Retail trade

Retail sales surged to a record high for the second straight month in April, in part due to a near-record price hike for gasoline. Retailers sold $32.8 billion worth of goods and services, up 1.7% from March, identical to the increase the month before. These back-to-back gains were the strongest monthly advances since a 1.8% increase recorded in March 2004.

April's robust sales conditions followed the strongest quarterly gain in four year. Excluding sales by dealers of new, used and recreational vehicles and auto parts, retail sales rose 1.9% from March, continuing a string of sales increases that started in December 2005.

Once prices are taken into account, total retail sales in constant dollars grew by a smaller but nevertheless robust 1.2% in April. While the effect of higher gasoline prices was significant (they rose 13.5% in April, the second highest increase in 23 years), these were partially offset by lower prices at other stores, such as clothing and accessories stores, general merchandise stores, and miscellaneous retailers.

Six out of eight retail sectors experienced sales gains in April with the automotive sector leading the way (+3.6%). Miscellaneous retailers, which include retailers such as office supply stores, sporting goods stores, and hobby, music and book stores, registered a 2.5% increase in their sales in April. The other sectors that saw their sales increase registered gains that were below the national average.

Consumer spending in building and outdoor home supplies stores fell in April (-0.8%), ending a five month streak of sales gains. The first three months of this year for this sector have been exceptional, the quarterly gain being the strongest in over two years. Despite being the fastest growing sector in the retail industry, however, building and outdoor home supplies stores have seen its annual growth performance slow down over the last four years.

Consumers also took a break from shopping at furniture, home furnishings and electronic stores (-1.1%) in April, after splurging in the retail stores of this sector in January this year.

Sales continue to be strong in the automotive sector

Despite a lull in sales among new car dealers (-0.4%) in April, the automotive sector registered a 3.6% increase in sales, due to higher gasoline prices and a real increase in sales of recreational motor vehicles. Sales at gasoline stations soared 9.3% in April. Gasoline stations sales have generally been dictated by the changes in the price of gasoline.

Used and recreational motor vehicle and parts dealers saw their sales rise by 7.2%, making it the fifth gain among these retailers in six months. A large part of April's increase stemmed from higher sales of recreational vehicles (RVs), especially in Alberta.

Miscellaneous store retailers have experienced their seventh sales increase in eight months, advancing 3.2% in April. Consumers also kept up their spending in sporting goods, hobby, music and book stores, as sales in these stores rose 1.9%. However, the level of sales in these stores was still below the gift card-induced peak recorded in January 2006.

Consumer purchases in the food and beverage sector rose by 1.2% in April, the third sales increase in a row. Sales in this sector have recently started to grow again after they reached a plateau in early 2005. Beer, wine and liquor stores saw their sales rise by 2.6%, while sales at supermarkets, which make up almost three-quarters of the sector, advanced 0.9% in April. Spending in supermarkets has been relatively flat since the end of 2004.

Consumers spent more on clothing and accessories in April than in the previous month, as sales in these stores increased 0.9%. Sales were up 2.2% in shoe, clothing accessories and jewellery stores. This sector has been experiencing rapid growth since July last year, recording only two marginal declines in sales over the 10-month period.

Spending in pharmacies and personal care stores (+1.4%) and general merchandise stores (+0.7%) was also up in April. Sales in pharmacies and personal care stores have been progressing for a number of years, as demand for prescription drugs continues to rise.

Sales at home centers and hardware stores remained relatively stable in April (-0.2%), after experiencing eight consecutive monthly advances. Despite the pause in retail activity, sales at these stores were still 10.8% higher than in the same month last year. Retailers specializing in building materials and garden supplies saw their sales decline by 3.2% in April. Although sales in these types of stores typically fluctuate from month to month, they have generally been growing in the last three years.

The sales decline in furniture, home furnishings and electronics stores was widespread among the four types of stores in this sector. Furniture stores (-0.8%), home furnishing stores (-2.4%), computer and software stores (-4.0%) and home electronics and appliance stores (-0.2%) all experienced decreases of varying magnitudes in April. Sales in this sector have generally been growing since 2004 in the wake of a strong housing market.

Strength in the Prairie provinces buoyed by the automotive sector

Alberta recorded its seventh consecutive sales advance (+3.9%) in April, its strongest monthly gain in over two years. Sales were 17.4% higher than in the same month last year, a record year-over-year increase for this province in a decade.

Employment growth in Alberta has outpaced the rest of the country over the previous 12 months, as people migrated toward the province's hot labour market. Alberta's net migration was over 16,000 people in 2005, more than double British Columbia's net migration of almost 7,500 migrants. All other provinces experienced negative net migration in 2005. Over the previous 12 months, provincial hourly wage rate growth continued to be highest in Alberta's tight labour market (+6.8%). In this environment, consumers continued to spend their dollars at new car dealers as well as at used and recreational vehicles and parts dealers—the latter especially for recreational vehicles.

The growth of sales in neighbouring Saskatchewan has generally followed Alberta's lead in the previous months. Retail sales were up in April (+3.4%), the result of strength in the automotive sector.

Growth in the Atlantic provinces was mainly driven by sales in Newfoundland and Labrador. Sales in this province rose 3.8%, partially offsetting the drops that occurred in February (-4.5%) and March (-1.2%). New car dealers reaped the benefits of consumer spending in Newfoundland and Labrador. The number of units of new motor vehicles sold in this province increased by 4.8% in April. Despite this recent advance, however, sales of new motor vehicles in Newfoundland and Labrador have been steadily declining since July 2005.

Sales continued to rise in Ontario (+1.2%) and Quebec (+1.6%). Both their annual sales increased at a more rapid pace last year than in the previous two years.

Related indicators for May

The number of people employed increased by an estimated 97,000 in May, driving the unemployment rate down 0.3 percentage points to 6.1%, the lowest level since December 1974. All of May's employment progression was in full time (+151,000), the largest increase on record. While employment growth continued to surge in Alberta, there were also large increases in Ontario and Quebec.

The average hourly wage in May was up 3.8% from 12 months ago, compared to the most recent 2.4% growth in the Consumer Price Index. Average hourly wages jumped 7.3% in Alberta.

Housing starts edged down 0.5% in May after falling 13.3% in April. This is the fourth consecutive month in which single detached starts have declined.

Based on preliminary sales figures from the auto industry, the number of new motor vehicles sold in May declined again, falling by about 1%. Truck sales accounted for the bulk of this decline, although passenger car sales also decreased during the month, but to a lesser degree.

Available on CANSIM: tables 080-0014 to 080-0017 and 076-0005.

Definitions, data sources and methods: survey numbers, including related surveys, 2406 and 2408.

The April 2006 issue of Retail Trade (63-005-XIE, free) will soon be available.

Data on retail trade for May will be released on July 24.

For more information or to order data, contact Client Services (1 877 421-3067; 613-951-3549; retailinfo@statcan.gc.ca). For analytical information, or to enquire about the concepts, methods or data quality of this release, contact Lucy Chung (613-951-1903), Distributive Trades Division.