OTTAWA (Bloomberg) -- Canadian retail sales in September advanced the most in eight months as new car dealers recorded an increase for the first time since January.

Total sales rose 1.1% to C$36.3b ($29.6b), Statistics Canada said Tuesday in Ottawa, after a 0.3% drop the month before. The increase exceeded economists’ median forecast of a 0.4% gain.
While the report shows consumers stepped up spending in September, financial turmoil and projected recessions in Canada and the U.S. may prompt Canadians to curb purchases and save up. The Bank of Canada, which lowered interest rates by three- quarters of a percentage point last month, said at the time that domestic demand will be “subdued” until the end of 2009 with “reduced growth” in consumer spending.
The central bank will cut its benchmark interest rate by a quarter of a point to 2% at its Dec. 9 meeting, according to the median of 11 economists surveyed by Bloomberg.
Canada’s currency, dubbed the loonie for the aquatic bird on the one-dollar coin, gained 0.5% to C$1.2259 per U.S. dollar in Toronto from C$1.2320 Monday. One Canadian dollar buys 81.58 U.S. cents.
In the U.S., Canada’s biggest export marker, the economy shrank in the third quarter as consumer spending plunged by the most in almost three decades, according to revised figures from the Commerce Department Tuesday in Washington. Gross domestic product contracted at a 0.5% annual pace from July through September, the most since the 2001 recession.