Canadian retail sales cool; rate hike still expected

Canadian retail sales cooled in June after three consecutive months of solid growth, but analysts said the economy's overall tone was still strong enough to warrant another interest rate hike this year. Sales edged up 0.1 percent in June from May, Statistics Canada said on Tuesday, less than the 0.3 percent advance predicted by analysts in a Reuters poll.
The strength of the economy this year helped spur the Bank of Canada last month to raise rates for the first time in nearly seven years. Traders expect another increase in October. Analysts noted that retail trade in volume terms rose by 0.5 percent in June and said the second quarter had ended strongly. "We maintain a strong view that the Bank (of Canada) will hike in October," said Fred Demers and Mark McCormick of TD Securities. Retail sales rose in six of 11 subsectors, representing 38 percent of total retail trade, to hit a record C$48.99 billion ($39.09 billion).