Canadas retail sales exceptionally soft in April - RBC

According to ActionForex, analysts at RBC Financial Group note that Canada's April retail sales plunged 26% – much softer than the -15.6% preliminary estimate a month ago.

"The drop in April retail sales in Canada was massive – and significantly larger than the 15.6% drop Statistics Canada provided as a preliminary estimate along with the March report. Controlling for price changes, sale volumes were down 25% from March in April and down almost a third compared to “pre-shock” February levels."

"Virtually all economic data for April has been exceptionally soft – manufacturing and wholesale sales reported earlier in the week were both also down more than 20% in April. Statistics Canada already provided an advance estimate that overall GDP declined 11% in the month, but reports to-date have left risks tilted to the downside of that."

"But it is also increasingly clear that the massive decline in economy-wide output ended at two-months in April – and that is still taking some of the sting out of exceptionally ugly backward-looking economic data." 

"Statistics Canada’s preliminary count of May retail sales showed an increase of 19%. That would still retrace less than 40% of the decline over the prior two months, but virus containment measures have continued to ease – and at least in Canada without a corresponding increase in virus spread to-date. And government income supports for those losing work due to COVID-19 are also exceptionally large. So spending probably has continued to increase into June."

"Some form of virus containment measures are likely to remain in place at least until there is a vaccine or more effective treatment – and that will leave the economy operating below capacity for the foreseeable future. But the long-road to recovery still very likely started in May."