Statistics Canada reports that retail sales fell 1.1 % in May

Retail sales decreased by 1.1% to $ 69.2 billion in May, due to the decline in vehicle and car dealerships, according to Statistics Canada.

However, the agency specifies that its preliminary figures for June indicate an increase of 1.6% for this month.

In May. For example. However, three of the nine sub-sectors recorded a drop, sales of car vehicle dealers and spare parts having decreased by 3.6%, under the effect of a 4.6% drop in sales of new car dealers.

Basic retail sales, which exclude service stations, combustible merchants and vehicle and car dealerships, remained relatively stable in May.

The only basic retail sub-sector to have recorded a drop is that of food and drinks retailers, down 1.2%. However, mainly due to the decrease in sales of beer, wine and spirits, as well as supermarkets statistics canada reports retail sales new and statistics canada reports retail sales new other food retailers.

The retailers of building materials statistics canada reports retail sales and equipment and garden supplies increased by 1.9%.

In volume, overall retail sales decreased by 1.4% in May.

A good sign of a return to GDP growth

The decline in May was widely expected. In addition. Meanwhile. Similarly, but it seems that the economy “found stronger bases towards the end” of the second quarter, argued Andrew Grantham, principal economist at CIBC capital markets.

“The retail rebound in June is a good sign of a return to GDP growth at the dawn of. Therefore, the second half. However. for lack of details available to date. we do not know to what extent this progression is due to volatile factors such as sales of cars. petrol, “Grantham said in a note to his customers.

“Although the Bank of Canada is expected to statistics canada reports retail sales new maintain its unchanged interest rates next week. new statistics canada reports retail sales new rate drops could be necessary later in the year to guarantee growth. strong enough statistics canada reports retail sales to fill the lack of resources accumulated in the economy. which should start to exert downward pressure on underlying inflation,” he added.

Statistics Canada also noted that 32% of retail companies said they were affected by trade tensions in May. compared to 36% in April.

Among the most common impacts. there are price increases, evolution of products’ demand and increased expenditure on raw materials, shipping and labor.

Unless a trade agreement is concluded to significantly reduce customs duties between the United States. Canada by the deadline for negotiations. on August 1. “households will continue to tighten the stock market cords, because job losses and the rise in prices attributable to customs duties weigh on their disposable income,” statistics canada reports retail sales new said Michael Davenport, main economist at Oxford Economics.

“Households have limited their expenses in statistics canada reports retail sales new May in a context of increased uncertainty. concerning commercial policy. slowdown in the labor market,” said Davenport in a statistics canada reports retail sales note.

“Despite the first signs of a rebound in sales in June. we believe that the dynamics of consumer spending continue to run out of steam as the economic slowdown linked. to the trade war will extend to the household sector. ” he added.

In Quebec, retail sales decreased by 0.4% to be $ 15.5 billion in May.

In fact, sales fell in nine provinces, the highest decrease having been observed in Ontario (-2.1%), under the decrease in sales of vehicle and automotive parts.

Sales in New Brunswick fell 1.5%, while they increased by 0.3% in Nova Scotia.

They remained stable on the Prince Edward Island statistics canada reports retail sales new and decreased by 0.3% in Newfoundland and Labrador.