Canada July retail and wholesale trade both rise, are now above pre-pandemic levels

OTTAWA (Reuters) - Canadian retail and wholesale sales both rose in July and were higher than before the coronavirus pandemic struck, Statistics Canada said on Friday, pointing to further evidence of a partial economic recovery.

FILE PHOTO: People walk in the Eaton Centre shopping mall, as the provincial phase 2 of reopening from the coronavirus disease (COVID-19) restrictions begins in Toronto, Ontario, Canada June 24, 2020. REUTERS/Carlos Osorio

Retail trade rose by 0.6% - less than the 1.0% forecast in a poll of Reuters analysts - and Statscan said August sales probably gained 1.1% on the month. Wholesale trade jumped by 4.3% in July, much more than the predicted 2.0% gain.

The increases were much more modest than the 22.7% surge in retail sales and the 18.8% jump in wholesale sales seen in June after restrictions imposed to fight the outbreak were removed.

“Retail and wholesale activity just carved out perfect V-shaped rebounds and that rebound was maintained in August,” said Doug Porter, chief economist at BMO Capital Markets.

“Now that the pent-up demand has been satisfied in many sectors, expect much more subdued (i.e., normal) figures in the months ahead in the sales data,” he said in a note to clients.

Retail sales grew in six of the 11 subsectors, with motor vehicles and parts contributing the most. Gas sales also rose.

Excluding those two subsectors, overall sales fell 1.2% on lower sales at building material and garden equipment and supplies dealers as well as at food and beverage stores.

“Broader household spending trends still look relatively solid at this point in the economic recovery,” said Nathan Janzen, a senior economist at RBC Economics.

That said, a recent spike in coronavirus cases is a signal the virus still poses a potent threat, he said in a note.

“We continue to expect this initial rapid-looking bounce-back in economic activity will ultimately fade into a slower pace of growth with the economy still expected to be running well-below capacity” into 2021, he said.

Additional reporting by Steve Scherer and Dale Smith in Ottawa; Editing by Jonathan Oatis and Chris Reese