Statistics Canada reports that retail sales rose 0.1% to $65.9 billion in June

OTTAWA — Retail sales rose 0.1 percent to $65.9 billion in June, according to Statistics Canada, driven by sales at new car dealerships.

The agency says core retail sales — which exclude gas stations and fuel sellers, and car and parts dealers — fell 0.9 percent in June.

Retail sales rose in three of the nine sub-sectors, led by a 2.5 percent increase in auto and parts dealers, while sales at new car dealers rose 2.9 percent. Sales at service stations and fuel vendors rose 0.3 percent, driven by higher pump prices in June.

“Canadian consumer spending remained flat in June,” said Tiago Figueiredo, economist at Desjardins, in a note to clients.

He added the numbers point to weaker economic growth going forward, in line with Bank of Canada expectations.

Desjardins estimates that second-quarter GDP grew 1.4 percent, slightly below the central bank’s forecast of 1.5 percent.

Convenience store sales were down 1.4 percent and food and beverage retail was down 0.9 percent.

In terms of volume, retail sales fell 0.2 percent in June.

Given the underlying weakness in the retail sales report, Maria Soloviena, economist at TD Economics, reckons consumer spending could regain momentum with the government’s grocery rebates credited to about 11 million Canadians in July.

Statistics Canada says its early estimate for July retail sales points to a 0.4 percent rise for the month but warned the number would be revised.

CIBC Economics’ Katherine Judge says she forecasts a final quarter-point rate hike by the Bank of Canada in September, but says that could change if preliminary estimates for July GDP look weak enough.

This report from The Canadian Press was first published on August 23, 2023.