OTTAWA - Retail sales rose 0.8 per cent in August to $34.5 billion, thanks to higher sales at gasoline stations and new car dealers, which helped offset July's decline.
Statistics Canada reported Thursday that the largest increase came in the automotive sector, which rose 2.4 per cent overall, with gasoline stations leading the way at 3.9 per cent.
"When the labour market fares well, good things tend to happen to the rest of the Canadian economy," said CIBC economist Krishen Rangasamy.
"The strong retail numbers will add to the growing evidence that the domestic side of the Canadian economy is recovering," Rangasamy wrote in a note.
Without the bulk of the increase from gasoline stations and new car deals, sales were relatively flat compared with July, increasingly 0.4 per cent by volume.
Overall, retail sales this past August were 3.7 per cent lower than a year earlier.
Retail sales rose in eight provinces, with New Brunswick posting the largest increase at 3.2 per cent.
Deputy chief economist Douglas Porter of BMO Capital Markets said the Canadian consumer continues to gradually "grind out" a modest recovery.
Canadian consumers have at least two aces up their sleeves compared with their U.S. counterparts, enjoying at least modest job growth and easier credit availability.
"Accordingly, Canadian consumer confidence has rebounded much more forcefully, and the outlook for spending is much rosier than for the deeply subdued U.S. consumer," Porter said in a research note.
TD Economics said most of the Atlantic provinces along with Manitoba are furthest along in seeing retail sales recover to previous peaks.
Alberta and British and Columbia have the furthest to go with sales respectively still 12 per cent and eight per cent lower than prior peaks, TD said.
They will likely have to wait until the second or third quarter of 2010 before revisiting previous retail sales highs, he said.
