Unexpected drop in retail sales adds to economy’s woes in June
August 22, 2013 | Canadian Press | Comments
An unexpectedly steep drop in retail sales adds to expectations that June was the weakest month for the Canadian economy since the recession, further dampening hopes for next week’s GDP report for the second quarter.
June’s retail sales fell 0.6% to $40.1 billion – or 1.2% in volume terms – partly reversing the outsized 1.8% surge of the previous month and a bigger drop than the 0.4% decline that economists had forecast.
Combined with drops in manufacturing and wholesale trade reported earlier, analysts are now estimating the country’s rate of economic growth slowed to about 1.5% in the April-June quarter.
The second quarter GDP estimate includes a 0.6% decline in gross domestic product in the month of June and compares with a first-quarter GDP growth rate of 2.5%.
Analysts cannot be precise when predicting GDP because certain elements of the economy, such as mining activity, some services and construction, are not captured in the Statistics Canada monthly reports.
But barring any surprises, Statistics Canada’s comprehensive report on gross domestic product should confirm that the quarter ended on a sour note in June, BMO chief economist Doug Porter said Thursday.
“Some of the numbers had been extra-ordinarily strong, but what June does show is the flashes of strength we saw in the economy in April and May were not a meaningful sign of strength and we’re back to the same old drudgery of an economy just slogging along at a very modest pace,” Porter said.
Unlike the earlier manufacturing and wholesale trade reports, the retail sales data released on Thursday does show some impact from June’s twin shocks to the system – the Alberta floods and a construction strike in Quebec.
Sales in Quebec, Canada’s second most populous province, fell 1.3% and slipped 0.6% in Alberta, the only western province to record a decline.
But Ontario, the province with the highest population, remained the weak link, with sales falling 1.4% in June – although that came after a 2% increase the previous month.