Canada: Retail sales are on track for a massive increase in Q3 – NFB

Data released on Wednesday showed retail sales rose 0.4% in August in Canada, below expectations. Kyle Dahms, analyst at the National Bank of Canada points out sales reached a new record high and are 1.8% above their February level. 

Key Quotes:

“The August retail sales report came in a bit weaker than expected. The increase was propelled by a minority of categories, but the declines elsewhere were not significant enough to offset the headline number.”

“Spending in August remained decent after having recovered to pre-pandemic levels in July. Indeed, headline sales are now 1.8% above their February level. The August report on retail spending helps affirm our belief that most of the pent-up demand has been absorbed. Despite the slight disappointment in August, retail sales are on track for a massive increase in the third quarter.”

“Including the preliminary result for September, retail spending likely rose over 110% annualized in Q3 after having declined 42% in the second quarter of the year. While this rebound was expected given delayed spending and government assistance measures, it remains to be seen if household spending will be sustained in the fourth quarter (and beyond) given the tapering of support programs and a second wave of COVID cases in many provinces.”