OTTAWA — Statistics Canada reported Wednesday that retail sales grew by a brisk 0.6 per cent to $23.8 billion in January from December, with consumers snapping up new appliances, autos, furniture and clothing.
Encouraged by tax cuts and the prospect of lower interest rates, consumers gave a jump-start to the new year.
Canadians pried open their wallets in January, giving retailers a much-needed shot in the arm in what analysts fear could be one last big spurt of consumer spending before the economy turns sour.
However, analysts warn the pace of purchasing will likely slow this year as the economy weakens in the wake of recessionary pressures in the United States and Japan, higher energy costs and layoffs in the manufacturing sector.
“The question on everyone’s lips is, is this the last big hurrah before the projected slowdown?” said a report by the J.C. Williams Group, a Toronto-based retail analyst.
Despite the good retail spending news, the Canadian dollar sank to its second-lowest point on record Wednesday and the stock markets struggled as bearish trader sentiment continued.
The loonie closed at 63.46 cents US, down 0.41 from Tuesday’s close. That’s the dollar’s lowest close since the all-time record of 63.31 cents US, reached Aug. 27, 1998, during the Asian financial crisis.
Despite the gloomy news on the loonie and the looming slowdown, some analysts seized on the retail report and a StatsCan report on inflation as rays of good news in what has been a flurry of negative economic data.
“The retail numbers were somewhat refreshing — it has been tough being an optimist lately,“said Craig Wright, chief economist with Royal Bank.
