Market Wire - Canadian Headline Retail Sales Flatline, But Underlying Momentum Remains Strong

Karl Schamotta, Chief Market Strategist: karl.schamotta@corpay.com

Canadian consumer spending increased by far less than expected in March, but “core” sales climbed rapidly, and an early estimate for April suggested that underlying domestic demand remained incredibly robust. Data released by Statistics Canada this morning showed retail sales remaining essentially stable on a month-over-month basis in March, missing consensus expectations for a 1.4 percent gain. Sales rose just 0.1 percent in February.

Sales at auto and parts dealers tumbled 6.4 percent, while gas station receipts jumped 7.4 percent. With those categories excluded, “core” sales climbed 1.5 percent, and an advance estimate showed overall receipts rising 0.8 percent in April.

The loonie ticked slightly lower on the print, but remains up on the week.

Separately, the number of Americans filing new claims for unemployment benefits dropped to 210,000 last week, 8,000 less than in the prior week. Data released by the Department of Labor this morning showed the 4-week moving average – used to smooth out weekly volatility and discern longer-term trends – falling to 183,927, a decrease of -14,534 from the previous week's revised average.

US 10-year yields and the dollar remain below levels that prevailed ahead of yesterday’s Federal Reserve minutes. The record showed officials were largely in agreement on raising rates in 50 basis point increments at the next two meetings, but are less confident about conditions in the early autumn - a stance that could signal a pause in the central bank’s hiking cycle.