New car purchases boost retail sales, but economists warn of Omicron pullback

Sales at motor vehicle and parts dealers were up 2.2 per cent, led by a 2.8 per cent jump in new car sales, Statistics Canada said.

Canadian retail sales were up 1.6 per cent to $57.6 billion in October as new car sales rebounded after two consecutive months of declines.

Statistics Canada said Friday the effect of the semiconductor chip shortage on the supply of motor vehicles was less pronounced in October than in previous months.

Sales at motor vehicle and parts dealers were up 2.2 per cent, led by a 2.8 per cent jump in new car sales, the agency said.

Statistics Canada also said its preliminary estimate for November pointed to an increase in retail sales of 1.2 per cent for the month, but it cautioned the figure would be revised.

“Canadian trade was moving into the fast lane in October and November, before Omicron likely applied the brakes in December,” Andrew Grantham, a senior economist with CIBC Capital Markets, said in a client note.

The 1.6 per cent increase in retail sales in October beat estimates of one per cent, he noted, adding that Statistics Canada’s early estimate for November suggests retail and wholesale sales saw further impressive gains last month.

“Were it not for the rise of Omicron and retightening of some restrictions across the country, we would probably be having to upgrade our Q4 GDP forecast even further,” Grantham said in the CIBC Economic Flash. “As it is, something around 4.5 per cent may still be appropriate factoring in a modest December pullback.”

Meanwhile, overall core retail sales _ which exclude gasoline stations and motor vehicle and parts dealers – increased 1.5 per cent, the agency said.