Canadians hunting for Raptor gear to celebrate their team’s resounding victory in The National Basketball Association finals helped perk up retail sales in an otherwise lacklustre June, according to Statistics Canada.
“Clothing and clothing accessories stores (+4.2 per cent) and sporting goods, hobby, book and music stores (+3.7 per cent) recorded increases in June,” Statistics Canada said in a release Friday. “These gains also followed inclement weather in May and coincided with the Toronto Raptors playing in and winning the NBA championship in June.”
Overall, retail sales were flat, beating economists’ estimate of a 0.3 per cent decline.
Building material and gardening equipment stores saw growth of 6 per cent, while sporting goods, hobby, book, and music stores increased by 3.8 per cent and general merchandise stores sales were up by 3 per cent.
However, motor vehicle and parts dealers declined by 2.5 per cent, something Statistics Canada ascribed to a 3.2 per cent decline in sales at new car dealers. Gasoline stations by 3.4 per cent, thanks to an 8 per cent drop in gasoline price on an unadjusted basis.
While grocery stores didn’t entirely return from weaker May, “the 1 per cent increase in June in the separately released monthly survey of food services and drinking places suggests what most of us already knew — Canadian restaurants and bars were big winners during the NBA playoffs,” reads a report from Royce Mendes, director at CIBC World Markets.
Other analysts say it is difficult to gauge the Raptors’ contribution to retail sales.
“There was an element of a rebound from a couple of weak months prior to that for categories such as clothing, hobbies and sporting goods as a result to the late start to summer weather,” said Mendes. “Some of June’s gains are simply a rebound.”
Benjamin Reitzes, the Canadian rates and macro strategist at BMO Capital Markets, says there are too many factors to attribute any one force in the market, although it may be easier to pin down numbers once July’s sales are released.
“You might get some pullback but you’re coming off a weaker May,” said Reitzes. “Does that mean you get another negative in July? I don’t think that’s necessarily clear but there is some downside risk just based on the reversal of the boost from the Raptors.”
Sales of Raptors championship apparel and memorabilia on NBA.com broke the record for the day following the title win in June, topping LeBron James’s 2016 victory with his hometown Cleveland Cavaliers.
“We have to keep this in context because the recent run of growth is looking more like a rebound from virtual stagnation from the beginning of the year,” said Mendes. “Once we return the question is how fast can we grow after that?”
This week’s industry reports on manufacturing, wholesaling and retailing delivered three-for-three ‘beats’ versus the consensus, capping a strong set of data for the Bank of Canada to parse as it mulls a decision on interest rates on September 4.
CIBC’s Mendes believes the triple dataset could see both monthly and quarterly GDP forecasts for next week’s releases being upgraded.
“As a result, Q2 GDP should sail past the Bank of Canada’s last forecast, with Q3 also getting a shot in the arm from the solid handoff, reason enough for us to still see the Bank of Canada waiting on the sidelines for some time before cutting rates.”