Data-wise Canada’s consumer spending still robust

Tuesday’s data showed the declining retail sales in Canada in September by 0.5%. The biggest decline comes from gasoline and is linked to lower prices during the month in question , making sales a little better in volume terms with a 0.1% decline.

The advance estimate for October shows a healthy bounce back of 1.5%, suggesting that consumer spending on goods is still strong.

Q3 may represent a modest giveback of prior strength in terms of retail sales volumes, but with spending on services continuing to recover the consumer is still expected to be a positive contributor to overall GDP growth in Q3.

The advance estimates for October retail, wholesale and manufacturing suggest that Q4 started with a little more momentum than we previously expected, this could exert some upside pressure on the Bank of Canada’s GDP forecast (+0.5% annualized) for Q4.