Retail sales activity fell 0.2 per cent in September, as the loonie reached parity with the U.S. dollar and cross-border shopping increased.
The drop was led by a decline in new car sales, Statistics Canada said Wednesday.
Overall sales were down 0.2 per cent for the month to roughly $34.4 billion. It was the third sales drop in four months. Analysts had expected sales to be flat.
Sales in the automotive sector declined 0.7 per cent in September, primarily due to a 1.3 per cent decrease in sales by new car dealers.
Factoring out sales by dealers of new, used and recreational vehicles and auto parts, retail sales actually showed a slim increase of 0.1 per cent for the month.
Purchases of furniture, home furnishings and electronics stores fell by 2.2 per cent. Statistics Canada said the tumble was mainly due to a 4.2 per cent slide in sales at home electronics and appliance stores — their first decline since April 2006.
The other sectors that were down in September were clothing and accessories stores, which were off by 0.8 per cent, and the miscellaneous retailers group, including sporting goods, music and book retailers, which dropped by 0.2 per cent.
Food and beverage stores, general merchandise stores, pharmacies and personal-care stores, and building and outdoor home supplies stores all reported increases of less than one per cent.
Some analysts said the weaker-than-expected sales report points to a slower holiday season for retailers.
"As the Canadian dollar crossed parity towards the end of September, cross-border shopping and [Canadian dollar] pressure intensified, suggesting that subsequent retail sales reports could be similarly sluggish," said BMO Capital Markets economist Michael Gregory.
"An elevated currency into early 2008 will likely result in the trade sector continuing to act as a drag on the pace of growth," agreed RBC senior economist Dawn Desjardins.
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