"While much of this weakness promises to be transitory, the bigger uncertainty is the ability of the economy to rebound in [the third quarter] if the global backdrop remains precarious".
- Royal Bank of Canada
Canadian Retail Sales data came out better than expected yesterday, indicating that the data climbed 0.9% in April, compared to the 0.8% forecast. Moreover, the previous result was also revised up from -1.0% to -0.8%, contributing to the effect of the overall strong figures. At the same time, the Core Retail Sales were released, which exclude the automobile sector, as this sector takes up approximately 20% of the Retail Sales and tends to vary and be highly volatile; therefore, the Core Sales are considered to be a better reading to pay attention to. Consequently, the positive effect for the Canadian economy was even higher with the Core data, as these Sales showed a 1.3% increase, not only beating expectations by 0.6 percentage points, but with the previous reading also being revised higher. As for the reasons of such strong April figures, the main gauge was an increase in fuel prices, namely gasoline. Gasoline prices edged higher for the first time in ten months, up 0.6%, as April's Canadian inflation data suggested.
However, the Retail and Core Retail Sales were the last piece of the puzzle for the upcoming Canadian GDP release next week. On the other hand, improvements in the Retail trade was mostly price-based rather than volume-based, meaning that the contribution to the upcoming GDP data will be limited.
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