Canada retail sales seen rebounding in June after declining 2.1% in May

OTTAWA (Reuters) - Canadian retail sales likely rebounded in June after dropping less than expected in May, data showed on Friday, as businesses forced to shut down amid a potent third wave of COVID-19 infections began to reopen.

Retail sales dropped 2.1% in May from April, Statistics Canada said, less than a 3.0% decline forecast by analysts. June retail sales likely rose 4.4%, according to a Statscan preliminary estimate.

"May and June sales (data) are slightly better than what we had penciled in, and suggest that while Canadians were finding ways to spend during the shutdowns, there was still ample pent-up demand to be satisfied when restrictions were lifted," CIBC senior economist Royce Mendes said in a note.

Some 5.6% of retailers said they were closed at some point in May, compared with 5.0% in April.

Retail sales fell in April on lower sales at building material and garden equipment and supply dealers, as well as motor vehicle and parts dealers, Statscan said.

Statscan provided no details on what drove sales higher in June.

The Canadian dollar was nearly unchanged at 1.2565 to the greenback, or 79.59 U.S. cents.

The Bank of Canada last week painted an optimistic picture of growth heading toward the second half of the year as higher vaccination rates allow for a broad reopening of the economy. The economy is expected to grow 6% this year compared to 2020, the central bank said.

(Reporting by Steve Scherer; Additional reporting by Fergal Smith; Editing by Andrea Ricci)