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Economic News

Canada: Rate Hikes to Hold Back Holiday Cheer

December 20, 2022
Randall Bartlett
Senior Director of Canadian Economics

Retail sales rose 1.4% in October, in line with consensus expectations and Statistics Canada’s flash estimate. The advance in the month was entirely due to price gains, with retail sales volumes flat on the month.  With nearly half of Statistics Canada’s survey responses received so far, the flash estimate for November is for a 0.5% contraction. This despite a solid increase in auto sales expected for the second consecutive month. While October retail sales were a bit of a blip, the November number lines up more closely with other indicators that point to fading momentum in the Canadian economy. This should be good news for the Bank of Canada as it means aggressive interest rate hikes are having their desired effect. However, the bigger question is: Will the softening in the economy be enough to keep the Bank on the sidelines in January? As of right now, we think it will be. But given the long delays in Canadian economic data releases, we won’t know definitively until February whether or not the Governor stole Christmas.

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