But recovery expected to fade in second half of year
The report confirms Canadian consumers are emerging from nationwide lockdowns with pent up demand and keen to spend. At issue is whether the sharp rebound will be sustained into the second half of the year. Policy makers have warned a full rebound in consumer confidence could take years.
“At the moment, sales are still being buoyed by the enormous government income-support programs and consumers satisfying pent-up demand, both of which could fade in the second half of the year,” Royce Mendes, an economist at CIBC World Markets, said in a report to investors. Auto sales led the pick up in receipts in May, jumping 66 per cent. Excluding auto vehicles and parts, retail sales were up 10.6 per cent on the month.
Economists in a Bloomberg survey had expected a 20 per cent gain in May sales, and a 12 per cent increase excluding autos. Even with the increase in May and June, the second quarter will go into the books as among the worst ever for Canadian retailers. Based on the June flash estimate, quarterly sales were down 15 per cent in the three months from the prior period.
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