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Nov 28 2007 10:27AM | Permalink | Email this | Comments (0) |
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By Jim Haughey

Canadian consumers continue to be optimistic on the whole, despite a slight dip in retail sales in September (after a healthy rise in August). This optimism should bode well for Canadian retailers during these last weeks before the holidays; however, Canadian consumers are also frustrated by the slow response by retailers to the stronger Canadian dollar.

Many Canadian shoppers are delaying their holiday shopping, in hope that the retailers still have more price reductions to come. If the retailers fail to meet consumer price expectations, the season should still be a healthy one, thanks to a booming Canadian economy, but it may not be the banner year it could have been.

(For more details about this week’s retail sales and consumer price index announcements please see the summaries below.)

Of course, retail sales and consumer confidence are closely tied to employment. CanaData chief economist Alex Carrick writes that month-to-month employment growth in Canada (+63,000 jobs) in October 2007 was nearly four times the long-term average (+17,000). In the U.S., the latest job growth figure (+166,000) was an improvement versus the preceding four months, but was only slightly above the long-term average (+140,000).

Canadian retail trade numbers creep lower
Canadian retail sales crept down 0.2% in September, to an estimated $34.4 billion. Since 2004, retail sales have generally been rising at a brisk pace; however, September’s figures marks the third decrease in overall sales since May 2007.

The overall trend is positive though. Since 5% is usually considered a good benchmark figure for retails sales in both Canada and the U.S., the seasonally adjusted retail sales increase of 5.4% in September indicates a healthy rate of growth.

Canadian Consumer Price Index rises in October
Consumer prices in Canada rose 2.4% in October compared to the same month in 2006. This year-over-year figure represents a slightly slower rate of growth than the 2.5% year-over-year rate posted in September.

On a month-over-month basis, consumer prices fell by 0.3% in October, chiefly because of lower gasoline prices.

Apart from energy, the all-items index climbed 1.9% in the 12 months preceding October 2007, a slowdown from the 2.1% growth recorded in September.

The Bank of Canada’s core index, used to monitor the inflation target range of 1% to 3%, increased by 1.8% between October 2006 and October 2007.