Ottawa, July 21, 2020— The Conference Board of Canada’s Senior Economist, Cory Renner, offers insights on May’s retail trade data:
“The retail sales data suggests that Canada’s economy is on the road to recovery. While sales remained well below pre-pandemic levels in May, Statistics Canada’s early estimate suggests that retail sales could be fully recovered in June. While it’s good news that the recovery remains on track, translating retail sales to the broader economic recovery may be optimistic, as income supplement programs have helped maintain spending power over and above what other economic indicators (such as the labour market) would suggest. This means that retail sales may be one of the first sectors of the economy to recover.”
- Retail sales recovered to $41.8 billion in May— a $6.6 billion increase over April’s level (a rise of 18.6 per cent). This is another indication that Canada’s economy has now gotten through the worst of the pandemic.
- Despite the rise in May, retail sales remain more than 20 per cent below February levels, indicating that a full recovery is likely still a few months away.
- However, Statistics Canada’s preliminary estimate, which could be revised significantly, suggests that retail sales rose by 24.5 per cent in June. If this increase holds, retail sales would be almost completely recovered in June when compared to February.
- The Conference Board’s analysis concludes that the Canada Emergency Response Benefit (CERB) has been an income boost to many households and is likely a big reason why retail sales have recovered ahead of other parts of the economy. Government programs have maintained much of the spending power in the economy.
- Every province saw an increase in retail sales in May. The greatest increases were in the largest provinces with Quebec, Ontario, Alberta and British Columbia recording the largest gains. In percentage terms, Quebec (33.3 per cent ), Newfoundland and Labrador (+25 per cent) and Manitoba (+24 per cent) had the largest increases.
- The recovery from February levels remains very different among the provinces. Retail sales in Ontario remain 28 per cent below February levels, the lowest of any province and in-line with Ontario’s overall slower pace of economic recovery.Meanwhile, retail sales in Newfoundland and Labrador (7 per cent below February levels), Manitoba (9 per cent below), New Brunswick (10 per cent below) and Saskatchewan (10 per cent below) have recovered the most because of quicker re-openings and a lower prevalence of the coronavirus.
- Retail e-commerce sales rose again in May, although at a more muted pace than previous months. Between February and April, e-commerce sales increased by over $2 billion. However, they only increased by $200 million in May, an early indication that Canadians, when able, still prefer going to a store.
- The recovery in May came mostly from durable goods as automotive, furniture and electronics and appliance goods accounted for a large portion of the increase. Despite a relatively large increase in May, sales for many other sectors remained well below pre-pandemic levels.
- Other sectors that recorded large sales increases in May included clothing stores, gas stations and health and personal care stores. In the case of clothing stores, sales remained at a third of pre-pandemic levels, but should continue to rise as confidence increases. Higher sales at gas stations is likely due to the easing of restrictions leading to more commuting.
- With the worst of the pandemic behind us, sales at food and beverage stores saw a slight decline.