Canada retail sales up 3.2% in January, seen falling 0.5% in February

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A woman carries shopping bags while walking past a window display outside a retail store in Ottawa, Ontario, Canada, July 21, 2017. REUTERS/Chris Wattie

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OTTAWA, March 18 (Reuters) - Canadian retail sales bounced back in January, beating expectations, as shoppers ventured out to car dealerships and home improvement shops, official data showed Friday, though February retail sales likely fell.

Retail sales increased 3.2% to C$58.94 billion ($46.7 billion) in January, led by higher sales of motor vehicles and parts, Statistics Canada said. Analysts had, on average, forecast a gain of 2.4%.

February retail sales most likely fell 0.5%, Statscan said in a preliminary estimate.

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Sales increased in nine of 11 subsectors in January, representing 85.5% of retail trade. In volume terms, retail sales were up 2.9%.

"It was a happy new year for Canadian retailers in January, as Canadians offset the misery of renewed pandemic restrictions by doing a lot of shopping," said Avery Shenfeld, chief economist at CIBC Capital Markets, in a note.

The expected decline in February was based on responses from 36.6% of companies surveyed, Statscan said. The average final response rate for the survey over the previous 12 months has been 89.9%.

But a February drop in retail sales is unlikely to move the Bank of Canada off its current path of multiple rate hikes, said economists.

"Markets won't be that sensitive to these monthly growth indicators, since its going to take more than a bump in the road to alter the Bank of Canada's trajectory for now," said Shenfeld.

The Canadian dollar was trading nearly unchanged at 1.2631 to the greenback, or 79.17 U.S. cents.

($1 = 1.2630 Canadian dollars)

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Reporting by Julie Gordon in Ottawa; Additional reporting by Fergal Smith in Toronto; Editing by Jan Harvey

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