The Conference Board of Canada’s Senior Economist Richard Forbes offers the following insights on today's release of retail trade data:
“Today’s Statistics Canada release showed that retail sales fell 5.7 per cent in April, posting their first decline since December of last year. With provincial governments implementing more stringent lockdown measures throughout the month, the results are hardly surprising. And given that restrictions mostly remained in place during May, most retailers have endured a difficult spring. Still, we expect that sales have been recovering swiftly since many in-store shopping limitations were eased in June.”
- Retail sales fell 5.7 per cent in April compared to the previous month.
- The decline can be attributed to the third wave of the pandemic, as provincial governments began to implement more stringent lockdown measures in April.
- Sales fell by about the same amount as they did in December, when the second wave was ramping up.
- Most retailers now offer curbside pickup, something that has helped many stores stay afloat during the lockdown periods. Still, the results show that curbside cannot entirely replace the lost revenue from in-store shopping.
- Taking into account price changes, total sales volumes fell 5.6 per cent in April.
- Sales fell in 9 of 11 subsectors, with clothing stores (-29 per cent) and hobby stores (-26 per cent) posting the largest declines.
- In contrast, sales at grocery stores rose 0.6 per cent. With shutdowns of indoor dining around the country, and grocers largely exempt from in-store closures, grocers were able to avoid a contraction in sales.
- Preliminary estimates released by Statistics Canada today suggest that retail sales fell an additional 3.2 per cent in May. With many restrictions still in place throughout the month, the estimates are in line with what we have seen over the past year.
- On a positive note, retail sales were still 5.4 per cent above their pre-pandemic level. With income still holding up well due to the government support measures implemented during the pandemic, and a lack of alternative spending opportunities on entertainment and travel, consumers have spent heavily on discretionary retail items when in-store shopping has been permitted.
- As such, we expect sales will have posted a strong bounce-back in June, when many lockdown restrictions around the country were eased.
- Regionally, sales fell in seven provinces. At 13 per cent, Ontario posted the largest decline. Meanwhile, the Atlantic provinces performed comparatively well, with only Nova Scotia posting a contraction.
- Looking ahead we expect that, after recovering in June, retail sales will moderate in the second half of the year. As government support programs continue to wane and travel restrictions begin to ease, consumers will spend less frivolously on discretionary retail items.
- It is important to note the downside risks to our forecast. While we anticipate widespread distribution of effective COVID-19 vaccines by the third quarter of this year, there is still a degree of uncertainty surrounding the pandemic. With cases of new variants rising in the United Kingdom—an area with relatively high vaccination rates—the Canadian and global economies are not out of the woods yet. Additional waves of the disease around Canada could lead to yet another round of lockdowns, weighing on our economic recovery.