Retail sales increased 0.3% to $70.1 billion in April. Sales were up in six of nine subsectors and were led by increases at motor vehicle and parts dealers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were up 0.1% in April, reported Statistics Canada on Friday.
In volume terms, retail sales increased 0.5% in April.
“Feedback from respondents for April highlighted the effects of trade tensions between Canada and the United States on Canadian retail businesses. According to answers to supplementary questions, 36% of retail businesses were impacted by the trade tensions in April. The most common impacts were price increases, change in demand for product and supply chain disruptions. Despite six of nine subsectors posting monthly gains in retail sales, all nine subsectors saw a negative impact on sales,” said the federal agency.
The largest increase in retail sales in April was observed at motor vehicle and parts dealers (+1.9%), up for a second consecutive month. The increase was led by higher sales at new car dealers (+2.9%) and used car dealers (+2.1%). The largest decrease in the motor vehicle and parts dealers subsector was in automotive parts, accessories and tire retailers (-4.7%), explained Statistics Canada, adding that sales at gasoline stations and fuel vendors (-2.7%) decreased in April for a second consecutive month. In volume terms, sales at gasoline stations and fuel vendors increased 0.4%.
“Core retail sales edged up 0.1% in April, posting their third consecutive monthly increase. The gain was led by higher sales at sporting goods, hobby, musical instrument, book, and miscellaneous retailers (+1.0%) and furniture, home furnishings, electronics and appliances retailers (+0.8%),” noted Statistics Canada.
“Higher sales were also recorded at food and beverage retailers (+0.2%) in April. The increase in this subsector was led by gains at supermarkets and other grocery retailers (+0.4%).
“The largest decrease to core retail sales in April came from clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers (-2.2%).”
On a seasonally adjusted basis, retail e-commerce sales increased 3.6% to $4.4 billion in April, accounting for 6.2% of total retail trade, compared with 6.0% in March, said Statistics Canada.
“Statistics Canada is providing an advance estimate of retail sales, which suggests that sales decreased 1.1% in May. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 53.8% of companies surveyed. The average final response rate for the survey over the previous 12 months was 90.8%,” it said.
Maria Solovieva, Economist, TD Economics, said as expected, consumers continued front-load vehicle purchases in anticipation of price increases that are likely to come due to tariffs.
“However, core sales may be an early signal of broader consumer hesitancy in the face of trade policy headwinds. According to a supplementary by Statistics Canada survey, 36% of retail businesses reported being affected by trade tensions in April. The most commonly cited impact included price increases, change in demand, and supply chain disruptions,” she said.
“The advance estimate sets a somber tone for the second quarter. In addition, our internal credit and debit card spending data shows a meaningful softening in spending through May, suggesting that consumers tightened their purse strings. As a result, we expect real personal consumption expenditures to be flat this quarter, with consumer spending likely to contract in Q3 if U.S. tariffs continues to weigh on sentiment and job prospects.”
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