"Assuming that we are up on the volume side, GDP could be 0.2% m/m. It supports the consensus around that the Canadian economy most likely returned to positive growth in Q3"
- David Madani, Capital Economics
Canada's retail sales fell short of estimates, as they rose less than expected in July, mainly driven by consumers buying new clothing and cars. Receipts increased 0.5% to a record C$43.3 billion in July, after a downward revised gain of 0.4% in the previous month, while markets expected to see a rise of 0.7%. Sales advanced in six of 11 sectors in the reported month, representing 55% of retail trade and marking the third consecutive monthly increase. In volume terms, retail sales edged up 0.2%. Concerning the major contributors of the monthly gain, car sales jumped 2.7%, while clothing sales surged 2.5%. On an annual terms, sales in July were 1.8% higher.
Meanwhile, core retail trade, which excludes sales of automobiles and parts, also came out below expectations, remaining flat in July instead of rising 0.5% as estimated. In the meantime, the growth of the Canadian economy is expected to rebound in the second half of 2015, following a mild recession in the first half, when the Bank of Canada cut its interest rates twice, in order to offset the shock from falling oil prices.
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