Canada June Retail Sales Fall From Record on FloodGreg Quinn and Theophilos Argitis
Canadian retail sales fell in June by the most this year as flooding in Alberta and a Quebec construction strike disrupted spending, adding to evidence the economy shrank during the month.
Sales decreased 0.6 percent to C$40.1 billion ($38.2 billion), Statistics Canada said today in Ottawa, after touching a record the previous month. Economists surveyed by Bloomberg News forecast a 0.4 percent drop, based on the median of 20 projections.
Canada’s economy may have recorded its biggest monthly contraction since 2009 in June, as the the world’s 11th-largest economy struggles to build steam. Today’s reports mirror other recent signs of weakness, including an unexpected employment decline in July, and drops in factory sales and wholesale sales for June.
“The Canadian economy looks to have ended the second quarter on a very sour note,” Benjamin Reitzes, an economist at Bank of Montreal in Toronto, said in a note to investors. While the flooding and strike had an impact, “the declines in the retail, wholesale and manufacturing activity seen in June were also driven by broader underlying weakness,” he said.
The Citigroup Economic Surprise Index for Canada this week has fallen to its lowest since April. Canada’s dollar depreciated 0.2 percent to C$1.0498 per U.S. dollar at 10:15 a.m. in Toronto.
A June contraction is consistent with Bank of Canada forecasts for a 1 percent expansion in the second quarter, down from 2.5 percent in the first quarter. Economic growth will be “choppy” in the next few months, Bank of Canada Governor Stephen Poloz said in a July forecast.
Statistics Canada will report monthly and quarterly gross domestic product data on Aug. 30. Reitzes said GDP may have contracted by 0.5 percent in June, which would be the sharpest decline since March 2009.
Retail sales in oil-rich Alberta fell 0.6 percent while Quebec receipts declined 1.3 percent, the third fall in four months, the statistics agency said today. In Ontario, the country’s most populous province, sales dropped 1.4 percent, Statistics Canada said.
Food and beverage sales posted the largest dollar decline by merchandise category, with a 1.2 percent fall to C$8.91 billion. Sales fell in eight of 11 categories making up 57 percent of total receipts.
One area of strength was motor vehicle and parts sales, with a 0.2 percent gain led by new car purchases marking the sixth straight monthly advance. Purchases excluding the motor vehicle and parts category fell 0.8 percent. Economists had forecast they would be little changed.
Sales in June were 3.1 percent higher than a year earlier, Statistics Canada said.
The drag on June’s economic output from retail sales may be larger than the decline in total receipts suggests. The volume of sales, which excludes price changes and more closely reflects the industry’s contribution to growth, fell 1.2 percent.
In a separate report, Statistics Canada said the number of Canadians receiving jobless benefits rose in June.
The number of regular beneficiaries rose by 4,520, or by 0.9 percent, to 512,280. From the year-ago month, the total number of beneficiaries fell 6.4 percent, or by 34,990.