Sales ex autos fell 7.2% in April
Virtually the entire period of April-June will be affected by the harshest lockdowns since the start of the pandemic and that makes the Bank of Canada's call for 3.0% annualized growth in the quarter fall too rosy.
After today's report, CIBC underscored a forecast for no growth in Q2.
"The data on retail sales continue to indicate that the Bank of Canada is too optimistic about second quarter growth, even if there is a solid rebound now occurring in June," they wrote.
The consensus on GDP is 2.0% but I expect others will follow CIBC and ratchet that down. The flipside though is that more juice is likely coming in Q3 as a wave of reopening spending takes place. There's plenty of reason for more optimism with Canadian covid cases now at the lowest since October after a rapid plunge. It's suddenly realistic that most of Canada's restrictions could be gone in August.
The consensus for Q3 growth is +9.1% annualized and that's likely going to rise. So on net, I think the market is right to look past a soft Q2 and focus on better times ahead.
