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Canadian Retail Sales Increased 0.3% In May

ByThe National Bank of Canada
Published 07/25/2012, 06:23 AM
Updated 05/14/2017, 06:45 AM
FACTS:

Retail sales increased 0.3% in May, following a 0.6% decline in April. Sales increased in 6 of 11 retail industries. Motor vehicles and parts sales were down 0.4%, after a 1.3% drop in April. Excluding motor vehicles and parts, retail sales were up 0.5% with the largest increase registered by sporting goods, hobby, book and music (+1.9%), food and beverage stores (+1.6%) and clothing and clothing accessories stores (+1.6%). This month’s worst performers were gasoline stations (-1.4%) and electronics and appliance stores (- 0.8%). On a regional basis, sales were up in 6 provinces. The strongest increase was observed in Saskatchewan (+2.0%) while New Brunswick (-1.3%) and Manitoba (-0.6%) lagged. In May, volume retail sales were up 0.7%, after declining 0.8% in April (top chart).

Retail sales increased 0.3% in May
OPINION: May’s headline retail sales were below consensus expectations. The disappointment came from autos after an earlier report had suggested healthy results for auto dealerships. Having propelled retail sales in the second half of 2011, sales in this sector have been on a downward trend since then (middle chart). It’s good to see real retail sales rising at its fastest pace in 8 months. However, despite this rebound that didn't make up for the prior month's 0.8% drop. As a result, with two months of data, Q2 retail volumes are now tracking an annualized growth rate of -1.9% (bottom chart). So, consumer weakness likely extended to the second quarter, after the sub-1% Q1 growth in real consumption spending. Looking ahead, consumption spending is likely to remain soft considering that consumer credit growth (year-on-year) is the lowest in almost two decades and the savings rate is at its lowest in five years.

Auto dealership sales in a downward trend

Weak consumption growth in Q2

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