UPDATE 2-Canada June retail sales down 0.6 pct, GDP to be soggy

Thu Aug 22, 2013 10:22am EDT
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* Volume down 1.2 pct; forecast for retail was -0.4 pct

* June GDP seen weaker; Q2 still above Bank of Canada f'cast

* Quebec strike, Alberta floods only part of story

* June sales still 1.2 percent higher than in April

By Randall Palmer

OTTAWA, Aug 22 (Reuters) - Canadian retail sales fell 0.6 percent in June after a 1.8 percent gain in May, foreshadowing weaker gross domestic product for the month than initially thought, Statistics Canada data showed on Thursday.

The effect of floods in Alberta and a construction labor strike in Quebec for two weeks in June had led analysts to expect a decline in retail sales and economic growth in the month. That was expected to be largely matched by a rebound in July, and therefore the Bank of Canada had said it would essentially ignore June's expected economic weakness.

"I guess you don't need to put on new fertilizer when you're under 2 feet of water," said David Tulk, chief Canada macro strategist at TD Securities.

But the strike and flood were only part of the story. While Quebec and Alberta did indeed see retail sales falling 1.3 percent and 0.6 percent, respectively, Ontario fell an even greater 1.4 percent despite higher car sales there.   Continued...