Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Retail sales data is arguably the most important for the Canadian economy as it will provide the initial indicator that higher interest rates are starting to bite consumers. The most recent results announced Wednesday were much weaker than expected as CIBC economist Katherine Judge reports,
“Canadian consumers ended the second quarter on a cautious note, and unlike their American cousins, don’t seem to be rushing to the stores at the start of Q3. Retail sales rose by only 0.1% in June, and that modest increase was entirely driven by autos, some of which might have been ordered months ago, as non-auto sales were down by 0.8%. That compared to the consensus expectation of 0.0% and 0.3% for total and ex. auto sales, respectively.
“During the last 30 years, meanwhile, globalization has prompted many businesses to shift investment from their home to cheaper overseas locations. As a result, the net borrowings of US nonfinancial corporations, which averaged 3.44 per cent of GDP from 1970 to 1985, have dropped to an average of just 0.74 per cent of GDP since then.
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