Canadian retail sales surprisingly strong in June, but July decline looms

0

OTTAWA, Aug 19 (Reuters) – Retail sales in Canada rose 1.1% in June, easily beating forecasts, thanks to more expensive gasoline and higher sales at car dealerships, data shows. from Statistics Canada on Friday, but sales fell in July.

Analysts polled by Reuters had expected retail sales to rise 0.3% in July. Statscan, in a preliminary estimate, said it forecast retail sales fell 0.2% in July.

Much of this July decline is likely due to lower gasoline prices, but also signals growing consumer fatigue and cooling demand following a series of interest rate hikes from the Bank of Canada, economists said.

Join now for FREE unlimited access to Reuters.com

Register

“Canadians have felt the effects of both high inflation and rising interest rates,” Royce Mendes, head of macroeconomic strategy at Desjardins Group, said in a note.

“So it’s no surprise that retailers are starting to see the pace of sales slow.”

The Bank of Canada raised rates by a surprise 100 basis points in July. It should again raise its key rate by at least 50 basis points in September. Read more

The latest TD Consumer Spending Tracker, released separately on Friday, also showed spending stabilizing.

“June spending remained relatively stable and there are signs of an incipient downward trend in July. This could be a harbinger of slowing consumer demand as inflation reduces the purchasing power,” TD economist Ksenia Bushmeneva said in the note.

She added that the downward trend is more apparent when spending data is adjusted for inflation.

The Canadian dollar was trading down 0.3% at 1.2985 to the US dollar, or 77.01 US cents, as the greenback rose against a basket of major currencies.

The July flash estimate was calculated based on a weighted response rate of 36.5%. The weighted average response rate for the survey over the past 12 months was 91.3%.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Julie Gordon in Ottawa Additional reporting by Dale Smith in Ottawa and Fergal Smith in Toronto Editing by Paul Simao and Frances Kerry

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.