Canada retail sales will likely rebound in Q3

Canadian retail sales likely rose sharply in August after a solid July gain, indicating a strong rebound after two consecutive quarters of shrinking sales.

 

August’s 0.5% rise, based on an advance estimate from Statistics Canada released Friday, is just the third monthly sales gain this year. That follows a 0.9% boost the previous month, which beat expectations for a 0.6% rise in a Bloomberg survey of economists.

 

Overall, retail sales are tracking a 0.8% rise in the third quarter, assuming flat growth in September. That follows a 0.4% decline in the second quarter and a 0.5% drop in the first quarter — the weakest two consecutive quarters since 2009 outside the pandemic.

 

The report sends a more upbeat signal about the strength of the Canadian economy than the latest gross domestic product data, which pointed to stalling growth in June and July. The data may give central bank officials more confidence that they can tame inflation without steering the economy into a recession.

Sales rose in seven of nine subsectors in July, led by increases at motor vehicles and parts dealers. Despite high volatility this year, car sales have generally been a source of strong receipts the last few years as Canada recovered from the pandemic, bolstered by pent-up demand and a booming population.

 

Excluding autos, receipts rose 0.4% in July, narrowly beating expectations for a 0.3% rise.

 

In volume terms, sales rose 1%.

 

Core retail sales, which exclude gas stations and car dealers, rose 0.6%

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August’s preliminary estimate is based on a response rate of 52%. Typically, 89% of companies respond to the final survey.

 

 

 

This article was first reported by BNN Bloomberg