Canada retail sales increased in June but dropping in July

The June gain was slightly below the average analyst estimate of 4.4%, Statistics Canada data showed. Excluding motor vehicles and parts, retail sales were up 4.7%, just beating expectations of 4.6%.

Sales increased in eight of 11 subsectors, representing 69.5% of retail trade, as COVID-19 restrictions were eased and Canadians congregated back to nonessential stores, Statscan said.

“There’s nothing like some retail therapy to cure the post-lockdown blues,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note to clients.

“The general rebound following lockdowns shows the willingness of Canadians to spend and, more broadly, how quickly the economy can bounce back when Covid cases are low,” he added.

While the preliminary estimate for July was disappointing, economists noted that even with the decline, retail sales remain well above their pre-COVID-19 levels. The drop in July could also signal a shift to more spending in bars and restaurants.

“It’s very possible that spending was redirected to services as that sector more fully reopened,” said Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets.