Canadian retail sales increased by 1.0% month-on-month in May, matching market consensus but coming in slightly below TD Securities' forecast of a 1.1% rise [1]. The gains were broad-based, with notable contributions from gasoline stations, which saw a 3.1% increase, as well as autos (+0.7%), general merchandise (+1.0%), and sporting goods (+1.8%) [1]. The ex-autos/gas measure rebounded by 0.9%, and all nine subcomponents posted gains, indicating a wider recovery in retail activity compared to the previous two months [1].
On a volume basis, retail sales were softer, rising by 0.4%, but this was still sufficient to keep real Q2 goods consumption on track for a modest increase, according to TD Securities [1]. Flash estimates for June suggest nominal spending is expected to rise by a further 0.4%, even as lower gasoline prices act as a drag [1].
The data points to continued, albeit modest, growth in Canadian consumer spending in the second quarter, with broad-based sectoral support. While the headline figure met expectations, the slightly softer real sales and the impact of lower gasoline prices in June may temper market optimism [1].
CONCLUSION
Canadian retail sales data for May signals modest but broad-based growth in consumer spending, supporting a positive outlook for Q2 goods consumption. However, softer real sales and the anticipated drag from lower gasoline prices in June suggest that gains may remain moderate in the near term.