| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -0.8% | -0.8% to -0.7% | -0.7% | 0.6% |
| Year over Year | 5.1% | 5.2% |
Highlights
Canada retail sales contracted 0.7 percent in July, roughly in line with expectations in an Econoday survey, with preliminary data pointing to a 1.3 percent recovery in August.
The decline in July was related to weaker activity, as sales volumes fell 1.1 percent from June.
The Bank of Canada projects consumption growth to slow in the third quarter, to an annualized rate of 1.6 percent despite the first quarterly population growth in a year, as gasoline prices squeeze disposable income. In July, gasoline prices rose 3.6 percent from the previous month and 25.7 percent from a year earlier, while sales of gasoline and fuel contracted 0.9 percent as volumes fell 3.5 percent. The overall 12-month inflation rate picked up to 3.0 percent from the 2.8 percent in June, an remained at 3.0 percent in August. Meanwhile, average weekly earnings growth slowed to 3.2 percent year-over-year from 3.4 percent in June, with little change on a monthly basis.
Sales declines were widespread across eight of nine sectors in July, led by a 1.9 percent drop in general merchandise after a 2.5 percent gain in June.
Motor vehicle and parts sales were down 0.8 percent due to a 1.3 percent decrease in new car sales, while other categories were up.
Core retail sales, excluding gasoline, fuel, and motor vehicle and parts, were down 0.7 percent, reflecting the widespread nature of declines.
The only subsector to record an increase was building material and garden equipment and supplies, up 0.8 percent.
Regionally, sales declined in half of the provinces, led by a 2.0 percent drop in Ontario.
Retail e-commerce sales decreased 3.5 percent on the month, now accounting for 7.5 percent of retail trade, down from 7.7 percent in June.
Market Consensus Before Announcement
The Statistics Canada advance retail indicator looks for sales down 0.8 percent in July from June and forecasters agree.
Definition
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.
Description
With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.
The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.