Canadian June Retail Sales Rose 0.1%, Underlying Sales Gain 0.7%

Canadian retail sales rose 0.1% in June which was below consensus expectations of a 0.3% gain for the month and followed a revised 0.5% increase for May. The annual gain held steady at 7.3% for the month.

In real terms, sales increased 0.5% to give a 7.8% annual gain.

Underlying sales rose 0.7% on the month which was significantly above consensus expectations of a 0.1% gain for the month. Following a 0.1% decline the previous month, underlying sales increased 6.6% over the year.

Sales increased in six of the eleven categories for the month, although these categories accounted for less than 40% of total sales.

Motor vehicle and parts sales registered a 1.4% decline on the month which cut annual growth to 9.6%. Gasoline sales declined on the month and there was also a decline in miscellaneous store sales.

Food and drink sales declined marginally on the month while there was a sharp rebound in general merchandise store sales for the month. Sales of building materials and garden supplies also advanced firmly on the month.

Overall confidence in demand and spending trends will remain strong in the short term, maintaining expectations that the Bank of Canada will sanction another increase in rates. A dip in motor vehicle sales could, however, be an indication that consumers are less willing to spend on big-ticket items and concerns will increase if there is a sustained slowdown in the housing sector.

The Canadian dollar responded to the stronger than expected underlying sales release and strengthened after the data with USD/CAD sliding to 1.2530 from 1.2580.

Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.