No Rebound? July’s Retail Sales Say Differently
Economists, analysts, mortgage brokers, and real estate agents have been going back and forth on whether or not Canada is in the midst of a rebound or not. Now, new stats have come out that show we are actually in a rebound, and those stats have nothing to do with new home sales, resales, or home prices. They have everything to do with the retail sales in July.
History has proven that the economy is dependent on consumer spending, and that you can tell how the economy is doing just by looking at that data. During the recession, it was our consumer spending that kept the national economy from tanking as so many others did around the globe. Last Christmas, shortly after mortgage rules were introduced and people had to spend more to buy a home, we saw one of the biggest drops in retail spending than we’d seen in several years.
Now, this past July retail sales saw an increase of 0.6 per cent, shooting it to $40.3 billion. That came after a decline in June that was nearly on par with July’s stats. And that decline in June was due only to the construction strike in Quebec, and the flooding that happened in Alberta. July’s percentage was further broken down to show that wholesale sales saw an increase of 1.5 per cent, manufacturing spending saw an increase of 1.7 per cent, and building permits – yes, those in real estate – saw a surge of a whopping 20.7 per cent.
And that growth isn’t going anywhere. According to Bloomberg economists, we can expect to see an increase of 1.7 per cent in our nation’s economy between now and September.
“That weakness in June even outside of the temporary disruptions was overstated,” says Nathan Janzen, a Royal Bank of Canada economist. “The bounce back implies activity is on a stronger path than what was implied by the June data alone.”
Janzen realizes that the growth expansion in July sat at 0.7 per cent, but he also says that the third quarter will see an increase of 3.4 per cent.
But where did those retail sales go in July? The survey shows that gas stations saw a 3.2 per cent increase; clothing and accessory stores saw an increase of 1.9 per cent; and home furnishing stores saw growth of 1.6 per cent. From all eleven categories that are regularly counted in this survey, eight of them saw growth. One of the categories to see a decline was motor vehicles and part sales.
But those sales can be broken down by province too. Ontario saw the biggest retail gains with an increase of 1.5 per cent, and Quebec – one of the provinces that was the reason for June’s decline – was right behind at 1.3 per cent. One of the provinces to see one of the biggest declines was Manitoba, who raised their provincial sales tax beginning July 1, and therefore saw a decline of 4.1 per cent.