Canadian shopping binge reaches new height in first half 2017
Canadian retailers posted a fourth-straight monthly sales gain in June, closing off a half-year performance that was one of the best for the sector on record
- Sales were up 4.6% in first six months of 2017, a record
- Policy makers anticipate consumption boom will continue
Retail sales increased 0.1 % during the month to CAD 49 billion (CAD 39 billion), Statistics Canada reported. Retailers generated CAD 291 billion in sales in the first six months of 2017, a record. Sales were up 4.6 % from the last half of 2016, which is the biggest half-year gain in the data going back to at least the early 1990s.
Canada has been in a consumption boom for years, as households binged on cheap credit. The appetite for spending has only increased over the past six months as the country emerged from the drop in commodity prices and the jobless rate fell to the lowest since 2008.
It’s a remarkable run in spending that policy makers expect will continue, even as the Bank of Canada raises interest rates. Households will account for about two-thirds of growth over the next three years, the central bank projected last month. That would extend a pattern over the past 15 years that has seen consumers carry the bulk of the economic load.
“The retail sector continues to look strong,” Andrew Grantham, an economist at CIBC World Markets, said in a note to investors.
The Canadian dollar advanced following the report, gaining 0.2 % at 8:42 a.m. in Toronto on August 22, 2017 trading to CAD 1.253 against its U.S. counterpart. The June numbers included a 1.4 % drop in sales for motor vehicle retailers and parts dealers.
Excluding those, sales were up 0.7 % in June versus expectations of a 0.1 % gain. Economists had forecast a 0.2 % gain for total retail sales during the month.
Gasoline sales also dropped in June because of lower prices. Excluding gasoline and autos, sales increased 1.1 % during the month.
In volume terms, receipts for retailers increased 0.5 % and are up 7.8 % from a year earlier, which is the biggest 12-month increase since at least 2004.