Canadian consumer spending in April was stronger than expected, which economists say lends weight to the Bank of Canada’s recent suggestions that interest rate hikes could be on the way.
Statistics Canada reported Thursday that retail sales for April rose by 0.8 per cent on a monthly basis to $48.6 billion. Excluding sales of motor vehicle and parts, retail sales climbed 1.5 per cent month-over-month on a dollar basis.
The consensus forecast of economists was for an overall increase of 0.3 per cent, and a jump of 0.7 per cent when auto sector sales are excluded.
In dollar terms, sales at building materials stores were up by 3.5 per cent for the month, while clothing stores saw an increase of 3.1 per cent. Electronics stores saw an increase of 2.1 per cent, and general merchandisers, such as department stores, had an increase of 2.1 per cent.
The only sectors with declines were automobiles, which fell by one per cent, and furniture, which was down by 0.3 per cent on the month.
Higher sales in Ontario and Quebec accounted for the majority of the overall increase. Sales in April in Ontario grew by 1.1 per cent, while Quebec saw an increase of 1.6 per cent following two months of declines.
‘Solid’ economic data increases odds of rate hike
Economists said the latest reading on retail activity is in line with the Bank of Canada’s recent bullish talk about the state of the Canadian economy, which has prompted speculation of possible interest rate hikes coming sooner than had been expected by the market.
“The solid run of Canadian data continues,” said BMO Capital Markets economist Benjamin Reitzes. “There’s nothing here to alter the Bank of Canada’s now more hawkish path.”
“With most of the April data now in hand, it looks as though monthly GDP rose around a modest 0.1 per cent… but that would still keep [the second quarter] on track for about 2.5 per cent growth,” he said in a commentary.
Nathan Janzen, a senior economist at RBC, said the odds…