Canadian retail sales drop for third straight month
Canadian retail sales fell in August for a third straight month, a surprise decline after the government sent out tax benefit checks.
Sales decreased 0.1 percent to C$44 billion ($33 billion), Statistics Canada said Friday in Ottawa. Economists surveyed by Bloomberg News forecast a 0.3 percent increase, based on the median of 15 projections.
Consumer spending has stalled since a peak in February, coinciding with signs the broader economy was taking longer than expected to recover from an oil shock. The Bank of Canada said Wednesday housing sales may be also be curbed in the short run by new tougher government mortgage rules, and that over a longer period debt-fueled spending will slow.
Investors were watching the report to see what consumers would do with family benefit payments that started being delivered in July. The payouts were one of the main fiscal actions Prime Minister Justin Trudeau’s government took this year to boost sluggish growth.
Automobile and parts dealer sales fell 0.5 percent to C$10.9 billion. At general merchandise stores they fell by 0.9 percent, the third decline in four months.
Families receiving additional child benefits planned to use only 15 percent of the windfall for new spending, with most of it going to pay bills or reduce debt, according to a poll by Nanos Research Group for Bloomberg News published Sept. 7. There is little evidence the tax cuts are having much of an effect either, with just 8 percent perceiving a drop in income taxes. The results cast doubt on whether the two fiscal measures — worth C$12.3 billion over the next two years — will provide much of a boost.