Retail sales in Canada likely to bounce back in Q3

[Correction made in second para]

Retail sales in Canada rose in May, coming in more than consensus projections. Moreover, April’s data was revised downward a bit. Retails sales rose 0.2 percent in May, whereas in volume terms it was relatively flat, rising 0.1 percent. A robust end to 2015 and firm beginning to 2016 seems to be winding down, noted TD Economics in a research report.

Even if retail sales exceeded the flat consensus view, the volume rises seemed to have lost momentum. The Canadian economy is likely to contract 0.9 percent in the second quarter, adding in expected wildfire effects. Retail sales in the third quarter are expected to rebound as wildfire reconstruction and new home furnishing sales would give a slight lift up, according to TD Economics.

May’s retail sales were mainly driven by increased sales at beverages and food stores that recorded 2.1 percent rise in May. This was the fourth rise in five months. Sales at liquor stores increased 6 percent in May, whereas at grocery stores it climbed 1.6 percent. Sales at gasoline stations also contributed to the headline rise, climbing 2.3 percent in May following a 6.4 percent increase in April. Sales in other sectors came in flat or dropped. Furniture sales dropped 3.5 percent, sales at general merchandise stores fell 0.5 percent, whereas motor vehicle and parts dealers recorded drop of 2 percent.

Region wise, sales rose in seven of the ten provinces. Quebec and Newfoundland & Labrador registered growth of 1 percent each, while Manitoba recorded growth of 0.5 percent. Year-to-date sales in Ontario, Manitoba, B.C., Quebec and PEI continued to be high. On the contrary, retail sales remained subdued in Saskatchewan, Alberta and Newfoundland and Labrador. Sales in Alberta declined 1.1 percent.