Automotive sector helps retail sales surge: StatCan

Retail sales surged 18.7 per cent in May led by a revving of the automotive industry following COVID-19 shutdowns, Statistics Canada said Tuesday.

The agency says retail sales increased to $41.8 billion in May after steep declines in the previous two months, still leaving them 20 per cent below levels in February, before physical distancing measures were implemented to fight COVID-19.

Economists on average had expected an increase in May of 20 per cent, according to financial markets data firm Refinitiv.

Excluding the automotive sector, sales increased 10.6 per cent.

“At the moment, sales are still being buoyed by the enormous government income-support programs and consumers satisfying pent-up demand, both of which could fade in the second half of the year,” said Royce Mendes, senior economist at CIBC Capital Markets.

Spending on travel as well as recreation and entertainment still remains well below last year’s levels, added Brian DePratto, senior economist for TD Economics.

“Spending patterns are, on balance, encouraging. However, caution remains warranted as employment is still well below pre-pandemic levels, the risk remains of a second wave, and direct income support measures are set to begin expiring early this autumn,” he wrote in a report.

StatCan said about 23 per cent of retailers were closed during the month, with the average shutdown lasting five business days.

Sales were up in 10 out of 11 subsectors with vehicle and parts dealers, general merchandise stores and clothing stores the main contributors to May’s strength.

Motor vehicle and parts dealer sales soared 66 per cent, up for the first time in three months to nearly $8.5 billion; clothing and accessories rose 92.6 per cent to $932 million; sporting goods, book and music jumped 101.2 per cent to $750 million; furniture increased 58.6 per cent to $947 million; and general merchandise gained 20.4 per cent to $6.5 billion.

Gasoline stations were up 17.1 per cent to $3.3 billion after a record 35.5 per cent decrease in April. Electronics and appliance stores climbed 12.1 per cent to $1.1 billion, building materials and garden equipment increased 5.5 per cent to $2.9 billion and cannabis stores rose 4.2 per cent to a record $186 million.

Food and beverage stores were the only subsector to decrease, losing two per cent to $11.8 billion as supermarket sales fell 4.2 per cent and beer, wine and liquor store sales were down 1.2 per cent.

The increase in sales followed a record decline of 24.1 per cent in April while estimates suggest that retail sales increased by 24.5 per cent in June.

All provinces and territories contributed to the sales increase but the recovery was strongest in Quebec where sales grew 33.3 per cent, followed by Newfoundland and Labrador at 25.5 per cent and Manitoba at 24 per cent. Ontario sales were the largest at $14.3 billion, up 14.2 per cent following a 30.9 per cent decrease in April.

Statistics Canada says online sales were $3.8 billion in May, accounting for eight per cent of the total retail market. Retail e-commerce sales increased 112.7 per cent from a year earlier.