OTTAWA – Canadian retail sales fell 0.2 percent in June, but May's big jump was revised even higher, Statistics Canada said Wednesday in a report that sheds no light on the outlook whether the Bank of Canada will raise interest rates in September .
Weekly retail sales in May and June were the reason for robust economic growth in the second quarter, which should prompt the central bank to raise interest rates in September or October.
Economists in a Reuters poll predicted that retail sales would increase by 0.1% in May and a 0.1% decline when cars were excluded. Excluding car sales, turnover fell by 0.1 percent, as expected.
The profit of May was revised to 2.2 percent compared to an initially reported jump of 2.0 percent.
"Consumers were not really a spending limit in June," economist Royce Mendes of CIBC Capital Markets wrote in a research note.
"Consensus consensus means that GDP will remain stable throughout the month and about 3 percent for the quarter, and as a result, the debate between a September or October increase by the Bank of Canada will not solve much," he said. added.
Turnover at petrol stations fell by 2.3 percent, partially offsetting the 5.2 percent gain in May. In volume terms, turnover at petrol stations decreased by 0.4%.
Motor vehicles and parts dealers saw sales fall by 0.7 percent, the second fall in three months.
Sales fell in six of the 11 subsectors, representing 52 percent of retail sales. By removing the effects of price changes, the sales volume decreased by 0.3 percent.
The Canadian economy has shown mixed signs of strength in recent months, but the financial markets expect the central bank to raise interest rates before the end of the year after four hikes since July 2017.
Analysts are divided on whether an interest rate increase will take place in early September or the end of October if the bank assesses the impact of a trade dispute with the United States and how consumers and businesses have so far dealt with the four walks.
BMO Capital Markets Chief Economist Doug Porter said the June break in retail spending means the economy is likely to grow by about 3.3 percent per year in the second quarter.
"This is not so far removed from the latest BBC GDP GDP estimate of 2.8 percent, and we're sticking to an interest rate hike in October," Porter wrote in a note to customers.
The official quarterly GDP count is scheduled for release on August 30.
© Thomson Reuters 2018