Trucks drive up retail sales in July

‘Decent’ 0.5-per-cent increase for month fuelled primarily by auto sector and clothing

OTTAWA— Retail sales rose for a third consecutive month in July to $43.3 billion as Canadians opened their wallets for a new ride and new clothes.

The 0.5 per cent increase from June’s level was helped by rising sales of new motor vehicles — mostly trucks — as well as clothing and clothing accessories, Statistics Canada said Wednesday. It said six of 11 retail subsectors posted gains.

According to Thomson Reuters, economists had expected a gain of 0.5 per cent for the month overall and 0.4 per cent excluding autos.

The motor vehicle and parts dealers subsector gained 2.0 per cent in July and posted the largest gain in dollar terms. Sales at new car dealers gained 2.7 per cent. That was partly offset by flat levels at parts dealers and declines for used car dealers and other types of motor vehicles.

Clothing and clothing accessories stores gained 2.5 per cent — the first increase in three months.

The Canadian economy struggled through the first half of the year as it contracted in the first two quarters of 2015. However, most economists expect the economy to gain strength in the second half.

To help offset the drag caused by the sharp drop in oil prices, the Bank of Canada has cut its key interest rate by a quarter of a percentage point twice this year. It now sits at 0.5 per cent. The central bank expects the Canadian economy to grow at an annual pace of 1.5 per cent in the third quarter before accelerating to an annual pace of 2.5 per cent in the final three months of the year. BMO senior economist Robert Kavcic said the “decent” retail sales report suggests the economy continued to rebound in July. “When combined with a strong result in manufacturing, real GDP looks like it should post a 0.2-per-cent gain in the month,” Kavcic said.

“That would mark a second straight month of growth after the negative early-year run.”