Canadian Retail Sales Rebound, Stocks Jump, Economists too Gloomy?

Canadian Retail Sales Rebound

Canadian consumers remained resilient in December, even in the face of elevated inflation and rising interest rates. Despite these challenges, receipts for retailers jumped 0.5% last month, according to an advance estimate released Friday by Statistics Canada. This follows a 0.1% drop in November, which was led by lower sales of food and beverages, as well as building material and garden supplies.

The increase in December more than offsets the lower-than-expected losses in November and adds to a 1.3% gain in October, ending last year with relatively strong retail sales. This positive trend suggests that household spending may be holding up better than expected in the fourth quarter. Furthermore, it points to a delayed start to what’s expected to be a consumption-led gearing down of economic growth.

Economists see a technical recession in the first two quarters of this year. A technical recession is defined as two consecutive quarters of negative economic growth. However, the strong retail sales in December suggest that the economy may not be as weak as previously thought. This is a positive indication that the Canadian economy may be more resilient than expected, and may be able to withstand the challenges of inflation and rising interest rates.

The recent survey of economists and the statistics agency’s own estimate originally forecasted  a 0.5% decline in November sales.

In November, sales decreased in six of 11 subsectors, representing 47.4% of retail trade. However, the December numbers show that consumers were still able to spend money despite the challenges they faced. The retail sector is a vital component of the Canadian economy and strong sales in this sector can have a positive impact on the overall economy.

The strong retail sales in December suggest that Canadian consumers remained resilient in the face of elevated inflation and rising interest rates. This is a positive indication that the Canadian economy may be more resilient than expected and may be able to withstand the challenges of inflation and rising interest rates. Additionally, it points to a delayed start to what’s expected to be a consumption-led gearing down of economic growth. While economists predict a technical recession in the first two quarters of this year, the strong retail sales in December suggest that the economy may not be as weak as previously thought.

Despite facing inflation and rising interest rates,  these latest figures are encouraging as it appears that Canadians a barrowing through inflation and keeping costs in check, allowing the opening of wallets, which might be what is driving the shift in the stock market, as shares are jumping strong into a well defined month end rally. Could it be the retail investor?

 

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