* October sales up 0.7 pct; markets expected 0.2 pct rise
* Sales at motor vehicle dealers, gas stations fuel rise
By David Ljunggren
OTTAWA, Dec 20 Canada retail sales in October
jumped by a stronger-than-expected 0.7 percent from September to
hit a record, but analysts said the figures were less impressive
than they seemed and would not do much to boost recent sluggish
Statistics Canada said on Thursday that retail sales in
October reached C$39.45 billion ($39.85 billion), the third
consecutive all-time high. Sales have now grown for four
But analysts, who had expected a month-over-month increase
of 0.2 percent, noted that in volume terms sales were only up by
This, they predicted, would not have a major effect on
October gross domestic product data due out on Friday. The
consensus forecast is for a 0.1 percent increase.
"It's volume that matters to GDP such that while the
(October) gain was positive, it will translate into GDP much
less powerfully than the headline would suggest," Scotiabank
economists Derek Holt and Dov Zigler said in a note to clients.
Canada's economy grew at a sluggish 0.6 percent pace,
annualized, in the third quarter. Although the Bank of Canada is
predicting fourth-quarter growth of 2.5 percent, annualized,
that looks to be too optimistic given exporters' problems with
weak markets and the strong Canadian dollar.
The retail sales data helped push the Canadian dollar
up to a session high of C$0.9875 versus the U.S.
dollar, or $1.0127, compared with C$0.9890, or $1.0111, before
the release. It later slipped back and at 10:05 a.m. (1505 GMT)
was trading at C$0.9893, or $1.0111.
In October, gains were reported in eight of 11 subsectors,
representing 92 percent of retail trade.
On annualized terms, fourth-quarter retail sales growth so
far is an anemic 0.6 percent, compared with the 2.2 percent rise
recorded in the third quarter.
Benjamin Reitzes, senior economist at BMO Capital Markets,
also noted sales growth from October 2011 was just 1.7 percent,
matching June's figure and the second-lowest since Canada
emerged from recession.
"Underlying sales continue to slow, which has been the story
for much of the past year, as modest job growth, warnings about
over-indebtedness and the allure of cross-border shopping weigh
on retailers," he said in a note to clients.
Sales at motor vehicles and parts dealers grew by 1.6
percent on the back of a 1.6 percent increase in sales by new
car dealers, who posted a fifth consecutive monthly gain. Sales
at gasoline stations also advanced by 1.6 percent.
Food and beverage store sales were up by 0.5 percent.
Furniture and home furnishings store sales fell by 2.0 percent
while electronics and appliance stores recorded a decline of 1.6