Canada July Retail Sales - Q3 appears to be regaining momentum after a weak Q2
Canada’s July retail sales data is stronger than expected, up 0.9% versus a preliminary estimate made with June data of 0.6%, with the gain being 1.0% in real terms. The preliminary estimate for August is for a nominal gain of 0.5%, which suggests sales have regained some momentum in Q3 after a weak Q2.
The increase in July was 0.4% ex autos, and 0.6% excluding autos and gasoline. Building materials and electronics saw weakness, but elsewhere gains were solid.
The 3month/3month picture is still weak but should improve in August as a weak May drops out. Retail sales rose by only 0.1% in Q1 (not annualized) before slipping by 0.2% in Q2. Stronger momentum in Q3 may hint that BoC easing is having some impact though conclusions are tentative at this point.
The data gives further support to our view that July GDP will exceed the preliminary unchanged estimate with our forecast being for a 0.1% increase. Wholesale sales also exceeded preliminary expectations in July.
