Although the Bank of Canada (BoC) would like to see the country's economy transition away from its dependence on debt-burdened consumers, Canadian spending remains surprisingly resilient.
According to Statistics Canada (StatCan), April retail sales grew 1.1 percent month over month, to CAD41.6 billion, nearly double economists' consensus forecast of 0.6 percent.
Total retail turnover was up 5.1 percent year over year. By contrast, US retail sales were up 4.6 percent over that same trailing-year period.
With the March figure revised to a 0.1 percent increase from the previously reported decline of 0.1 percent, that makes April the fourth consecutive month in which retail turnover has risen. US retail sales enjoyed a similar four-month streak from February through May.
StatCan notes that gains were widespread across Canada's retail sector during April, as 10 of 11 subsectors posted increases.
Much of the overall increase was driven by motor vehicle and parts dealers, whose sales grew 2.4 percent, to CAD9.7 billion. In particular, new car sales rose 3.2 percent, to CAD7.9 billion, following flat sales in the two preceding months.
In fact, new car sales, which increased 6.3 percent from a year ago, were one of the biggest contributors to the country's overall sales growth on a year-over-basis. But even when excluding results from the auto subsector, Canada's retail sales still grew 4.8 percent over the past year.
Receipts at food and beverage stores, another key subsector, climbed 0.6 percent, to CAD9.2 billion, for their fifth consecutive month of growth. This latest result was thanks to higher sales at beer, wine and liquor stores, which were up 2.1 percent, to CAD1.7 billion.
And sales at general merchandise stores rose 0.9 percent, to CAD5.2 billion, supported by sales at department stores, which were up 0.5 percent, to CAD2.3 billion, the third increase in t! he past four months.
A significant portion of April's retail rise may be attributable to the return of more pleasant weather after an unusually harsh winter. While retail turnover was still strong in January and February, as revised sales exceeded economists' forecasts, with month-over-month growth of 1.0 percent and 0.7 percent, respectively, March sales increased by just 0.1 percent.
Meanwhile, wholesale trade rose 1.2 percent in April, well above the consensus forecast of 0.5 percent. Coupled with the retail result, these data suggest that Canada's economy got off to a strong start in the second quarter.
Indeed, economists with CIBC World Markets said that April's gross domestic product (GDP) is tracking a tenth of a percentage point ahead of expectations. The current consensus among private-sector economists is for GDP to grow at a 2.2 percent annualized pace during the second quarter, a resurgence following the 1.2 percent annualized pace recorded during the first quarter.
The one caveat as far as sales data go, according to CIBC, is that retail gains may be difficult to sustain without sufficient wage and employment growth. Job gains have averaged just 3,000 per month over the trailing six-month period that ended in May, while higher-paying, better-quality full-time positions have declined by an average of 5,600 per month over that same period.
Nevertheless, these results, along with a stronger-than-expected rise in Canada's consumer price index (CPI), were enough to push the Canadian dollar to a year-to-date high of USD0.933, up 4.9 percent from the four-year low hit in late March.
Of course, the BoC would prefer a lower exchange rate to help boost the country's exports. But as US investors who have suffered from the erosion in the loonie's value over the past year, we'll welcome a temporary enhancement in our gains, while recognizing that Canada's economy, along with our companies, will ultimately benefit from a protracted decline in the curr! ency.