Retail sales fell 5.7% in April amid pandemic’s third wave

Canadian retail sales in April posted their largest drop since the start of the pandemic as governments moved to deal with its third wave.

Statistics Canada said Wednesday retail sales fell 5.7% to $54.8 billion in April, the largest decline since April 2020 during the pandemic’s first wave.

The agency also said its preliminary estimate suggested an additional drop of 3.2% for May, but cautioned the figure would be revised.

TD Bank economist Ksenia Bushmeneva said third wave–related restrictions on non-essential and in-person shopping held back retail sales in April as expected.

“In addition to restrictions, auto dealers were also impacted by the shortage of microchips, limiting their inventory and weighing on sales that month,” Bushmeneva wrote in a report.

“While the microchip shortage may persist for some time, other headwinds will ease. With the vaccination campaign gathering speed and most provinces gradually lifting restrictions in June, consumer spending is on track to rebound strongly in the second half of the year.”

The drop in April sales was concentrated in retailers deemed “non-essential” as sales fell in nine of 11 subsectors.

Core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — fell 7.6%.

Sales at clothing and clothing accessories stores plunged 28.6% in April, while general merchandise stores dropped 8.1%.

Statistics Canada said sales at building material and garden equipment and supplies dealers fell 10.4%, their first drop in nine months.

Meanwhile, sales at motor vehicle and parts dealers and gasoline stations also fell for the first time in four months.

Sales at motor vehicle and parts dealers fell by 1.4%, while sales at gasoline stations fell 4.1% in April.

Retail sales in volume terms fell 5.6% in April.

The Canadian Press

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