A resurgent retail market fuelled by improved purchasing power from federal financial aid programs could feed into broader economic recovery, according to the Conference Board of Canada.
Data from Statistics Canada showed that retail sales nationwide saw 18.6% growth in May, recovering $6.6 billion from the April doldrums to reach $41.8 billion. Early StatsCan estimates have projected a further 24.5% increase in retail sales in June.
“[This] data suggests that Canada’s economy is on the road to recovery. While sales remained well below pre-pandemic levels in May, Statistics Canada’s early estimate suggests that retail sales could be fully recovered in June,” the Conference Board said in its latest analysis.
The initial recovery was evident across the board, with the greatest proportional increases seen in Quebec (up 33.3%), Newfoundland and Labrador (up 25%) and Manitoba (up 24%). In terms of dollar volume, the largest gains were observed in Quebec, Ontario, Alberta, and BC.
The Conference Board attributed this trend to the success of federal aid programs like the Canada Emergency Response Benefit.
“While it’s good news that the recovery remains on track, translating retail sales to the broader economic recovery may be optimistic, as income supplement programs have helped maintain spending power over and above what other economic indicators (such as the labour market) would suggest. This means that retail sales may be one of the first sectors of the economy to recover,” the Conference Board said.