Canadian retail sales strongly rebounded in June, as consumers flocked to brick-and-mortar stores following a lengthly period of pandemic-related shutdowns. However, July’s preliminary data suggests the momentum may only be temporary.
According to Statistics Canada, retail sales jumped 4.2% to $56.2 billion in June, as activity rose across eight of the 11 subsectors. Core retail sales, which do not account for volatile sales such as those from gasoline stations and motor vehicle and parts dealers, were up 4.6%.
As restrictions on non-essential retailers were lifted, sales at clothing and clothing accessories stores soared 49.1%, following two consecutive months of declines. Similarly, sales at general merchandise stores rose 7.4%, while sales at motor vehicle and parts dealers jumped 2.7% in June. On the other hand, sales at food and beverage stores slumped 2.6%, while sales at building material and garden equipment and supplies dealers were down 3.1%.
Despite the strong rebound in retail sales in June, it appears that the optimism was short-lived. According to Statistics Canada’s flash estimates, retail sales declined 1.7% in July, suggesting that consumers are shifting their spending patterns from goods to services as the economy continues to reopen. “Canadians probably started replacing goods purchases with services. And even with the retreat in July, retail sales are still well above pre-COVID levels,” explained CIBC economist Royce Mendes.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.