- Benjamin Reitzes, senior economist at BMO Capital Markets
Retail sales in Canada fell for a second consecutive month in August, as gasoline prices dropped and new cars and food recorded weaker sales, according to Statistics Canada. Sales fell 0.3% to C$42.4 billion, the biggest decline this year, following a 0.1% drop in July. Sales decreased in seven of the 11 sub-sectors, accounting for 76% of retail trade. Gasoline stations were the major contributor to the decline, with sales down 2.1% in August to C$5.38 billion. Sales at motor vehicle and parts dealers dropped 0.4%, pushed lower by a 0.6% decline in sales at new car dealers, while food and beverage stores experienced a 0.4% decrease. The data is unlikely to put much pressure on the Bank of Canada, which does not plan to raise interest rates from near all-time lows until there are signs of a sustained economic recovery.
Retail sales follow mixed monthly data releases, such as disappointing manufacturing and upbeat wholesale trade numbers. Canada's manufacturing sales plunged the most in over five years in August, falling 3.3% to C$52.1 billion and reversing last month's record gains, with major losses in the transportation equipment industry. However, wholesale trade climbed 0.2% to C$53.1 in August due to increased sales within the machinery, equipment and supplies category. Meanwhile, the economy posted the largest trade deficit in nine months, as imports rose 3.9% and exports dropped 2.5%, resulting in a C$610 million trade gap.
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