Canadian Retail Sales Continue to Gain Ground
Retail sales continued to rise in May, although by a more moderate 0.4% compared to the 0.6% gain in April. Market expectations had been for growth in May to match the April increase.
The optimism for nominal sales in May had been largely based on rising gasoline prices that pushed sales at service stations up 2.4% in the month. Excluding the effect of all price increases, including gasoline, the volume of retail sales rose a more moderate 0.1% following the 0.4% gain in April.
Most components of retail sales rose in the month, with increases in five of the eight major categories. The strongest increase was in the automotive component (up 1.1%) helped by the price-related strength in service stations, but solid gains were also recorded in building and home supply stores (up 0.7%) and miscellaneous retailers (up 0.4%). The only two components that declined, clothing stores by 0.7% and general merchandise stores by 0.2%, followed robust increases in April of 2.7% and 2.0%, respectively. One component, food and beverage stores, had unchanged sales activity in the month.
The gain in the volume of retail sales in May is encouraging on top of increases in the volume of manufacturing sales (up 0.2%) and wholesale trade (up 0.3%) in May. This augurs well for overall GDP building further on April’s hefty 0.4% increase, with output likely rising 0.1% in May. This is consistent with our forecast that GDP growth will return to the positive column in the second quarter, rising an annualized 1.5% after the 0.3% annualized decline in the first quarter.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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