CIBC Research discusses its reaction to today's US and Canadian retail sales reports for the month of March.
"Americans opened their wallets by more than expected in March, as retail sales grew by 1.6%. That was bolstered by a rise in receipts at the pump, reflecting higher gas prices, along with a rise in auto sales. The control group grew by an impressive 1% following a disappointing previous month. That leaves the annualized three month average of core sales at a decent 2.6%, helped by March's rise in sales, which is indicative of a healthy rebound in consumption. While we still expect real consumer spending to decelerate over the remainder of the year, rising wages and a strong labor market should provide ammunition for continued spending," CIBC notes.
"Canadians have been reluctant shoppers of late, but were willing to brave cold February weather to finally go out and spend more, even if most of that was to cover higher prices rather than actually load up on goods. Sales rose a headline grabbing 0.8%, twice expectations, and were up 0.6% excluding autos. But the underlying story is not nearly as positive. For one, in real terms sales were up a mediocre 0.2%, and still at lower levels than were reached in the first half of 2018 (although up 1.7% from the prior February). As well, ex auto sales were revised down for January, to -0.6% (wiping out a 0.1% gain previously reported) with the headline revised down a tick to -0.4%. In sum, while this was "better than expected" and will help offset weaker factory activity in terms of February GDP, it wasn't really all that strong a signal for consumer activity," CIBC adds.