Canadian retail sales unexpectedly declined in May, posting the first drop in four months as food and beverage stores led the declines even though a majority of the industry groupings saw gains.Sales fell 0.1% in the month to $51.5 billion, Statistics Canada said in a report on Friday. The consensus on Econoday was for a rise of 0.3%. Excluding motor vehicle and parts dealers as well as gas stations, sales decreased 1%, the government agency said.
“Sales were down in four of 11 subsectors, representing 39% of retail trade,” StatsCan said. “Lower sales at food and beverage stores were the main contributors to the decline.”
Food and beverage store sales fell 2% in May after rising for the prior three months. Clothing and accessories sales were down 2.7% and general merchandise slipped 1.1%. Sales at gas stations rose 3.5%.
Higher spending at gas stations “tends to get diverted from other sectors,” said Benjamin Reitzes, an economist with Bank of Montreal. “And, the weather in May was simply awful, generally a negative for retail activity.”
Sales were down the most in Canada’s smallest province, Prince Edward Island, falling 3.9% in the month. Ontario, the biggest province in terms of population, saw sales rise 0.5% while Quebec, the second-most populous, rose 0.9%.
“Even if this month’s softness is exaggerated, let’s not forget that the Canadian consumer is sporting a hefty debt burden which will likely restrain spending growth for years to come,” Reitzes said.