TD Securities analysts project that Canadian Retail Sales will increase by 0.7% month-on-month in February, which is slightly below the market consensus of a 0.9% rise [1]. The analysts attribute this expected growth to stronger auto sales and higher gasoline prices, which are anticipated to support both the headline and ex-autos retail sales measures [1]. Specifically, new vehicle sales, while still below Q3 levels, have recovered some ground during January and February [1].
For the ex-autos measure, TD Securities forecasts a 0.4% month-on-month increase, compared to the market expectation of 0.8% [1]. The main driver for this more modest gain is higher gasoline prices [1]. Despite a 1.5% month-on-month decline in hours worked across trade services, which was highlighted as a weak spot in the February jobs report, household goods consumption is still expected to rebound sharply in the first quarter [1].
The analysts note that the contribution from higher gasoline prices will likely result in a more modest increase in retail sales volumes, but this should still be sufficient to keep household goods consumption on track for a significant recovery in Q1 [1].
CONCLUSION
TD Securities anticipates a moderate rise in Canadian Retail Sales for February, led by gains in auto sales and gasoline prices, though their forecast is slightly below market consensus. Despite some weakness in trade services, the outlook for household goods consumption remains positive, suggesting a potential rebound in Q1.