Canadian retail spending gained 0.3% month-on-month in July. Despite a stumble in June, July’s gain was sufficient to send nominal sales to a new high. Stripping price effects out, the volume of goods sold was effectively flat.
Excluding the swing factors of auto and gasoline sales (-1.4% and 1.9% respectively), a gain of 0.7% would have been recorded.
Beyond these swing factors, it was a generally positive month for sales in major categories. Gains at food and beverage stores (+1.3%) and clothing stores (+1.1%) helped to offset some declines at health/personal care stores (-0.8%) and general merchandise retailers (-0.2%).
Regionally, gains were widespread, with 8 provinces reporting increased sales. Manitoba (-0.7%) and B.C. (-0.5%) were the exceptions.
Key Implications
Well alright. This was a not too hot, not too cold type of report. Beneath a modest headline lay decently positive details. Stripping out the noise of volatile auto and gasoline sales, we had yet another month of positive gains in both nominal and volume terms. Canadians may not be rushing to buy cars, we’re still happy to go shopping.
Today’s data is another sign of an economy that continues to perform well despite a number of headwinds. We continue to track third quarter GDP growth around the 2.2% mark or slightly above, consistent with our latest economic forecast.
That retail spending is holding up despite a string of interest rate increases should give the Bank of Canada confidence that the Canadian consumer continues to manage higher borrowing costs. The stars remain aligned for another policy interest rate hike on October 24th.
