Canadian Retail Sales Preview: Four major banks expectations for June report

Today, the Canadian Retail Sales report for June is set to be released at 12:30 GMT and as we get closer to that time, here are the expectations forecast by the economists and researchers of four major banks regarding the upcoming data. Most of the market specialists are expecting Retail Sales (MoM) to post-reading in between +20% and +32% in May, while the consensus is +19.1% reading. 

RBC

“We expect the upcoming May Retail Sales report to show more of the same vigour, with a 20% rebound in spending – in line with the 19% preliminary estimate from Statistics Canada. An impressive showing – but still only enough to bring sales back to around 80% of what they were before COVID-19 prompted an unprecedented collapse in March and April. Still, our own tracking of credit card expenditures point to a similar-sized rise in June. Indeed, it’s possible that Retail Sales were close-to or above year-ago levels in June – as was the case in already-reported numbers in the United States and the United Kingdom.”

NBF

“Gasoline prices and auto sales rebounded in the month, a development which may have helped headline outlays to increase 20% MoM. While impressive, this result would still leave total Retail Sales down 20.4% on their February level. Spending on other items than autos, meanwhile, could have benefited from the partial reopening of the economy and advanced 12.5%.” 

CIBC

“Statistics Canada’s advance estimate of a rebound of 19.1% in May Retail Sales is consistent with the 20% increase according to our own independent modeling. The partial reopening of the economy in May likely lifted almost all of the boats in the Canadian retail space. Car sales, which were hit hard during the worst months of the pandemic for retailers, will lead the way back. Earlier-released data on new autos suggest a doubling of unit sales in May relative to April. Some of that might have reflected discounting, so won’t be fully matched in the nominal sales numbers, but will still be a solid bounce from the depths of April. Rising gasoline and demand from increased driving should also see fuel sales rise. Excluding autos and gasoline, a range of retailers should have benefited from the reopening, particularly clothing stores which had seen sales drop almost 90% from February to April. However, one area that might not have seen increased traffic is grocery stores which probably gave back more of the gains made in March when Canadians were panic buying and stockpiling.”

TDS

“Retail Sales are poised for their largest increase on record with TD looking for a 32% MoM rebound in May, well above flash estimates from StatCan (+19.1%), that would leave them down just 11% y/y (vs -33% in April). Gains should be broad-based, but we still expect autos to contribute half of the total increase, leaving ex-auto sales up 16%. Gasoline stations will also provide a sizeable contribution, helped by a 17% increase in the price at the pump, while other categories, including apparel and home furnishings, will benefit from a partial rollback of emergency measures. Volumes should come in slightly below the nominal increase, but this should prove inconsequential for GDP given the strength of the headline print.”