Auto sector leads 18.7% surge in May retail sales: StatsCan

Retail sales surged 18.7% 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% 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%, according to financial markets data firm Refinitiv.

Excluding the automotive sector, sales increased 10.6%.

“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.

StatsCan said about 23% 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%, up for the first time in three months to nearly $8.5 billion; clothing and accessories rose 92.6% to $932 million; sporting goods, book and music jumped 101.2% to $750 million; furniture increased 58.6% to $947 million; and general merchandise gained 20.4% to $6.5 billion.

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

Food and beverage stores were the only subsector to decrease, losing 2% to $11.8 billion as supermarket sales fell 4.2% and beer, wine and liquor store sales were down 1.2%.

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

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

Statistics Canada says online sales were $3.8 billion in May, accounting for 8% of the total retail market. Retail e-commerce sales increased 112.7% from a year earlier.

Ross Marowits, The Canadian Press

Ross Marowits is a reporter with The Canadian Press, a national news agency headquartered in Toronto and founded in 1917.