Canada: Weakness in consumer spending continues – RBC

Nathan Janzen, the senior economist at the Royal Bank of Canada (RBC) notes that the larger-than-expected 1.2% drop in sales in October caps off a month of broadly soft economic data reports following earlier-reported declines in October wholesale and manufacturing sale volumes.

• "The numbers will keep concerns alive that the domestic Canadian economic growth backdrop has lost its footing somewhat at the end of the year, particularly after an unusually bad looking November employment report.
• To be sure, all of these monthly reports are volatile, perhaps the employment numbers most of all. The retail numbers in particular still look oddly soft given what has been an unspectacular but still decent household income backdrop.
• Even in that ugly November employment report, strong wage growth meant that household income growth still looked okay. And the external growth backdrop has begun to look a little less scary with US/China trade tensions easing.
• Still, Q4 GDP growth now looks like it's tracking firmly below the Bank of Canada's call for a 1.3% increase (and our own 1.4% call), and economic data releases, particularly the next Canadian labour market report, will be watched just that much more closely for confirmation that soft October/November data to-date has been more monthly volatility than new trend."