TD Securities strategists anticipate that Canadian retail sales for May will rise by 1.1% month-on-month, slightly exceeding both the flash estimate and the market consensus of a 1.0% increase, according to their latest preview [1]. The expected outperformance is attributed primarily to a 5% month-on-month rise in gasoline prices during May, which is projected to provide a significant boost to the headline retail sales figure [1]. In April, fuel stations contributed 0.5 percentage points to retail sales growth, and a similar impact is anticipated for May [1].
Excluding automobiles, TD Securities forecasts retail sales to climb by 1.4%, compared to the market expectation of a 1.1% increase [1]. Motor vehicle sales are expected to post modest gains, building on a 1.7% increase in the previous month [1]. The strategists also predict a rebound in the ex-autos/gasoline measure, following consecutive declines in March and April, as higher fuel prices had previously weighed on core retail sales [1].
The anticipated recovery in core retail sales is supported by stronger job growth in May and a notable increase in consumer goods imports, which are expected to offset the negative impact of earlier fuel price pressures [1]. TD Securities notes that the easing of fuel price pressures, combined with these positive economic indicators, should help drive a rebound in core spending [1].
No specific market reactions or analyst opinions beyond TD Securities' outlook are mentioned in the article [1].
CONCLUSION
TD Securities projects that Canadian retail sales for May will slightly exceed consensus expectations, driven by higher gasoline prices and a rebound in core spending. The anticipated gains in both headline and core retail sales suggest a positive near-term outlook for Canadian consumer activity.