Canada: Consumer expenditures surged in May – NFB
Data released in Canada on Friday showed retail sales rose 2.2% in May surpassing expectations of a 1.6% gain. Analysts at the National Bank of Canada point out sales were pushed up at gasoline stations and motor vehicle/parts dealers. They consider a strong labor market will compensate higher prices and rising interest rates.
Key Quotes:
“Consumer expenditures on goods came out better than expected although the prior month observed a small downward revision. The May print was pushed up by sales at gasoline stations and motor vehicle/parts dealers.”
“The remainder of the retail sales report was not too shabby as witnessed by core retail sales (ex. autos/gas) which increased 0.6% in May, a fifth consecutive monthly increase. The national diffusion of retail sales was also a bright spot of the report as all provinces reported gains in the month.”
“There was some optimism to be found by the increase in volume retail sales which rose 0.4% in the month. Including the rise in the previous month, real retail spending increased 2.1% annualized in the second quarter of the year assuming growth is flat in June. The Statistics Canada preliminary estimate for June suggests a 0.3% increase in nominal sales.”
“While gas receipts should support nominal retail sales with rising gasoline prices in June, there could be a reduction in spending in other sectors as consumers deal with higher prices and rising interest rates. Hopefully these headwinds are compensated by a strong labour market and a still high savings rate.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
