Canadian retail sales data for December 2018
- Prior was -0.9% (unrevised)
- Ex autos -0.5% vs -0.3% expected
- Prior ex autos -0.6% (revised to -0.7%)
- Excluding gasoline +0.4%
- Sales +2.7% y/y
- Following a 2.1% gain in November, sales at electronics and appliance stores decreased 4.0% in December
- Auto sales were down 2.0% in Canada in 2018
The headline was a tad better but the key reading on ex autos was softer and that suggests a weak holiday season for consumers, who may be starting to feel the squeeze of higher interest rates and sagging home prices.
Digging through the details, they're mediocre. The drop in gasoline sales (and volumes) was larger than anticipated so if you strip that out sales were decent. Furniture (+0.1% m/m) is a forward looking indicator and it was ok. One that raises an eyebrow for me is a 3.1% jump in building materials which looks like a one-off.
Overall, the holiday season always adds some cross currents but if you were expecting consumers to spend the money they saved on gasoline, then you should be disappointed.
The Canadian dollar is 25 pips higher in the aftermath but I think that's more about the rally in oil that took place shortly before the release, something I warned about beforehand.
