Canada Retail Sales Rise 1.0% in May, Matching Expectations
Key Takeaways
- •Canada's retail sales increased 1.0% in May, meeting expectations, while April's figure was revised down from 0.5% to 0.4%.
- •All nine retail subsectors posted gains, with gasoline stations leading nominally, even as their sales volumes declined 2.7%, signaling price-driven rather than volume-driven growth.
- •Core retail sales, which exclude gasoline and motor vehicle dealers, rose 0.9%, indicating resilient underlying consumer demand.
- •British Columbia recorded the largest provincial sales increase at 2.1%, whereas Nova Scotia was the only province to post a decline at 0.8%.
- •Statistics Canada's advanced estimate projects a 0.4% retail sales increase for June, which will factor into the Bank of Canada's assessment ahead of future rate decisions.
Canada's retail sales increased 1.0% in May, matching market expectations, according to data released by Statistics Canada. The prior month's figure was revised down from 0.5% to 0.4%. Retail sales are a closely watched gauge of consumer spending, which accounts for a significant share of Canadian economic activity and feeds directly into GDP calculations.
Retail sales excluding automobiles came in at 1.2%, slightly below the 1.4% expected. The previous month's ex-autos reading was revised from +0.1% to 0.0%.
Sales rose across all nine subsectors, with the largest gains driven by gasoline stations and fuel vendors. Core retail sales, which exclude gasoline and fuel vendors (+3.1%) as well as motor vehicle and parts dealers (+0.7%), increased 0.9% compared to 0.7% in the prior month. In volume terms, however, sales at gasoline stations and fuel vendors fell 2.7% in May, indicating that price increases rather than higher volumes drove the nominal gain in that category. The breadth of gains across all subsectors, alongside the solid core reading, suggests underlying consumer demand remained resilient heading into the summer months, though the volume decline at gasoline stations underscores that inflationary pressures continued to inflate headline figures.
Statistics Canada's advanced estimate for June suggests retail sales increased 0.4% during that month. This forward indicator will be relevant for the Bank of Canada's ongoing assessment of the economic backdrop as it deliberates on future rate decisions.
Provincial Breakdown
- British Columbia: Retail sales rose 2.1%, representing the largest provincial gain in dollar terms, driven by stronger sales at motor vehicle and parts dealers.
- Vancouver CMA: Retail sales increased 3.4%.
- Ontario: Retail sales increased 0.5%, supported by higher sales at gasoline stations and fuel vendors.
- Toronto CMA: Retail sales rose 0.8%.
- Nova Scotia: The only province to post a decline, with retail sales falling 0.8%, led by weaker sales at motor vehicle and parts dealers.
Market Reaction
The USDCAD was little changed following the release of the report. For the day, the pair traded near unchanged levels at approximately 1.4086. The price remained above both its 100-hour and 200-hour moving averages, situated near 1.4063 and 1.4068 respectively. Holding above these levels has kept buyers in a position of relative control. A move below these moving averages would shift the short-term technical bias to the downside. The current price was trading at 1.40868 at the time of reporting.
