• Canadian retail sales were up 0.4% (m/m) in July, following a downwardly revised 0.1% decline in June (previously reported as 0%). The release came close to consensus expectations for a 0.6% increase.
  • After stripping out price effects, the picture was subdued, with volumes effectively flat on the month.
  • July saw sales increase in 6 of the 11 major categories. Autos provided a significant lift, with sales at motor vehicle and parts dealers up an impressive 1.5%, primarily driven by new vehicle sales (+2.4%). Sales at health and personal care stores (+2.6%) and food and beverage stores (+0.6%) were also strong. Meanwhile, lower sales at building material and gardening equipment stores (-3.2%), clothing stores (-2%), and general merchandise stores (-1%) provided some offset.
  • Excluding the volatile autos and gasoline categories, sales were down 0.1%.
  • Regionally, 6 of the 10 provinces saw retail sales increase in July. Leading the way were Ontario (+1.2%) and the Prairies (Alberta at +0.7%, Saskatchewan at +0.9%, and Manitoba at +0.6%). Sales were weak in Quebec (-0.4%) and British Columbia (-0.8%).

Key Implications

  • The decent uptick in July’s retail sales masks weaker details in the report – notably the flat volumes print and the subdued performance seen in core retail sales (excluding autos and gasoline stations). The release leaves our Q3 GDP unchanged tracking at 1.1% (annualized). Overall, Canadian retail sales (especially volumes) have continued to move sideways for more than a year now, and July’s report doesn’t change that narrative much.
  • As noted in our latest Quarterly Economic Forecast, a divergence remains between household spending on the one hand, and healthy labour markets and incomes on the other. The recent uptick in Canadian housing markets and declining borrowing rates may provide a modest lift to spending on housing-related items (furniture, home and building material equipment) and durables going forward. But, elevated household debt levels and high debt-services ratios (see commentary) will act as a moderating influence. We don’t expect too notable an acceleration in consumer spending.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.