Headlines are good, dig deeper and it’s not so great. First the headline, retails sales grew by 0.3% (3.6% p.a. annualized), but strip out cars and car parts and there is no growth. Again this sounds worse than it is, in fact slightly more than half of retail sector saw growth (with the sale of new automobiles at 8.6% the top), and the growth segment represent ¾ of the retail sector.
Still, compare to previous retail sales report this is by far the weakest, with an unbalanced economy that is causing some headaches. Needless to say that the market sees no hikes in interest rate this year, and even Q1/12 is looking mightily dodgy in terms of increase. Economic weakness is certain to affect policy, and may even cause the Federal government to slow down its“exit” from stimulus expenditure contraction.
Overall, this is a transitory number; there is no reason for Canada’s retail sector to slow down, except fear of a “collapse” south of the border. In reality, Canada’s economy looks solid, this weakness may be transitory… watch this space
Still, compare to previous retail sales report this is by far the weakest, with an unbalanced economy that is causing some headaches. Needless to say that the market sees no hikes in interest rate this year, and even Q1/12 is looking mightily dodgy in terms of increase. Economic weakness is certain to affect policy, and may even cause the Federal government to slow down its
Overall, this is a transitory number; there is no reason for Canada’s retail sector to slow down, except fear of a “collapse” south of the border. In reality, Canada’s economy looks solid, this weakness may be transitory… watch this space