June 22, 2023
Sales at retail stores are on the rise after two months of declines, suggesting Canadians’ spending power remains resilient despite tightening economic conditions.
Retail sales climbed 0.5 per cent in May, according to Statistics Canada’s advance estimate released on June 21. In April, retail sales increased 1.1 per cent to $65.9 billion, surpassing the agency’s previous advance estimate of 0.2 per cent — the same figure analysts polled by Reuters expected — and reversing declines in February and March.
April’s growth was broad-based with sales climbing in eight of the nine sub-sectors that Statistics Canada tracks. Core retail sales, which exclude auto and gasoline sales, rose 1.5 per cent, which is higher than the headline number.
The numbers look strong, but they’re not entirely great news, Desjardins economist and senior director Randall Bartlett said.
“Total retail volumes edged higher by a much more modest 0.3 per cent, meaning April’s bumper advance was largely a price story,” he said in a note to clients.
Spending at general merchandise stores, such as department stores, supercentres and warehouse clubs, led the April increase and grew 3.3 per cent, while sales were up 1.5 per cent at grocery stores. The largest decrease in core retail sales came from furniture, home furnishings, electronics and appliance retailers, which collectively declined 1.6 per cent.
Auto and parts dealer sales also increased, after dropping in March, led by higher sales at used car dealers. Sales at gas stations ticked up 0.3 per cent, but sales by volume decreased 1.5 per cent.
“The Canadian consumer continues to prove its resilience,” Bank of Montreal economist Shelly Kaushik said in a note to clients. “Looking ahead, momentum in consumer spending is expected to slow in the second half of the year, as yet higher interest rates and still-elevated inflation continue to weigh on purchasing power.”
