Canadian retail sales growth likely to have accelerated in August

Canadian retail sales data for the month of August is set to release tomorrow. According to a TD Economics research report, the retail sales are likely to have grown by 0.6 percent on the growth of pickup in motor vehicle sales, leaving the ex-auto figure slightly changed for the second straight month. August was a record month for light truck sales, underpinned by better weather conditions, a recovering housing market, and strong labor gains.

This should more than counter the fall in passenger car sales while housing market strength should give further support to durable goods through home furnishings. Lower gasoline prices will give a modest headwind to total sales, leaving the ex. Autos and gas measure to post a modest rise, while a modest fall in overall consumer goods prices implies a more significant pickup in retail volumes to the benefit of industry-level GDP.

“This should come as relief for those concerned by the Q2 consumption slowdown, however, a muted performance across June/July will weigh on any rebound in Q3”, added TD Economics.