Canadian Dollar: Retail sales support modest Q2 consumption – TD Securities

TD Securities reports that Canadian Retail Sales rose 1.0% month-on-month in May, matching consensus but slightly below its forecast. Gains were broad-based, led by gasoline stations, autos, general merchandise and sporting goods. Real sales were softer but still point to a modest rise in Q2 goods consumption, with flash data indicating a further 0.4% nominal increase in June.

Broad-based May retail sales gains

"Retail sales rose by 1.0% m/m in May to match the market consensus while falling short of TD's forecast for a slightly larger (+1.1%) increase."

"Gasoline stations (+3.1%) remained the key driver for retail sales in May, although strength was more broad-based than the last two months with a 0.9% rebound in the ex-autos/gas measure and gains across all nine subcomponents."

"Auto sales rose by 0.7% m/m to build on their 1.6% increase last month, while general merchandise (+1.0%) and sporting goods (+1.8%) also helped to support core spending."

"Sales were a little softer on a volume basis (+0.4%), but that is still enough to keep real Q2 goods consumption tracking towards a modest increase."

"New flash estimates also called for nominal spending to rise 0.4% in June, despite the drag from lower gasoline prices."