- Flash estimate had been -0.5% m/m
- Prior was +1.4%
- Ex autos -0.6% vs -0.4% expected
- Prior ex autos +1.7%
- Ex autos and gas -1.1% vs +0.7% prior
- December advance flash estimate +0.5% m/m
- November sales down in 6 of 11 subsectors
- Motor vehicle and parts dealers +1.4%
The headline here and the December flash estimate are both surprisingly strong. That's going to make it tough on the Bank of Canada next week because there are clear indications that the economy is slowing and that housing is falling. One big caveat is the 1.1% decline in ex-autos and gas, which is the largest decline in 11 months led by a 1.1% decline and food and beverage stores (an economically-sensitive category).
The market is pricing in a 65% chance of a 25 bps hike next week with a 35% chance of no change. I was leaning to the dovish side because of the BOC business outlook survey but it's going to take some real courage for Macklem to hold. What could be happening here is that badly-lagged auto sales are finally being completed and that's sending a misleading signal.
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