Canadian Retail Sales Rose 2.2% to $62.2-Billion in May

Retail sales increased 2.2% to $62.2 billion in May, recording the fifth consecutive increase. Sales were up in 8 of 11 subsectors, representing 86.8% of retail trade. Sales were led by higher sales at gasoline stations and motor vehicle and parts dealers.

Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—increased 0.6%. In volume terms, retail sales were up 0.4% in May.

TD Bank economist Ksenia Bushmeneva said retail sales advanced at a strong pace in May, but the details of the report were not as positive. “Much of the gain in May is due to higher prices, particularly at the pump, and a recovery in auto sales following three months of decline,” Bushmeneva wrote in a report. “With inflation running at a multi-decade high, higher prices have been giving a lift to nominal retail sales figures. As such, it’s becoming increasingly important to look at spending in real or inflation-adjusted terms,” Bushmeneva said.

Core Retail

Core retail sales were up 0.6% in May. Leading the increase were higher sales at food and beverage stores (+1.9%). The Consumer Price Index noted that food prices remained elevated in May, up 9.7% from the same month the previous year. Increases in input costs and supply chain disruptions continued to put upward pressure on prices.

Sales were also up at general merchandise stores (+1.4%) in May. This was the 10th increase in the last 12 months.

The largest decline to core retail sales in May came from miscellaneous store retailers (-6.7%), following gains in April. Stores in this subsector include pet stores, cannabis stores and office supplies and stationery stores.

Receipts at building material and garden equipment and supplies dealers were down for a second consecutive month (-1.7%). Despite the decline in May, activity in this category remains high, with sales up 5.7% from May 2021.

Sales up in every province

Retail sales increased in all provinces in May, led by higher sales in Quebec (+3.4%). In the census metropolitan area (CMA) of Montréal, sales rose 2.7%.

Higher sales were observed in Ontario (+1.9%) on the strength of higher sales at gasoline stations. Sales increased 0.6% in the CMA of Toronto.

Sales were up in Alberta (+1.9%) and Manitoba (+4.9%), both of which were led by higher sales at new car dealers.

Sales increased 1.3% in British Columbia, led by higher sales at gasoline stations. Sales were up 0.8% in the CMA of Vancouver.

Retail e-commerce sales in Canada

On a seasonally adjusted basis, retail e-commerce sales were down 2.9% in May. On an unadjusted basis, retail e-commerce sales declined 23.5% year over year to $3.5 billion in May, accounting for 4.9% of total retail trade. The share of e-commerce sales out of total retail sales fell 2.5% compared with May 2021, when many retailers faced restrictions on in-person shopping related to the spread of COVID-19.

Advanced Estimate for June

Given the continually evolving economic situation, Statistics Canada is providing an advance estimate of retail sales, which suggests that sales increased 0.3% in June. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 42.3% of companies surveyed. The average final response rate for the survey over the previous 12 months has been 91.7%.

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

U.S. Retail Sales Up 1% in June, Easing Fears of a Recession

American consumers picked up their spending from May to June, underscoring their resilience despite painfully higher prices at the gas pump and in grocery aisles and allaying fears that the economy might be on the verge of a recession. U.S. retail sales rose 1% in June, from a revised decline of 0.1% in May, the Commerce Department said.

The figures aren’t adjusted for inflation and so largely reflect higher prices, particularly for gas. But they also show that consumers are still providing crucial support for the economy and spending on such discretionary items as furniture, restaurant meals and sporting goods.

At the same time, June’s spending gain is modest enough that it likely won’t encourage the Federal Reserve to raise interest rates even more aggressively. Stock prices rose after the report’s release.

“People did not fold in the face of the Ukraine shock and the subsequent surge in food and energy prices,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Instead, they ran down a small part of their pandemic savings in order to keep up their discretionary spending.”

Consumers still have significant savings, on average, bolstered by pandemic-era government relief cheques and strong hiring and pay gains. JPMorgan executives said that their customers are still breaking out their credit and debit cards at a healthy pace.

Kathy Bostjancic, chief U.S. economist at Oxford Economics, said that excluding inflation, retail sales still rose about 0.3% in June, up from a contraction of 0.4% in May. She expects the economy to grow at a slim 0.5% annual rate in the April-June quarter, after shrinking in the first three months of the year.

The report showed consumers’ ongoing appetite for non-essentials like gadgets and furniture. In fact, sales at furniture stores rose 1.4%, while those at consumer electronics stores rose 0.4%. Online sales showed resurgence, posting a 2.2% increase. Business at restaurants was up 1%. But department stores took a hit, posting a 2.6% decline.

The solid spending came even as shoppers were confronted with high prices in all areas. U.S. inflation surged to a new four-decade high in June because of rising prices for gas, food and rent, squeezing household budgets and pressuring the Fed to raise rates aggressively – trends that raise the risk of a recession.

The government’s consumer price index soared 9.1% in June compared with 2021, the biggest yearly increase since 1981, with nearly half of the increase due to higher energy costs. The year-over-year leap in consumer prices in June followed an 8.6% annual jump in May. From May to June, prices rose 1.3%, following a 1% increase from April to May.

Some economists believe inflation might be reaching a short-term peak. Gas prices, for example, have fallen from $5 a gallon reached in mid-June to an average of $4.57 nationwide on July 14 – still far higher than a year ago.

Accelerating inflation is a big problem for the Fed, too. The central bank is already involved in the fastest series of interest rate hikes in three decades, which it hopes will tame inflation by tamping down borrowing and spending by consumers and businesses.

The retail sales report covers about a third of overall consumer spending and doesn’t include services, such as haircuts, hotel stays and plane tickets.

Source: Globe and Mail
Source: BNN Bloomburg
Source: BNN Bloomburg