CANADA DATA: June Retail Sales Confirmed Solid, But July Flash Bodes Ill For Q3
June's retail sales report was extremely mixed, with strength at the end of Q2 offset by initial indications of a sharp pullback at the start of Q3.
- Retail sales rose by 1.5% M/M (nominal, SA) in June, a little lower than the 1.6% seen in the flash estimate, but still the strongest sequential reading since December 2024.
- However, more attention in this release is on the July flash estimate which indicates a contraction of 0.8% M/M. That would still leave retail sales above the May level, but below the end-2024 level in a fairly significant setback.
- To be sure, June's reading was confirmed as solid. All subsectors improved (led by increases at food and beverage retailers, though clothing retailers led growth with +5.1%). Core sales (ex-gasoline stations and fuel vendors and motor vehicle and parts dealers) rose a 6-month best 1.9%.
- And volumes rose 1.5% M/M (implying zero price deflation in the month), bringing Q2 quarterly growth to 0.7% (our 3M/3M annualized est for June is 3.2%, highest since February).
- However with July's relapse, the overall picture looks dimmer. Indeed the 3M/3M nominal annualized rate is implied at 0.2% for July, which would be the slowest since July 2024 and well down from 10+% at the turn of the year. Assuming the volume reading is the same (-0.8%), the 3M/3M rate falls to 0.7%, suggesting a weak start to the quarter for the consumer.
- This is consistent with other readings that we are seeing that suggest a pullback in activity after a surprisingly solid economy in Q2, including July's soft jobs report.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: Trump Approval On Handling Of Inflation Nears Biden-Era Lows
A new survey from YouGov has found: “More Americans disapprove than approve of Trump's handling of all six issues asked about in this week's poll: national security (-2 net approval), immigration (-6), foreign policy (-11), jobs and the economy (-12), foreign trade (-15), and inflation/prices (-29)”
- YouGov notes: “Trump's approval on inflation and prices is nearly as low as the lowest score Joe Biden received during his presidency.”
- The report notes: “Inflation and prices is the issue Americans are most likely to name as their most important issue, with 21% picking it. That's more than choose jobs and the economy (14%), health care (10%), and immigration (9%)”
- According to Silver Bulletin's approval aggregator, Trump's approval rating on inflation is roughly -26%, suggesting that the YouGov survey is not an outlier.
Figure 1: “Donald Trump's net approval on inflation is approaching the low mark of Joe Biden's presidency” (Biden blue line/ Trump red line)
Source: YouGov
TARIFFS: Navarro: Take EU-US Trade Deal Reports With "Grain Of Salt"
A brief risk-off move on a comment by White House adviser Peter Navarro on Bloomberg TV referring to earlier reports of a EU-US trade deal nearing completion that would include a 15% baseline tariff - Navarro says:
- "We don't negotiate in public. These other countries aspirationally negotiate in public to try to get us to where they want us to go. I would say even though it was reported on Bloomberg, I would take it with a grain of salt. Never assume anything is fixed until the boss says it is fixed... Let's see what happens."
- Navarro's comments weren't quite as concrete as initially feared from the headlines ("*NAVARRO ON US-EU DEAL REPORT: TAKE IT WITH A GRAIN OF SALT" -bbg) so the risk-off move (worth about 10 points in the S&P) quickly reversed.
- Immediate focus is on a reported EU member state vote on tariff countermeasures Thursday in case a deal can't be reached with the US by Aug 1.
EURGBP TECHS: Trend Needle Points North
- RES 4: 0.8800 Round number resistance
- RES 3: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 2: 0.8738 High Apr 11 high and a key resistance
- RES 1: 0.8698 High Jul 16
- PRICE: 0.8653 @ 16:07 BST Jul 23
- SUP 1: 0.8626 20- day EMA
- SUP 2: 0.8597 Low Jul 7
- SUP 3: 0.8561 50-day EMA
- SUP 4: 0.8508 Low Jun 27
The trend condition in EURGBP remains bullish and the cross continues to trade closer to its recent highs. A bullish price sequence of higher highs and higher lows is intact and note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would open key resistance at 0.8738, the Apr 11 high. Support to watch is 0.8626, the 20-day EMA.
