By Robb M. Stewart
OTTAWA--Canadian retail sales rose in the first month of the year as consumer demand remained relatively strong in the face of a jump in interest rates over the last year, though an advance estimate suggests sales weakened in February.
Sales increased 1.4% in January from the previous month to a seasonally adjusted 66.37 billion Canadian dollars, the equivalent of about US$48.38 billion, Statistics Canada said Friday. That was stronger than the data agency's preliminary estimate last month for a rise of 0.7% on-month, after retail sales were downwardly revised to unchanged in December.
Compared with a year earlier, sales were 5.0% higher in January.
Early indications from companies suggest that retail sales weakened on-month in February, Statistics Canada said, which with early data pointing to declines in wholesale and factory sales supports expectations economic growth is slowing.
The Bank of Canada earlier this month left its benchmark interest rate unchanged in anticipation inflation will continue to cool from last summer's peak, though at 5.2% year-over-year in February it remains well above the central bank's 2% target. The bank, which has forecast economic growth will stall for a couple quarters before recovering later this year, has said it will monitor the economy's response to the string of increases to its policy rate that boosted it 4.25 percentage points to a 15-year high 4.5%.
Annual gross domestic product was flat in the final quarter of last year following five consecutive quarterly increases, largely thanks to a slowdown in inventory-building, though early data points to a recovery in January from the previous month even as hiring across Canada has remained strong in recent months and the unemployment rate hovers just above a record low.
Statistics Canada's advance estimate suggests sales fell 0.6% in February, though the figure is an estimate and will be revised.
Preliminary data also released Friday by the agency points to a drop of 1.6% in wholesale sales on-month in February and a 2.8% decline in manufacturing sales, after both segments recorded higher sales in January.
January's rise in retail sales was driven by a sixth consecutive monthly increase in motor vehicle and parts sales. After the largest drop in five month in December, sales at gasoline stations and other fuel vendors also rose in February with a jump in gas prices.
Canadian core retail sales, which exclude gas stations and motor-vehicle and parts dealers, were up 0.5% from December thanks largely to food and beverage retailers, the agency said.
On a price-adjusted, or volume basis, overall retail sales advanced 1.5%.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
03-24-23 0849ET
