Canadian consumers slow their spending as rates bite

BLOOMBERG

Canadian consumers likely slowed down their spending in November after splurging the previous month, as high interest rates restrict household budgets.
Receipts for retailers were flat last month, according to an advance estimate from Statistics Canada released.
That followed a 0.7% increase a month earlier, slightly below a median estimate of 0.8% in a Bloomberg survey of economists. Still, retailers had a strong month in October with sales up in seven of nine sub-sectors, led by a 1.1% gain at car and parts dealers.
Excluding autos, retail sales rose 0.6%, versus expectations for an increase of 0.5%. In volume terms, retail sales grew 1.4%.
Yields on two-year Canadian government bonds fell about five basis points after the release to 3.86% in Ottawa. The Canadian dollar dipped about 0.3% to C$1.33 per US dollar.
General merchandise retailers were the second-highest upside contributor to retail sales in October with a 2% gain, while health and personal care sales were up 1.5% and clothing sales rose 2.4%. On the downside, sales at gasoline stations and fuel vendors decreased 3.1%.
“Retail sales were solid in October, with the details even firmer than the headline,” said Shelly Kaushik, an economist with Bank of Montreal, in a report to investors. “However, indicators of weakness for November suggest consumer spending could slow meaningfully in the rest of the fourth quarter.”
The Bank of Canada held its benchmark overnight rate at 5% earlier this month. The Canadian economy has shown signs of stagnation, and in a separate release, Statistics Canada said that payroll employment decreased by 44,600 in October, offsetting gains made in September and following little variation in July and August.