By Robb M. Stewart
OTTAWA--Canadian consumers were spending again last month, hinting at some resilience despite the hit to household budgets from high interest rates that saw retail sales drop in the early months of this year.
An advance estimate of retail receipts indicates sales increased 0.7% in April, the strongest increase in seven months, Statistics Canada said Friday.
That comes after sales in March fell 0.2% from the month before to a seasonally adjusted 66.44 billion Canadian dollars, the equivalent of about $48.39 billion, the data agency said. The result was weaker than the agency's prior forecast for essentially flat sales and the 0.1% dip forecast by economists.
Compared with a year earlier, retail sales in March were up 1.9%.
Statistics Canada's advance estimate for April sales was based on responses of roughly 51% of retailers surveyed and will be revised.
With a third consecutive fall in March, retail sales were down 0.2% in the first quarter of the year, a pullback from growth of 1.1% in the final three months of last year.
The first quarter was a mixed period for many well-known Canadian retailers.
Canadian Tire pointed to depressed consumer spending and a slight fall in traffic at its stores for the quarter as revenue fell roughly 5% from a year earlier. Clothing brand Roots saw lower sales due in part to with weakness in cold-weather outerwear and accessories, but pet-goods retailer Pet Value logged a rise in sales with growth in its franchise base. Among the big grocery chains in the country, Loblaw, Metro and George Weston each reported higher sales than a year ago even as consumers faced elevated food prices.
The sales data from Statistics Canada is one of the last major economic indicators the central bank will gather before its next policy meeting early next month. The Bank of Canada has left its benchmark interest rate steady since last raising it in July to a more than two-decade high, though Gov. Tiff Macklem earlier this month said a cut was getting nearer as inflation continued to ease.
In volume terms, price-adjusted sales were 0.4% lower than in February. That hints at another headwind to industry-level gross domestic product for March after factory sales dropped 2% for the month on a price-adjusted basis.
The weakness in March was broad, with sales down in seven of nine retail segments tracked by the agency, led by declines at furniture, home furnishings, electronics and appliances retailers.
Retail receipts for March showed Canadians also spent less on food and beverages, and on clothing, accessories, luggage and leather goods.
However, sales at motor vehicle and parts dealers were up for a second straight month, rising 1.0% thanks in sales of new vehicles. That offset a decline at gas stations and fuel vendors.
Core retail sales, which exclude car and auto-parts dealers and gas stations, were 0.6% lower for the month but up 1.2% from a year earlier.
Retail e-commerce sales were up 3.0% in March to C$3.98 billion, accounting for 6.0% of overall sales versus 5.8% in February, the agency said.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
05-24-24 0906ET
