Canada retail sales rise in September, boosted by autos

OTTAWA: Canadian retail sales picked up in September as auto purchases climbed for the first time in three months on demand for new cars, data from Statistics Canada showed on Tuesday, reinforcing expectations that economic growth rebounded in the third quarter.

Retail sales rose 0.6 percent, in line with economists' expectations, but would have been flat without the increased purchases of cars and parts.

Sales at motor vehicle and parts dealers led the way, rising 2.4 percent. Besides the increase in new car sales, Canadians paid more for gasoline. Despite the large contribution from motor vehicle sales, the increased sales activity across multiple sectors was encouraging, said Robert Both, macro strategist at TD Securities.

Sales were up in seven of 11 sectors, accounting for 65 percent of retail trade. Retail volumes, which strip out the effects of price changes, were up 0.6 percent. "The strong advance in retail volumes should provide a robust handoff to fourth quarter consumer spending," Both wrote.

Economists said the data pointed to a recovery in the broader economy in the third quarter after growth contracted in the previous quarter following massive wildfires in Alberta. The retail figures offset some of the weakness in Monday's wholesale trade data and put the third quarter on track for 3.3 percent growth, said Doug Porter, chief economist at BMO Capital Markets.

That is a tad ahead of the Bank of Canada's forecast for 3.2 percent. Some analysts were unimpressed that consumers did not yet appear to be spending much of the benefit checks the government began mailing out in July to families with children as part of its effort to bolster the economy.

Sales at clothing stores edged up 0.2 percent, while purchases of electronics and appliances rose 0.3 percent. Sales at general merchandise stores rose 0.4 percent, recovering from the previous month's decline.

"We're expecting more out of shoppers heading into the fourth quarter, since it's unlikely that families will stash away the entirety of those family benefit checks," wrote Nick Exarhos, economist at CIBC. A new measure showed e-commerce accounted for 2.1 percent of Canada's total sales on an unadjusted basis, up from 2.0 percent in August.

The figure measures internet sales at retailers that have brick and mortar locations and at those that are only online. In the first nine months of the year, the proportion of online purchases ranged from 2.3 percent in January to 1.9 percent in July, Statistics Canada said.