Retail sales dropped 2.1% in May

Statistics Canada says retail sales fell by 2.1% to $53.8 billion in May, as many businesses remained close during the third wave of Covid-19, but the agency expects to see a return to growth once June numbers are available.

Sales decreased in eight of 11 subsectors for May, representing more than 65% of the country’s retail trade.

The largest declines in retail sales occurred in the building material and garden equipment and supplies sector, which saw an 11.3% drop, and in the motor vehicle and parts industry, which experienced a 2.4% decrease.

Receipts rose 0.8% at food and beverage stores and 0.9% at businesses selling gasoline.

StatsCan predicts June will deliver a 4.4% sales increase because fewer companies were closed during the month.

It says 5.6% of retailers used to calculate its monthly numbers were closed at some point in May, compared with about 5% the month before.

In a Friday report, CIBC economist Royce Mendes said about the June estimates, “That’s actually a little more of a rebound than we had penciled in, and is particularly surprising since May saw less of a retreat than anticipated. There is, however, scope for momentum in goods sales to cool down as Canadians begin allocating more of their budgets to previously unavailable services.”

Mendes expects household consumption to be “the most significant driver of GDP growth in Q3.”

National Bank of Canada economists are also upbeat, noting in their report that consumer activity looking ahead “should remain relatively strong,” given the savings amassed during the pandemic.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.