Aug. 24 (Bloomberg) -- Canadian retail sales rose five times as fast as forecast in June, posting the fifth gain in six months, led by purchases of gasoline and car parts.

Sales rose 1 percent to C$34.4 billion ($31.9 billion), Statistics Canada said today in Ottawa. Economists expected a 0.2 percent increase in June, based on the median of 17 estimates compiled by Bloomberg. Statistics Canada also revised the increase in May to 1.1 percent, from the 1.2 percent originally reported.

The report adds to evidence the world’s eighth-largest economy is recovering from a recession marked by lower international orders for Canada’s lumber, automobiles and metals. The Bank of Canada said last month that Canada will come out of its first recession since 1992 in the third quarter, earlier than policy makers had expected in April.

“I didn’t expect as much strength as the report showed,” said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York. The report is an “encouraging sign that will reinforce the Bank of Canada’s notion -- and our notion at Credit Suisse -- that the recession ended in the second quarter and recovery will start in the third quarter.”

Working in Synch

Increases in June for manufacturing shipments, wholesale and retail sales show that parts of the economy’s production chain are working in synch, Basile also said.

The Canadian dollar appreciated 0.4 percent to C$1.0769 per U.S. dollar at 4:08 p.m. in Toronto, from C$1.0812 on Aug. 21. One Canadian dollar buys 92.86 U.S. cents.

Retail sales have been rebounding from a two-year low of C$33.1 billion in December, in the early months of the recession.

Excluding the effect of price changes, retail sales rose 0.4 percent in June, Statistics Canada said.

The value of sales at gasoline stations rose 4.7 percent because of higher prices. Sales of recreational vehicles, used cars and parts gained 2.2 percent and purchases at new car dealerships advanced 0.4 percent in June, the report said.

Excluding the automotive sector, retail sales were up for a second straight month, rising 1 percent. Economists anticipated a 0.4 percent gain, based on the median of 16 estimates. Statistics Canada revised the May gain in ex-auto retail sales to 0.6 percent from 0.7 percent.

Widespread Gains

Six of the eight retail sectors tracked by Statistics Canada saw increasing sales in June. Sales at food and beverage stores rose 1.3 percent and pharmacies and personal care stores gained 0.8 percent. Furniture, home furnishing and electronic store sales rose 0.6 percent, while sales at clothing and accessories stores and miscellaneous retailers each gained 0.1 percent.

Sales at general merchandise stores and purchases from building and outdoor home supplies stores both dropped 0.6 percent, the agency said.

“The economic context makes things difficult,” said Claude Guevin, chief financial officer of home-improvement retailer Rona Inc., in an Aug. 20 interview. “People do renovations, but they do smaller projects.”

Guevin also blamed “pretty terrible” weather for sluggish sales. “If Mother Nature had been on our side, that would have mitigated that a little, but it wasn’t the case.”

Sales were hurt by the weak economy and bad weather that provided “little motivation for a cautious consumer to spend money, particularly on higher ticket discretionary products,” Mike Arnett, who is the president of Canadian Tire Corp.’s retail division, said in an Aug. 13 conference call with analysts.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net.

Last Updated: August 24, 2009 16:38 EDT