Retail sales pushed higher by auto sector in September

Statistics Canada says retail sales rose 0.6 per cent to $44.4 billion in September, pushed higher by improved sales at motor vehicle and parts dealers.

Excluding the motor vehicle and parts dealers, retail sales were unchanged for the month.

The overall result matched the expectations of economists, according to Thomson Reuters. However, retail sales excluding autos had been expected to rise 0.5 per cent from the previous month.

Statistics Canada says sales were up in seven of the 11 subsectors.

Motor vehicle and parts dealers posted the largest increase in dollar terms as they gained 2.4 per cent, fuelled by a 2.8 per cent gain at new car dealers.

The September increase followed four straight months where retail sales struggled to post solid gains.

"While September's gains were narrowly based, it's nice to finally see a positive reading of more than a tick or two after a lengthy lull for sales," BMO chief economist Douglas Porter said in report. "We don't expect the consumer to lead the expansion in the year ahead, but at the same time we weren't expecting it to drag it lower either; thus, the uptick after a series of soft retail reports is a relief."

Retail sales were up in eight provinces in September with gains in Quebec, Ontario and British Columbia accounting for most of the increase.

"Overall, the pace of retail sales growth over the third quarter is consistent with what is estimated to be a three per cent jump in real GDP,"  TD economists Michael Dolega and Diana Petramala said in a commentary. " More importantly, today's release suggests healthy momentum heading into the fourth quarter. "

TD added that elevated consumer debt levels and gradually rising interest rates are expected to shift consumer spending to a pace below two per cent during 2017.