Retail Sales (May) - Capital Economics
Canada Economics

Retail Sales (May)

Canada Data Response
Written by Stephen Brown

The 18.7% m/m rebound in retail sales in May still left them 20% below the pre-virus level, but Stats Can also said today that its preliminary data point to a further 24.5% m/m rise in June. While that would take retail sales above their level in February, it comes partly at the expense of lower restaurant sales.

Sales appear to have surpassed pre-virus levels in June

  • The 18.7% m/m rebound in retail sales in May still left them 20% below the pre-virus level, but Stats Can also said today that its preliminary data point to a further 24.5% m/m rise in June. While that would take retail sales above their level in February, it comes partly at the expense of lower restaurant sales.
  • Sales increased in almost every sector in May, with sales at sporting goods, hobby, book and music stores jumping by over 100% m/m and clothing and clothing accessory sales rising by 93%. Sales of big-ticket items also rebounded strongly, with auto sales up by 66% and furniture store sales rising by 59%. Food and beverage stores were the only sector to see sales decrease, albeit by a modest 2%. That decline was probably because the lifting of restrictions across the country enabled people to start eating out again.
  • Despite almost doubling in May, clothing sales remained depressed compared to pre-virus levels, at 68% lower than they were in February. Furniture, auto and gasoline sales were around 40% lower, although in the case of gasoline that partly reflects much lower prices. Overall retail sales were still 20% lower than in February, while only sales at food & beverage and general merchandise stores were higher. (See Chart 1.)
  • Stats Can also said today that retail sales appear to have done even better in June, with the preliminary data pointing to a stronger rise of 24.5% m/m in June as most of the remaining stores re-opened and more people returned to work. That would take overall sales to 1.8% above their pre-virus level. That would seemingly be a better result than in the US, where sales were marginally below the pre-virus level in June, but one key difference is that the Canadian data do not include sales at food service and drinking places. If we included those, the Canadian picture would look comparatively worse.
  • Nevertheless, the apparent acceleration in June is a better result than we were expecting. As it comes at the end of the quarter, it does not materially affect our estimate that GDP declined by 40% annualised in the second quarter, but it will provide a stronger handover to this quarter and raises the chance that third-quarter GDP growth will be better than the 35% rise we’ve pencilled in. That said, amid signs the recovery is slowing in the US, there are clearly downside risks to our forecast as well.

Chart 1: Retail Sales (Change from February to May, %)

Source: Refinitiv

Table: Retail Sales

Sales

Volumes

Ex. Autos

Ex. Autos & Gasoline

Ex. Food & Gasoline

Autos

Gasoline

Foods

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

C$bn

%m/m

Mar.

46.9

-10.2

43.9

-8.6

38.0

-0.2

33.7

2.8

29.1

-19.0

8.9

-36.9

4.3

-18.9

13.5

23.2

Apr.

35.2

-25.0

33.3

-24.1

30.1

-20.7

27.3

-18.9

20.3

-30.2

5.1

-43.0

2.8

-35.4

12.1

-10.3

May.

41.8

18.7

39.3

17.8

33.3

10.6

30.0

9.9

26.7

31.1

8.5

66.3

3.3

17.1

11.8

-2.0

Source: Refinitv


Stephen Brown, Senior Canada Economist, stephen.brown@capitaleconomics.com

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