**Canadian Retail Sales Increase Slightly in June, Led by Auto Sales**.
**Key Points**.
* Retail sales in Canada rose by 0.5% in June, slightly above market expectations of a 0.3% increase..
* The increase was primarily driven by higher automobile sales..
* Excluding autos, retail sales actually declined by 0.4%..
* Clothing and accessories stores saw a particularly sharp decline in sales, dropping by 3.5%..
**Detailed Analysis**.
According to data released by Statistics Canada on July 22, 2023, retail sales in Canada increased by 0.5% in June compared to May. This was slightly higher than the market consensus forecast of a 0.3% increase..
The increase in retail sales was largely driven by a 2.9% surge in sales of new motor vehicles. This suggests that consumers are continuing to spend on big-ticket items despite rising interest rates and the ongoing cost-of-living crisis..
However, excluding automobiles, retail sales actually declined by 0.4% in June. This indicates that consumers are becoming more cautious in their spending on non-essential items..
One of the sectors that saw a particularly sharp decline in sales in June was clothing and accessories stores. Sales in this category fell by 3.5%, suggesting that consumers are postponing purchases of discretionary items amid economic uncertainty..
**Outlook**.
The modest increase in retail sales in June is a positive sign for the Canadian economy, but the underlying trend remains weak. The decline in retail sales excluding autos suggests that consumers are becoming more price-sensitive and are cutting back on non-essential spending..
The Bank of Canada is expected to continue raising interest rates in an effort to curb inflation. This is likely to further weigh on consumer spending in the coming months. As a result, the outlook for retail sales remains cautious in the near term..
**Source:**.
* Statistics Canada: https://www.statcan.gc.ca/en/dai/smr22/smr2243#a1.
