Canadian retail sales inch up in July

Canadian retail sales grew in July — barely — as Canadians bought more items for the home, offsetting falling car sales, according to Statistics Canada.

The country's national statistical agency said on Monday that Canadians purchased $35.99 billion worth of goods in the month, an increase of 0.1 per cent compared with June's figures.

Sales of furniture, computers and home electronics rose 2.2 per cent in the period, offsetting continuing weakness in automotive purchases.

"A 0.6% drop in the automotive sector in July came mainly from new car dealers, who saw their sales decrease for the sixth month in a row," Statistics Canada noted.

Still, experts were expecting a better result this month.

"Our monitoring assumes that retail sales will match the 0.5% gain recorded in June. In part this reflects the expectation that some of June’s surprising 3.1% decline in motor vehicle sales will be reversed in July," said Paul Ferley, assistant chief economist at RBC Economics in a commentary last week.

RBC was disappointed in its prediction as new car sales, one of the components of the automotive category, slipped 0.9 per cent in July, not as bad as the previous month, but not enough to push the overall indicator higher.

Despite a slower-than-expected July, overall retail sales in Canada posted decent growth comparing this July with July 2007, up 4.9 per cent.

That is good news compared to the situation in the United States.

Per cent retail sales growth (negative) Q3 Q4 Canada 2.0 2.0 United States (0.9) (1.0)Source: BMO Capital Markets

BMO Capital Markets forecasts overall retail sales growth in Canada of two per cent for both the third and fourth quarters of the year.

The bank, however, expects U.S. retail sales to fall 0.9 per cent in the third quarter and one per cent in the fourth three-month period.

Canada's home sub-sector looks relatively healthy in terms of sales, with the furniture, home furnishings and electronics category up 1.8 per cent July-versus-June and 7.2 per cent July-over-July.

Purchases at food and beverage stores showed weakness in July as the category posted a drop of 0.3 per cent compared with June, Statistics Canada said.

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