Canadian Retail Sales up 0.1% In June, Boosted by Increases at Motor Vehicle and Parts Dealers

Statistics Canada says retail sales rose 0.1% to $65.9 billion in June, lifted by sales at new car dealers. The agency says core retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — fell 0.9% in June.

Retail sales rose in three of the nine subsectors, led by a 2.5% gain at motor vehicle and parts dealers as sales at new car dealers added 2.9%. Sales at gasoline stations and fuel vendors rose 0.3%, lifted by higher prices at the pump in June.

“Canadian consumer spending continued to sputter in June,” Tiago Figueiredo, an economist at Desjardins, said in a note to clients. He added the numbers indicate weaker economic growth going forward, in line with what the Bank of Canada is expecting.

Desjardins is estimating GDP rose 1.4% in the second quarter, slightly below the central bank’s forecast of 1.5% growth.

Sales at general merchandise stores and Building material and garden equipment and supplies stores fell 1.4% while food and beverage retailers saw a drop of 0.9%. In volume terms, retail sales fell 0.2% in June.

With the underlying weakness in the retail sales report, Maria Soloviena, an economist with TD Economics, says consumer spending might regain its footing with the government’s grocery rebates credited to about 11 million Canadians in July. Statistics Canada says its early estimate for retail sales in July points to a gain of 0.4% for that month, though it cautioned that the figure would be revised.

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

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

U.S. Retail Sales Increase More Than Expected in July 

U.S. retail sales increased more than expected in July as Americans boosted online purchases and dined out more, suggesting the economy continued to expand early in the third quarter and keeping a recession at bay. According to the Commerce Department, retail sales jumped 0.7% while data for June was revised higher to show sales rising 0.3% instead of the previously reported 0.2%.

Economists polled by Reuters had forecast retail sales would climb 0.4%. Retail sales are mostly goods and are not adjusted for inflation. They likely received a boost from Amazon’s Prime Day promotion last month.

Demand has remained resilient despite the Federal Reserve’s aggressive interest rate hikes to tame inflation, thanks to strong wage gains from a tight labor market. Receding inflation is lifting consumers’ purchasing power. Households are also taking on debt to fund purchases.

Though lower-income households have exhausted excess savings accumulated during the COVID-19 pandemic, there remains a decent chunk of money stashed away to support consumer spending.

With inflation ebbing, most economists believe the Fed is probably done raising rates, and they are increasingly warming up to the idea that the U.S. central bank could steer the economy towards a “soft landing” rather than the recession that they had been forecasting since last year.

Excluding automobiles, gasoline, building materials and food services, retail sales surged 1.0% in July. Data for June was revised lower to show these so-called core retail sales increasing 0.5% instead of the previously reported 0.6%. Sales slipped for at-home furniture, with selling dropping 1.8% from June and 6.3% from July 2022. 

Consumer spending accounts for more than two-thirds of the U.S. economy. Though consumer spending slowed in the second quarter from the robust pace of the first quarter, the increase was enough to help guide the economy to a 2.4% annualized growth rate in the April-June period.

While consumer spending showed an increase, so too did debt. For the first time since it began keeping records, the Federal Reserve Bank of New York said last week that U.S. consumers are carrying a collective $1 trillion in credit card debt.

Source: MSN
Source: Yahoo