Canadian retail sales for July 2020:

Canada July retail sales
  • Prior was +23.7%
  • Advance July estimate was +0.7%
  • July ex autos -0.4% vs +0.5% prior
  • Ex autos and gas -1.2%
  • Early Statistics Canada estimates suggest that retail sales increased by 1.1% in August
  • 3% of retailers closed in July vs 9% in June
  • Sales up in 6 of 11 subsectors led by motor vehicles and parts at +3.3%
  • ECommerce sales -8.1% in July

That ex-autos number is worrisome. Canadian government benefits weren't cut off in July but spending struggled. In the bigger picture, Canadian sales overall surpassed February levels in July. The worry is that some of that is a mirage because of pent-up demand. Once that runs off, spending may fall back below pre-pandemic levels.

An example is auto sales, which were the driving force behind a positive number this month. But StatCan notes that on a year-over-year basis in July, the value of sales declined 7.9%, with passenger car sales down 17.8% and truck sales (which includes light trucks, heavy trucks and buses) down 5.5%.

Another worrisome sign is at building material and garden equipment and supplies dealers. There was a boom during the lockdown but a big question was whether this would lead to structurally higher home investment, or if it just pulled reno projects forward. In July, sales were down 11.6% m/m.

Overall, I'm seeing plenty to worry about here.