Canada: Sharp recovery in retail sales it’s a relief – CIBC

Canadian retail sales bounced sharply in May and preliminary data from Statics Canada points to another strong month in June.  Analysts at CIBC, consider it is a relief to see such a sharp recovery in retail sales.

Key Quotes: 

“The closure of many storefronts brought the retail sector to its knees in April, but a relaxing of restrictions allowed it to pick itself back up in May.”

“Statistics Canada also published an advance estimate of June retail sales, which showed a further increase of 24.5% from May. That would leave sales ending the first half of the year just off the highs seen in February.”

“With household spending accounting for more than half of the Canadian economy, it’s a relief to see such a sharp recovery in retail sales. The data continue to suggest that Canada avoided the worst-case scenario for the first half of 2020, and actually tracked closer to some of the most positive outlooks, with the help of fast and aggressive government aid.”

“Government restrictions will be in place for an extended period of time in one form or another, meaning the economy can’t fully bounce back. If government income support begins to wane, the pace of recovery might slow as the true effects of an elevated unemployment rate begin to be felt.”