Canada July retail sales fall 0.7%; seen up 1.3% in August

By Promit Mukherjee

OTTAWA, Sept ‌24 (Reuters) - Canadian monthly ​retail ​sales fell by 0.7% in July, marginally better than an average of analysts' expectations, primarily led by declines ‌at general merchandise retailers, data showed on Thursday.

Retail sales, which ⁠include purchases of cars, furniture, food and gasoline, are considered an early indicator ‌of gross domestic product growth ‌and account for about 40% of consumer spending.

• Retail sales dropped to C$73.70 billion ($52.25 billion) in July from C$74.25 billion in the ​prior month, Statistics Canada said.

• However, sales are likely to rebound once again in August and increase by 1.3%, the statistics ⁠agency said in an advance estimate.

• Sales were down in eight of nine sub-sectors in ​July. In volume terms, retail sales decreased 1.1%.

• General merchandise retailers, stores that sell a broad mix of ​unrelated goods from groceries to food and ‌apparel to electronics, posted the biggest decline in sales in July. This category, which contributes up to ⁠15% of total retail sales, slumped by 1.9%.

• Sales at motor vehicles and parts dealers, which account for the biggest share of retail sales, dropped ⁠by 0.8%, data showed.

• Purchases at food and beverage retailers, the second-biggest category, ​dropped 0.1%; however, sales at supermarket and grocery retailers hardly changed.

• The category of building materials was the only sub-sector which posted an increase, with sales ‌increasing 0.8%.

• "We don't expect the momentum to extend, as lingering trade uncertainty will likely weigh on discretionary ‌spending ahead," Katherine Judge, senior economist at CIBC Capital Markets, wrote in ⁠a note. This means the Bank ‌of Canada will not ​be raising rates in the near term, she added.

($1=$1.4105 Canadian)

(Reporting by Promit Mukherjee and Dale Smith; Editing by ‌Andrea Ricci )

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