By Promit Mukherjee
OTTAWA (Reuters) – Canada recorded a widely anticipated drop in retail sales in July, as purchases across a broad range of products dropped, data from the national statistics agency showed on Friday.
Retail sales for July were down 0.8% to C$69.6 billion ($50.36 billion), Statistics Canada said, giving away most of the previous month’s gains.
June retail sales increased by a revised 1.6%, StatsCan said, while an advanced indicator suggests that retail sales growth is likely to rebound to 1% in August.
Retail sales, which include domestic sales of cars, furniture, food, gasoline and many other items, are considered an early indicator of gross domestic product growth and contribute around 40% to total consumer spending.
Analysts and economists track the retail sales number closely to gauge the health of the economy.
A healthy August retail sales number could indicate that third-quarter GDP might not be weak and could possibly avoid contraction, after the economy shrank in the second quarter.
Two back-to-back quarters of contractions mean an economy has entered a recession.
In July, retail sales were down in eight of nine subsectors, representing 72.2% of retail sales, said StatsCan, which added that, in volume terms, retail sales decreased by 0.8%.
Sales at motor vehicles and parts dealers – the biggest contributor to retail sales accounting for over 27% to the overall number – rose by 0.2%. It was the only sector that posted growth in July.
Retail sales excluding motor vehicle and parts – a closely-tracked metric – were down 1.2%, missing analysts’ estimates by a large margin.
Analysts polled by Reuters had forecast retail sales to be down 0.8%, and sales excluding motor vehicles and parts were projected to drop by 0.7%.
($1 = 1.3821 Canadian dollars)
(Reporting by Promit Mukherjee; Editing by Joe Bavier)
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