Canadian Retail Sales Point to Q3 Economic Rebound

September 23, 2015 Updated: September 26, 2015

OTTAWA—Retail sales rose for a third consecutive month in July to $43.3 billion as Canadians opened their wallets for a new ride and new clothes.

The 0.5 percent increase from June’s level was helped by rising sales of new motor vehicles—mostly trucks—as well as clothing and clothing accessories, Statistics Canada said Wednesday, Sept. 23.

Statscan said 6 of 11 retail subsectors posted gains. Excluding motor vehicle and parts dealers, retail sales were unchanged for the month.

According to Thomson Reuters, economists had expected a gain of 0.5 percent for the month overall and 0.4 percent excluding autos.

“We’re modestly optimistic that consumer spending should see a pick-up in the next few reports, in part because families will have more time to spend their tax rebates,” CIBC economist Nick Exarhos said, referring to the Universal Child Care Benefit.

The motor vehicle and parts dealers subsector gained 2.0 percent in July, and posted the largest gain in dollar terms. Sales at new car dealers gained 2.7 percent. That was partly offset by flat levels at parts dealers and declines for used car dealers and other types of motor vehicles.

Clothing and clothing accessories stores gained 2.5 percent—the first increase in three months.

Second-Half Gain

The Canadian economy struggled through the first half of the year as it contracted in the first two quarters of 2015. However, most economists expect the economy to gain strength in the second half.

BMO senior economist Robert Kavcic said the “decent” retail sales report suggests the economy continued to rebound in July.

Retail sales rose 0.2 percent in volume terms.

“When combined with a strong result in manufacturing, real GDP looks like it should post a 0.2 percent gain in the month,” Kavcic said.

“That would mark a second straight month of growth after the negative early-year run.”

RECOMMENDED