Canada Retail Sales: A rebound in June, disappointment in July - CIBC

Data released on Friday showed retail sales rebounded as expected in June and preliminary numbers point to a decline in July. Analysts at CIBC, explained that even with the slight retreat, retail sales were still well-above their pre-Covid levels in July.

Key Quotes: 

“There's nothing like some retail therapy to cure the post-lockdown blues. Retail sales staged a major comeback in June as restrictions were eased across the country. While Canadians seem to have taken a bit of a breather in terms of goods purchases in July, that's likely only because they were out spending more dollars on services. And, even with the slight retreat, retail sales were still well-above their pre-Covid levels in July.”

“Retail sales advanced 4.2% in June, in line with the lofty expectations for the month. Gains were relatively broad based with 8 of 11 subsectors rising. That said, particular strength was seen in clothing store receipts, which rose a whopping 49% in June.”

“Statistics Canada's flash estimate for July suggested a somewhat disappointing 1.7% retreat in sales. We're hoping that just meant that Canadians were spending more money on hard-hit services that became available again. Indeed, it's likely that Canadians probably started replacing some goods purchases with services during the month.”

“At this point, we're not too concerned with the slight pullback in retail sales in July, as it's likely just a by-product of households spending more on services again. Overall, with the return of those aforementioned services, the third quarter looks like it will be a barnburner for the economy. That said, we're now holding our breath for the fourth quarter, with the beginning of a fourth wave seemingly here.”