Canada: Retail sales remain resilient in June, weaker in July

Data released on Friday showed retail sales in June rose surpassing expectations in Canada, although the preliminary data points to a decline in July. Analysts at CIBC continue to see the Bank of Canada rising rates by 75 basis points at the next meeting in September.

Key Quotes:

“With inflation running at a heady pace, nominal retail sales were once again stronger than expected in June, with headline sales growing 1.1%, much above the consensus expectations for a 0.4% gain. May was also revised up a tick. The advance largely reflected growth in gasoline prices, and the increase of 0.2% in volume terms looks far less impressive, though the positive growth is better than anticipated.”

“The advance estimate for July suggests a significant pull back of 2%, likely largely due to the drop in gasoline prices, a sign that if inflation does abate, Canadians might be looking to pocket some of that money rather than accelerate their purchase volumes. Still, for the second quarter, a healthy job market and return to greater activity outside the home meant that retail sales were up 13.6% quarter-over quarter annualized, or 3.5% in volume terms, providing a key source of support for GDP.”

“Retail sales remain more resilient than would have been expected given high inflation, rising interest rates and a shift to service consumption. With the June data, the second quarter as a whole posted strong growth in volume terms which supports our call for robust consumption growth in the quarter. The advance estimate for a decline in July provides some evidence that the expected shift away from goods consumption might finally materialize more meaningfully. The Bank of Canada should nevertheless remain on track for a 75 bps increase in September.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.