Quick take

Retail sales turn around in June as some provinces lift restrictions

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  • Retail sales rose by 4.2 per cent month-over-month (m/m) in June, edging up from their 2.1 per cent decline in May and below Statistics Canada’s preliminary estimate of 4.4 per cent.
  • Looking ahead, the agency’s flash estimate for July’s retail sales suggests that sales decreased by 1.7 per cent. This preliminary estimate is based on responses from less than 40 per cent of surveyed companies, so this figure will likely change.
  • Six out of ten provinces saw retail sales rise in June. Nova Scotia experienced the sharpest increase (+16.3 per cent) and Newfoundland saw the steepest decline (–2.6 per cent). In absolute terms, Ontario accounted for 79 per cent of Canada’s retail sales growth in June.
  • Gasoline station sales increased (+6.0 per cent) as travel picked up. Following declines in April and May, sales of motor vehicle and parts dealers increased (+2.7 per cent) in June.
  • Core sales (excluding gasoline and motor vehicles) increased by 4.6 per cent. Clothing stores saw the largest gains (+55.0 per cent) while specialty food stores saw the steepest declines (–10.3 per cent).
  • Retail e-commerce sales went up 6.3 per cent from a year ago, on a non-seasonally adjusted basis. E-commerce sales as a share of total retail trade sat at 5.8 per cent in June, down from 7.0 per cent in May.

Key insights:

  1. Sunny days for retail sales are here. An acceleration in vaccination programs in June prompted some (though not all) provinces to ease restrictions. This allowed many Canadians to head out to patios, book vacations and engage in social activities. All of which meant more spending.
  2. Statistics Canada’s preliminary estimate for July suggests that retail sales decreased during that month. This is surprising. Provinces continued to lift restrictions throughout July, and high-frequency data show that Canadian retail and recreation activity in July was much closer to its pre-pandemic levels than in June. This suggests that July may not be as bad as Statistics Canada’s preliminary estimate suggests.
  3. Unless the pandemic’s fourth wave spoils the party, consumer spending will power Canada’s economic growth for the rest of this year. Most of the boost is likely to come from customer-facing services that were hit the hardest last year, such as travel, recreation, and restaurants. Middle-and higher-income households will drive most of the spending. But, given the ongoing uncertainty, lower-income households are likely to hold on to a larger proportion of their savings for a rainy day.

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Kiefer Van Mulligen

Kiefer Van Mulligen

Economist

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