. 

Desjardins Group economist Tiago Figueiredo expressed disappointment, stating that the tracking for fourth-quarter GDP indicates minimal growth despite a notable increase in the population. Bank of Canada Governor Tiff Macklem, attributing the economic slowdown to higher interest rates, noted that growth stalled in mid-2023 and is expected to remain weak into 2024. Updated forecasts from the central bank are anticipated next month. Stephen Brown, deputy chief North America economist at Capital Economics, highlighted the risk of weak GDP growth, even with marginal positivity, due to elevated inventories-to-sales ratios and the potential impact of drawdowns.

(With Reuters Inputs)