Surging auto sales, fuelled by employee-pricing discounts, helped kick retail sales into overdrive in July, as spendthrift Canadians eagerly forked out a record $31.3 billion during the month.
That sum, reported by Statistics Canada, includes smaller increases for food, furniture and drugstores, helping push total retail sales up 1.5 per cent from June.
Excluding sales of vehicles and parts, the month's sales growth was a more modest but still solid 0.7 per cent.
"This makes a mockery of those who claimed at the start of the year that the Canadian consumer was 'tapped out,' '' Sherry Cooper, chief economist with BMO Nesbitt Burns, observed in a commentary.
"The Canadian consumer had plenty of oomph heading into the energy price storm late in the summer.'' Sales in the auto sector jumped 3.6 per cent month-over-month, as employee-discount promotions by General Motors, Ford and Daimler-Chrysler helped rev up showroom traffic.
This put new-car sales 11.4 per cent above July 2004, the largest year-over-year gain in almost three years, it said.
Higher gasoline prices were the only significant price change affecting retail trade in July, the agency said, noting that service stations have been ringing up sales increases since spring 2003.
"While core sales were middle of the road, that's not a bad performance given the heavy headwinds of sky-high gasoline prices,'' Cooper wrote.
Supermarkets also gobbled up gains resulting in a 0.9-per-cent increase in the country's food and beverage sector, even as beer, wine and liquor sales sagged in Central Canada.
Consumers shelled out 0.6 per cent more for health and beauty products, while spending on home furnishings and electronics was up 0.4 per cent.
Total retail sales in July were 7.9 per cent above year-earlier levels, the report said, noting that consumer spending has been particularly strong since the start of 2005.
Despite the July strength, August's spike in energy prices coupled with a negative household savings rate could present future challenges, commented David Wolf, head of Canadian economics at Merrill Lynch.
