Statistics Canada says auto sector boosts retail sales in August to $43.6B

OTTAWA – Canadians who bought new and used cars in August helped boost retail sales for the fourth consecutive month.

Statistics Canada said Thursday that higher sales at motor vehicle and parts dealers helped boost retail sales to $43.6 billion in August, up 0.5 per cent from the previous month.

Excluding the auto subsector, retail sales were flat for the month.

Economists had expected a gain of 0.1 per cent.

“Overall, high consumer confidence, continued employment gains and low borrowing costs appear to be supporting the pace of household consumption growth for now,” said economist David Madani of Capital Economics.

“But with the worst effects of the oil price shock arguably still ahead, we would expect to see some slowing in the pace of hiring and household spending in the months ahead.”

TD Bank economist Brian DePratto said the result suggests there’s a chance growth in the third quarter may be better than the bank’s prediction of a 2.5 per cent annual pace.

“Given the strong monthly momentum coming into the quarter, all signs point to a robust exit from the recession that marked the first half of the year,” DePratto said.

The retail sales results follow a decision by the Bank of Canada on Wednesday to maintain its key interest rate at 0.5 per cent after cutting it twice this year to help boost the economy.

The central bank noted in its monetary policy report that household spending continues to underpin the economy and is expected to continue to grow at a moderate pace.

The Bank of Canada raised its estimate for growth in the third quarter to an annual pace of 2.5 per cent in its monetary policy report, but lowered its expectations for the fourth quarter to an annual pace of 1.5 per cent.

Retail sales were up in four of the 11 subsectors tracked, representing 56 per cent of retail trade.

Motor vehicle and parts dealers increased 2.0 per cent in August, the seventh consecutive increase. New car dealers increased 1.7 per cent, while used car dealers reported a 5.5 per cent increase.

Also gaining ground were food and beverage stores, which increased sales 0.5 per, helped by a 4.6 per cent gain at beer, wine and liquor stores. Furniture and home furnishings store sales grew 3.0 per cent, following three months of relatively flat sales.

Gasoline stations sales fell 0.6 per cent, while miscellaneous store retailers reported a 2.3 per cent drop.

In volume terms, retail sales increased 0.7 per cent.

Retail sales rose in seven provinces in August, but declined in Nova Scotia, Manitoba and Newfoundland and Labrador.