Canada: Retail sales above forecasts in August, but trend is still failrly sluggish – CIBC

Data released on Friday showed a higher-than-expected increase in August retail sales. Analysts at CIBC, point out that while headline figures came in above consensus expectations, there were hints within the detail suggesting that while Canadian consumers are surviving, they are no longer thriving.

Key Quotes: 

“Retail sales posted a rebound of 0.7% (consensus +0.2%) after declining by 2.2% in the prior month. In volume terms, sales were up by an even healthier 1.1%, although that reversed only about half of the decline seen in the previous month. The big driver of higher sales in August was food & beverage stores, which could signal that consumers are once again eating at home more often than eating out.”

“Released alongside the retail sales figures today, the advance estimate for wholesale sales in September suggested a modest decline of 0.2%.”

“Retail sales were somewhat stronger than expected in August, although the trend is still fairly sluggish. The higher than expected print, combined with an upside surprise for August wholesale sales released last week, puts some upward pressure on forecasts for monthly GDP next week (flash estimate was 0.0%) and by extension Q3 as a whole.”