Canada’s retail sales rose 0.6% in June, beating economists’ expectations, as consumers increased spending at clothing, general merchandise and motor vehicle stores, according to data released by Statistics Canada on Friday.
Retail sales increased to C$74.28 billion in June from C$73.84 billion in May. Analysts had expected a 0.4% increase. In volume terms, sales rose 1.5%, indicating stronger underlying consumer demand.
Sales increased across seven of nine retail subsectors. Clothing and related retailers recorded the largest percentage gain, rising 3.1%, while general merchandise stores saw sales increase 2.7%.
Motor vehicle and parts dealers, the largest retail subsector, recorded a 1% increase, marking their third consecutive monthly rise. The sector accounts for roughly 27% of total retail sales.
However, sales at food and beverage retailers fell 0.4%, while gasoline stations and fuel vendors recorded the largest decline, with sales dropping 4.1%, largely because of lower gasoline prices.
Despite the strong June figures, Statistics Canada said retail sales are expected to fall 0.8% in July, based on an advance estimate.
Retail sales are closely watched as an early indicator of economic activity because they capture consumer purchases of goods including vehicles, furniture, food and gasoline and account for about 40% of consumer spending.
Andrew Grantham, senior economist at CIBC Capital Markets, said the figures pointed to a gradual improvement in consumer spending that could continue into next year, supported by household benefits and an improving labour market.
The data provide a positive signal for Canada’s economy, although the expected July decline suggests consumer spending could remain uneven in the months ahead.
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