Canada Retail Sales Rose 0.4% in July and Beat June Estimate

Canadian retail sales rose by more than expected in June, with data also pointing to a rebound in activity in July.

(Bloomberg) — Canadian retail sales rose by more than expected in June, with data also pointing to a rebound in activity in July.

Receipts for retailers jumped 0.4% last month, the strongest pace since April, according to an advance estimate from Statistics Canada released Wednesday. That followed a 0.1% increase a month earlier, which beat the median estimate for a flat reading in a Bloomberg survey.

In volume terms, retail sales edged down 0.2% in June.

Only three of nine subsectors saw higher sales in that month: motor vehicle and parts dealers, sporting goods stores and gas stations. Excluding autos, retail sales slid 0.8% versus expectations of a 0.3% gain.

The report shows Canadians continue to spend on big-ticket items like cars, which may be the result of pent-up demand and delays in shipments during the pandemic. Although sales for sporting goods were still up, spending on other rate-sensitive products, including furniture, contracted in June.

Read More: Softer Canada Jobs Data Points to Lower 2024 Rates, CIBC Says

Strength in household spending earlier this year prompted the Bank of Canada to resume raising interest rates, with increases to borrowing costs in June and July after a five-month pause. With goods consumption and the overall economy showing some signs of a slowdown, policymakers may have some room to step to the sidelines again.

The second-quarter growth number is due on Sept. 1. Preliminary data suggest the economy grew at an annualized pace of 1%, weaker than the 3.1% growth in the first three months of 2023.

Retail sales were unchanged in the second quarter, while in volume terms sales declined 0.8%.

Regionally, sales rose in four provinces in June, led by Ontario, where sales were up on the strength of higher sales of vehicles and parts.

The statistics agency didn’t provide details on the July estimate, which was based on responses from 45% of companies surveyed.

–With assistance from Erik Hertzberg.

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