Data released on Tuesday showed retail sales in Canada rose 0.9% on April, surpassing expectations, even as March’s figures were revised higher. According to analysts at the National Bank of Canada expect retail sales to moderate amid price increases and higher interest rates.
Key Quotes:
“Consumer expenditures on goods came out a little better than expected. In addition, the prior month was upwardly revised. The monthly print was held back again by motor vehicle/part dealers as lack of supply remains characteristic. Nonetheless, core retail sales (which excludes gas and autos) rose 1.0%, marking a fourth consecutive monthly increase.”
“Retail sales were driven up in part by outsized gains in general merchandise and miscellaneous stores, which increased at their fastest pace in 10 and 14 months respectively. Perhaps the most surprising element of the report was volume retail sales which rose 0.9% in the month, suggesting a negligible price effect in the month.”
“The Statistics Canada preliminary estimate for May suggest a 1.6% increase in nominal sales. For the following months, we expect retail sales to moderate in an environment where consumers are being hit by both price increases and higher interest rates. Fortunately, the labour market remains strong, and the still high savings rate should allow consumption to continue to expand.”