Enhance from Canadian shoppers will not final – CIBC

CIBC highlights a blended image in right this moment’s Canadian retail gross sales report however emphasizes that any power will not prolong into 2024.

November Canadian retail sales fell 0.2% in November in comparison with 0.0% anticipated with gross sales ex-autos and gasoline down 0.6% following a 1.2% decline. The excellent news was that advance December gross sales have been up 0.8%.

CIBC emphasizes that it is inhabitants development in Canada driving gross sales, not client power.

“Spending nonetheless seems worse in per-capita phrases,
because it sat 1.0% under year-ago ranges as of November,” economist Katherine Judge writes.

She notes that the weak point in November got here from key discretionary areas, together with on-line buying and
common merchandise shops, together with grocery shops. She additionally notes the drag from housing and the tailwind from autos.

“Gross sales in classes tied to housing market exercise, specifically furnishings and constructing supplies, confirmed modest development in
month-to-month quantity phrases, however are down by 4.4% and 1.1% in y/y phrases. Provide chain normalization and the impression on
the auto business has been a theme for the yr, and that was obvious within the November information, with gross sales volumes up
by 0.3% m/m and 4.2% y/y.”

Importantly, she sees the strength from Q4 retail sales reversing early in 2024.

“After client spending stagnated within the third quarter, it seems to have been a constructive
development contributor within the fourth quarter. We do not count on the momentum to final, nonetheless, as survey proof reveals that
shoppers have gotten more and more anxious about job prospects and mortgage renewals, which can weigh on spending
in early 2024.”

USD/CAD is down 22 pips to 1.3465 right this moment. I spoke with Reuters concerning the loonie yesterday.