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Canada’s Retail Sales Unexpectedly Slide in May Led By Food, Beverage Stores

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.

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