Retail sales fall in June, but GDP remains on track

Economic data released Wednesday shed little light on the Bank of Canada’s next move and don’t alter forecasts for second-quarter GDP, a CIBC economist said.

Retail sales edged down 0.2% in June to $50.7 billion, following a 2.2% increase in May, says StatsCan.

In a report, CIBC senior economist Royce Mendes says the drop was expected and won’t settle the debate between a September or October hike from Canada’s central bank.

“We’re still leaning towards the latter, but will be particularly attuned to the upcoming GDP report,” he said, referring to the second quarter GDP data to be released Aug. 30. Wednesday’s figures don’t alter forecasts for a 3% annualized gain in quarterly GDP, he said.

Sales were down in six of 11 subsectors, representing 52% of total retail trade. Lower sales at gasoline stations and motor vehicle and parts dealers led the decrease. Excluding those two subsectors, retail sales were up 0.3%, which Mendes called “modest.”

The monthly data’s greater-than-usual volatility can be attributed to adverse weather conditions that restrained spending in April, and reversed course in May, said Mendes. The outsized May gain likely resulted in “a bit of hangover” in June’s spending numbers.

Mendes expects Q3 data to look more trend-like as there haven’t been any major disruptions thus far in the quarter.

Wednesday’s economic data didn’t affect markets, he added.

For more details, read the full CIBC report.

Also read:

U.S. retail sales rose at robust 0.5% annual rate in July

RBC reports Q3 profit, led by wealth management

Inflation hits 3% in July, upper end of BoC target

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.