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National Bank of Canada’s analyst Jocelyn Paquet, point out that Canadian retail sales hit a record high in May and recovered after April’ slide and see numbers consistent with a positive contribution to GDP growth during Q2.  

Key Quotes:

“As was expected following a weather-related slump in April, Canadian retail sales rebounded strongly in May, led by a robust showing in the country’s two largest provinces. The monthly advance, which easily surpassed forecasts, even allowed retail sales to reach a new all-time high of C$50.8 billion.”

“Another sign of the strength of Canadian consumers in May, discretionary sales, which excludes gasoline, groceries and health products, spiked no less than 3.0%, more than erasing April’s weak result (-2.4%).”

“Retail sales are now on pace to expand 3.8% annualized in Q2 following a negative print in Q1. Such a performance is consistent with an acceleration of consumption spending and hence GDP growth in the second quarter of 2018.”

“Canadian retail sales easily topped consensus expectations in May, surging 2.0% m/m in nominal term, the most since October 2017.”