Statistics Canada Says Retail Sales Fell 0.6% in July as Grocery Store Sales Fell

Canadian retail sales dropped 0.6% to $55.8 billion in July as sales at supermarkets and grocery stores fell with more people returning to restaurants and patios. However, Statistics Canada said on September 23 that its initial estimate for August suggests retail sales gained 2.1% for that month, but cautioned the figure will be revised.

BMO economist Shelly Kaushik said that as the economy reopened shoppers diverted some of their spending from goods to services. “While the drop in retail sales is consistent with a pullback in July GDP, the early indications for August point to a broader rebound in activity,” Kaushik wrote in a report.

Statistics Canada said that retail sales in July fell in five of 11 subsectors. Sales at food and beverage stores were down 3.4% as sales at supermarkets and other grocery stores fell 3.4% and beer, wine and liquor stores lost 2.7%. Sales at convenience stores fell 8.4%, and specialty food stores dropped 0.4%. Sales at building material and garden equipment and supplies dealers were down 7.3% for the month, but remained elevated compared with pre-pandemic levels.

Statistics Canada said core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — fell 1.3% for the month. Retail sales in volume terms fell 1.1 per cent in July.

Statistics Canada also said that 0.5% of retailers were closed at some point in July, compared with approximately 5.2 per cent in June. As well, the share of retail sales accounted for by electronic commerce shrank to 4.6% from 6.2% in June as shoppers returned to retail stores.

Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Statistics Canada

Canadian Economy Contracted 0.1% in July, August Rebound Forecast

Statistics Canada announced that the economy shrank 0.1% in July, following a 0.6% rise in June. The agency’s initial estimate for July real gross domestic product had been for a contraction of 0.4% despite an easing of public health restrictions.

While the majority of sectors the agency tracks grew in July, declines in sectors such as agriculture and manufacturing more than offset any gains. Crop production, except cannabis, was at it lowest level since November, 2007 and manufacturing was down 1.1% in July. 

Residential construction fell by 0.9% making it the third consecutive monthly decline after touching a record in April. The surge in real-estate prices that came with the pandemic appears to be weighing on demand by making homes too expensive for most buyers. A spike in construction worker wages also implies the pool of contractors was too small to keep up with the growth that the industry was experiencing earlier this year.

Supply constraints will continue to test the economy over the rest of the year. Vacancy rates are at record levels, even though unemployment rates remain elevated, suggesting a mismatch in the skills needed and the talent available. Elevated commodity prices, shortages of key inputs and transportation bottlenecks continue to wreak havoc on global manufacturing and threaten to put upward pressure on inflation.

Statistics Canada said total economic activity in July was about 2% below pre-pandemic levels recorded in February, 2020. The agency’s initial estimate for August suggests a rise of 0.7% for the month, which would put total economic activity about 1% below pre-pandemic levels. The August GDP figure will be finalized at the end of the month.

CIBC senior economist Royce Mendes said the figures for both months were largely in line with expectations, but other figures released by Statistics Canada on October 1 suggest GDP is tracking below forecasts for the quarter.

Leading the gains in July was the beleaguered accommodation and food services sector, which has felt the brunt of public health measures restricting in-person services and travel. Still, each sector is still well below where it was just before the pandemic struck. Statistics Canada said the accommodations and food services sector in July was 21.3% below February, 2020 levels, while air transportation was nearly 83% below pre-pandemic levels.

“Today’s GDP report provides a small tonic to the troubling results from a month ago,” Douglas Porter, chief economist at Bank of Montreal, said in a note to his clients. “The slightly smaller-than-expected setback in July and nice pop in August suggest that the economy managed to grind out some moderate growth in the summer quarter as a whole.”

Source: The Star
Source: Globe and Mail
Source: Financial Post