UPDATE 1-Canada retail sales unexpectedly drop 2.1 pct in December

Fri Feb 22, 2013 8:42am EST

* The December drop was the worst decline since April 2010

* Auto sales plummet, holiday shopping weak

* Retail to combine with other data for soggy Dec GDP

* Retail volume down 1.6 pct

OTTAWA, Feb 22 (Reuters) - Canadian retail sales unexpectedly plunged 2.1 percent in December amid slumping new-car sales and a weak Christmas shopping season, Statistics Canada data said on Friday.

The drop, far larger than the 0.3-percent decline predicted by economists, suggested that already moderated expectations for fourth-quarter growth might be too optimistic. The monthly fall was the greatest since a 2.4-percent decline in April 2010.

Year on year, sales fell 0.7 percent, the worst since October 2009.

Seven of 11 subsectors, representing 58 percent of retail trade, registered declines. Sales by auto and parts dealers dropped by 6.4 percent, pulled lower by a 7.7 percent drop in sales at new car dealers.

Most stores associated with holiday shopping recorded weaker sales, with general merchandise store receipts dropping by 3.7 percent and department store sales falling by 9.6 percent. Sales at electronics and appliance stores, which jumped in November as Apple rolled out its iPad mini, fell by 12.1 percent.

Last month, the Bank of Canada trimmed its forecast for fourth-quarter growth to 1.0 percent from 2.5 percent. December growth is likely to be disappointing given poor manufacturing, wholesale and now, retail trade.

Statscan is due to release data for both December and fourth-quarter gross domestic product on March 1.

In volume terms, used for calculating real GDP moves, retail sales fell 1.6 percent.

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