Canadian consumers appeared to ignore stock market turmoil and spent on cars, electronics and other goods in September, giving retail sales their strongest boost in nearly a year.
The strong September sales increase – the best monthly advance since November 2010 – also fuelled speculation the economy will likely show solid growth for the summer quarter.
Retail sales rose 1% to $38.2 billion during the month, Statistics Canada reported Tuesday, with sales growth at most store types.
It was the fifth increase in six months and also reflected a better-than-expected back to school shopping season.
The gains were powered by motor vehicle and parts dealers which were up 2.8%, while sales at new-car dealers were up 3.7%, accounting for most of the gain.
Capital Economics analyst David Madani said the gains came as further evidence that most households were undaunted by financial market volatility and declines on the stock markets last quarter.
Most markets around the world took hits in August and September as investors worried about the European debt crisis and economic slowdowns in the United States and China.
“Despite the drop in consumer confidence in October, preliminary data showing higher new auto sales point to further consumer spending growth this quarter,” Madani added.
“Considering the supply-related disruptions to Honda and Toyota sales earlier this year, it is possible that new auto sales will continue to improve this month.”
Excluding gas and motor vehicle sales, retail sales were up 0.4%.
Statistics Canada said sales by volume rose 0.6%. Nine of 11 subsectors reported gains, representing 90% of retail sales.
“Autos were a big part of the story… however, electronics, building materials, gasoline station, clothing stores and sporting goods stores also posted hefty gains – suggesting that the back-to-school season in Canada did a bit better than most analysts had been expecting,” wrote economist Emanuella Enenajor of CIBC World Markets.
“The 0.6% lift to volumes suggests that third-quarter GDP could come in around 3.2 per cent or so, aided by accelerating consumption, but mostly due to a surge in exports.”
General merchandise store sales advanced 0.7%, the eighth increase in nine months, while sales at clothing and clothing accessories stores rose one per cent.
Electronics and appliance stores reported a sales gain of 1.2%, following three monthly decreases.
Health and personal-care store sales declined 0.4% in September.
Retail sales increased in all provinces in September. Nova Scotia (up 2.4%) reported the largest percentage sales increase.
