• Retail sales was held flat by lower vehicles sales & weaker energy prices
  • Absent price effects, volume increased by 0.4%

Today’s report had few surprises. As expected, headline sales were weighed down by a decline in gasoline station sales on account of lower energy prices. Controlling for price changes, sale volumes increased 0.4% June, bouncing back after a drop in May that was probably depressed by weather-related factors. Sale volumes still only increased 0.3% (annualized) in Q2 as a whole but the June increase leaves a stronger hand off for Q3. The June gain was boosted in by a partial rebound in food sales after a big May drop as well as a lift from apparel and sporting goods that Statistics Canada credited in part to the Toronto Raptors championship victory. In all, Statistics Canada reported sales increased in 7 of 11 categories.

Global uncertainty and trade disputes have created legitimate concerns for the industrial sector and look to weigh on overall economic growth. But they have also contributed to a sharp decline in borrowing costs. Coupled with still solid-looking labour markets, signs of rising wage growth, and still-strong consumer sentiment, that suggests retail sales could look a little better over the second half of the year than they did over the first.


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