Yahoo Finance Canada Retail Sales Jump 0.7% in April After Weak First Quarter
(Bloomberg) -- Canadian consumer spending sharply rebounded last month, according to preliminary data, after weaker-than-expected retail sales in the first quarter.
Most Read from Bloomberg
What the Trump Jury Saw as Evidence Against Him in 12 Images
Biden to End Tariff Exclusions on Hundreds of Chinese Products
Schwarzman Plans to Back Trump, Scoring a Wall Street Win for GOP
The Rise and Fall of Simon Sadler's Segantii, One of Asia's Most Successful Hedge Funds
Receipts for retailers jumped 0.7% in April, the fastest pace since September, according to the advance estimate from Statistics Canada released Friday. That followed a 0.2% drop in March, below expectations for a 0.1% decline in a Bloomberg survey and the statistics agency’s estimate for a flat reading.
With a larger-than-forecast decline in March, retail sales were down 0.2% overall in the first quarter. Despite the April bounce, retail sales are still below levels seen in December.
Receipts at motor vehicle and parts dealers grew 1%, the largest increase in the retail sales data and up for a second straight month. New car sales are up C$810 million ($590 million) since last March, accounting for the biggest share of this year’s increase in retail sales.
Excluding autos, receipts fell 0.6%, far lower than expectations for a 0.3% increase.
Overall in March, the retail sales decline was led by decreases at furniture, electronics and appliances retailers. In volume terms, retail sales decreased 0.4%.
“The waning of momentum over the quarter reflects consumer caution as mortgages come up for renewal at higher interest rates, and sales look even worse in per-capita terms, with volumes well below year-ago levels,” Katherine Judge, an economist at Canadian Imperial Bank of Commerce, said in a report to investors.
The advance estimate for April partly reflects higher gasoline prices, Judge added.
Charles St-Arnaud, chief economist at Alberta Central, said the estimate suggests some strength to start the second quarter, but it will likely prove temporary.
“Spending per person continued to trend lower, suggesting that individual households are reducing their spending and that the growth in consumer spending is only due to continued increase in population,” he said in an email.
Read More: TD, RBC Data Point to Slowing Household Spending in Canada
Given the notable positive swing in April’s advance estimate, there is reason to believe that March’s reading could be negatively skewed due to an early Easter holiday, Maria Solovieva, an economist at Toronto-Dominion Bank, said in a report to investors.
“One way or another, we expect a further slowdown in consumer spending in the second quarter, giving the Bank of Canada plenty of reason to cut this summer,” she said.
What Bloomberg Economics Says...
“Preliminary estimates show a surge of retail spending in April — but when it comes to understanding the economic outlook, slowing spending throughout the first quarter is more important. “
— Stuart Paul, US and Canada economist
Read the full note here.
Core retail sales, which exclude gas stations and car dealers, were down 0.6% in March. That’s the first decrease in four months, with broad-based declines in all subsectors except building material and garden supplies dealers. Gas station sales were down 0.7%.
Regionally, sales were down in six of 10 provinces. Ontario saw the largest provincial decrease, led by lower sales at sporting goods, hobby and book retailers.
The statistics agency didn’t provide details on the April estimate, which was based on responses from 51% of companies surveyed. The average final response rate for the survey over the previous 12 months was 90.5%.
--With assistance from Jay Zhao-Murray.
(Adds more economist reaction.)
Most Read from Bloomberg Businessweek
TikTok Video Playing on Finance Bro Stereotype Becomes a Viral Hit
The Dodgers Mogul and the Indian Infrastructure Giant That Wasn’t
A Hidden Variable in the Presidential Race: Fears of ‘Trump Forever’
©2024 Bloomberg L.P.
