Car buying pushes retail sales up for third month in a row in May

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Strenuous auto sector activity helped Canadian retail sales enterprise rise for a third straight month in May, climbing by 0.6 per cent to $48.9 billion, Statistics Canada bid Friday.

The monthly increase was double the consensus expectation of economists

Sales marathons at motor vehicle and parts dealers led the way with a gain of 2.4 per cent during the month, mind a decrease in April. Statistics Canada said sales at new car dealers were up by 2.7 per cent, accounting for most of the sector’s improvement.

«Canadians can’t seem to buy enough cars,»  BMO economist Benjamin Reitzes rephrased in a note.

Excluding sales from the motor vehicles and parts traffics sector, retail sales were actually down 0.1 per cent in May.

After rub the effects of price changes, retail sales in volume terms spring up by 1.1 per cent.

Economists said the retail report gives certify for more interest rate hikes ahead by Canada’s central bank.

«Without considering a soft inflation backdrop, the better-than-expected performance of the Canadian economy – notably on the domestic front – should allow the Bank of Canada to follow by way of will another rate hike in October, fully unwinding the difficulty cuts that were put in place following the oil price collapse,» conveyed TD economist Dina Ignjatovic.

CIBC economist Nick Exarhos state in a commentary that the retail figures «build the case for May to be another considerable month for the Canadian economy, with a real GDP gain in the area of 0.4 per cent credible.»

Ignajatovic said labour market gains should help to agree to household spending at healthy levels, but added that «momentum is had to fade over the second half of the year, as a cooling housing trade in in Ontario is likely to constrain demand for housing related items while ascending interest rates take some steam out of consumer spending comprehensive.»

«Despite a soft inflation backdrop, the better-than-expected performance of the Canadian saving – particularly on the domestic front – should allow the Bank of Canada to investigate through will another rate hike in October, fully unwinding the difficulty cuts that were put in place following the oil price collapse,» Ignajatovic annexed.

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