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Canada economy quickens, upending forecasts for tepid growth

Nov. 22, 2022 Updated Tue., Nov. 22, 2022 at 8:14 p.m.

People shop at a Walmart store in the Uptown Mall on July 26 in Victoria, B.C.  (James MacDonald/Bloomberg)
People shop at a Walmart store in the Uptown Mall on July 26 in Victoria, B.C. (James MacDonald/Bloomberg)
By Randy Thanthong-Knight Bloomberg

Bloomberg

Canada’s economy recorded a flurry of activity last month, according to preliminary data, potentially casting doubt over the extent of an expected slowdown in the fourth quarter.

Statistics Canada released advance estimates on Tuesday for retail that showed sales rising 1.5% in October. Separately, the agency said wholesale activity rose 1.3% during the month, while factory sales were up 2%. The agency provided few details, however, and it’s not clear how much rising prices were driving the gains.

Reports come with most economists anticipating a sharp slowdown in growth. But Wednesday’s data suggest business activity and household spending remain resilient in the face of high inflation and rising interest rates.

“Markets will be waiting to hear from the Bank of Canada senior deputy governor today and the governor tomorrow to understand how their thinking has evolved with inflation cooling down but activity still solid,” Tiago Figueiredo, an economist at Desjardins Securities, said in a report to investors.

The Canadian dollar was little changed on the report, maintaining intraday gains with the currency up 0.4% at 8:51 a.m. in Toronto trading.

The 1.5% increase in retail sales would be the largest since May and followed a small drop in retail sales of 0.5% in September. A big part of the rebound last month may reflect rising gasoline prices, though the statistics agency didn’t provide details of what drove the October number. Retail sales likely benefited from a 9.2% rise in prices for gasoline.

The September decline matched the median estimate in a Bloomberg survey. Sales dropped in 7 of the 11 subsectors, representing 74.9% of retail trade. It was led by lower sales at gasoline stations and food and beverage stores.

The agency said the rise in manufacturing sales last month was led by food, chemical and petroleum. The pickup in sales at wholesalers was led by building material and supplies.

Retail sales were down 1% in the third quarter, or 1.4% in volume terms, Statistics Canada said.

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