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Data released on Friday showed retail sales rose 0.6% in July in Canada, below expectations. According to National Bank of Canada’s analyst, Kyle Dahms, retail sales have confirmed their recovery after falling sharply during the months on March and April. 

Key Quotes:

“In real terms, Canada’s retail sales edged up 0.4%. The early estimate for August nominal sales is +1.1%.”

“The monthly increase was essentially driven by higher sales of motor vehicles/parts and gasoline stations. Core retail sales (which excludes those two same sectors) were down 1.2% in July following the massive rebounds in June and May.”

“Retail sales have confirmed their recovery from the March and April contractions and now sit at a level 1.1% higher than the pre-pandemic level in February.”

“Despite the slight disappointment in July, retail sales are on track for a massive increase in the third quarter with the August preliminary reading also showing an advance. This rebound was expected, given substantial pent-up demand and the considerable assistance provided by the Federal government to support household incomes. The real question remains whether household spending can be sustained given the tapering out of support programs in the coming months.”