Unprecedented decline for retail sales
June 19, 2020 | 3-minute read
Focus Area—Canadian Economics
The Conference Board of Canada’s Senior Economist Richard Forbes offers the following insights on today's release of data on retail trade:
Today’s Statistics Canada release showed that retail sales fell 26.4 per cent in April, marking their largest monthly decline on record for the second month in a row. Clothing stores have been the hardest hit by the pandemic, as sales in the subsector were down an astounding 85 per cent since February. Thankfully, it appears that the worst period for retailers is now behind us, and a recovery in retail sales is likely to have begun in May.
- Retail sales fell 26.4 per cent in April compared to the previous month and have fallen by one third since February.
- For the first time in nearly three decades, sales declined in all 11 subsectors. The largest declines were at clothing stores (down 69.5 per cent) and furniture stores (down 50.6 per cent).
- After surging in March, sales at food and beverage stores fell 12.7 per cent. The results indicate that while households stockpiled food in March, much of the panic-buying had subsided in April.
- Sales fell in all 10 provinces, with Ontario and Quebec posting the largest declines. Meanwhile, Alberta and Saskatchewan reported the most modest reductions in sales.
- The pandemic has caused many Canadian households to purchase goods online rather than in store. After increasing 38.2 per cent in March, e-commerce sales rose sharply in April, increasing by an additional 56.0 per cent.
- On a positive note, the worst period for retail sales is likely now behind us. Restrictions around most of Canada eased this spring, allowing many retailers to begin operating again. Preliminary estimates from Statistics Canada indicate that retail sales increased by around 20 per cent in May.
- This morning’s release supports our forecast that Canada experienced its worst economic downturn in decades during the second quarter of 2020. The preliminary estimate for May retail sales also supports our forecast that the downturn was short lived and that the economy began growing again in May. Despite this turnaround, activity will not return to pre-pandemic levels until late 2021. That’s because many sectors—such as accommodations, food services, and air transportation—will not fully recover from the crisis until well after a vaccine for COVID-19 is widespread globally, something we do not anticipate will happen this year.