Retail trade

Retail sales fell in May after two months of strong gains, pulled down by lower sales in the automotive and food and beverage stores sectors. Total retail sales declined by 0.6% from April to $32.6 billion. Retail sales have generally been rising at a rapid clip following a slowdown in 2003, and May's decline was only the second in eight months.

Keeping prices constant, retail sales still fell by 0.6%, as price changes did not have a significant effect on overall retail sales in May. In contrast to previous months, the Consumer Price Index indicated that gasoline prices were little changed in May (-0.8%).

Excluding new car dealers and used and recreational motor vehicles and parts dealers, total retail sales edged down 0.2% in May.

Sales in the automotive sector, which make up over one-third of total retail sales in Canada, fell by 2.1%. This retail sector, however, has generally been experiencing steady growth since 2004, partly due to the rising price of gasoline.

Food and beverage store (-0.6%) sales declined for the second time in six months. In general, retail sales in this sector have been growing slowly after recovering from January's drop earlier this year. The clothing and accessories stores sector also saw its sales edge down 0.3% in May. However, its sales were up 7.4% compared to the same month last year — the highest year-over-year increase since April 2005.

Increases in the other five retail sectors partially offset these declines. Sales in the furniture, home furnishings and electronics stores sector rose by 1.2% in May after falling by a similar amount in April. There were also strong increases in pharmacies and personal care stores (+1.3%) and general merchandise stores (+1.0%).

Sales were also higher in the building and outdoor home supplies stores sector (+0.5%) and the miscellaneous retailers sector (+0.2%).

Automotive sector sales decline after strong gains in the previous two months

All three sub-components of the automotive sector registered declines in sales in May. Gasoline sales fell by 2.7% after rising by 11.0% in April. Though the price of gasoline edged down in May, it has generally been rising since 2002, according to the Consumer Price Index. The year-over-year sales increase for gasoline was strong at 18.2%.

Sales by new car dealers fell by 1.7%. Despite recent fluctuations, new car sales have remained relatively flat since the incentive-induced peaks of the previous summer. Demand for new cars may have been dampened by rising interest rates and gasoline prices.

Sales at used and recreational motor vehicle and parts dealers fell by 2.0%. This was only the second sales decline in eight months for this sector and followed two months of strong sales growth. Sales were up 15.9% in May from the same month last year. This sector has been experiencing rapid sales growth since November of last year on the strength of recreational motor vehicle sales.

In the food and beverages sector, supermarket sales weakened by 0.8% in May. Sales in supermarkets have been relatively flat with low year-over-year gains since the fall of 2005, as restructuring of supply chains in some stores continued to have an effect on overall supermarket sales.

May's increase in sales at furniture stores (+0.8%) was the first since the peak in January. Though not at record levels, sales were still 9.4% higher than the same month last year — the highest year-over-year increase in two years with the exception of the gains in January.

May was also a good month for home furnishing stores (+1.8%) and home electronics and appliance stores (+1.3%). Sales at home furnishing stores have been see-sawing since the gift-card induced peak at the start of the year. In contrast, sales at home electronic stores and appliance stores have been relatively flat since January. In general, however, sales in these types of stores have been on the rise.

Pharmacies and personal care stores posted their seventh consecutive monthly sales increase in May. Sales in these types of stores picked up at a quicker pace since the start of 2006, reflecting increased demand for prescription drugs. According to the Retail Commodity Survey, sales of prescription drugs were 7.8% higher in the first quarter of 2006 than in the same quarter last year.

General merchandise stores, which include department stores and other general merchandise stores, also enjoyed sales gains in May, increasing for the ninth consecutive month. Sales have picked up the pace since the fall of 2005.

Ontarians put the breaks on shopping in May

Sales in Ontario declined by 1.9% in May after two consecutive monthly gains. The automotive sector was the main cause of the decrease in this province. The number of new cars sold in Ontario in May declined by 2.1% according to the New Motor Vehicle Sales Survey. Quebec retailers also experienced lower sales in May (-0.6%), the first decline in five months. Sales in Quebec have been rising after being relatively flat in 2005.

Consumers in Alberta took a shopping break in May as retail sales remained unchanged from April (+0.1%). Still, sales in Alberta's red-hot economy were 16.4% higher than in the same month last year as a result of a burst of retailing activity in the previous eight months.

Retail sales in British Columbia rose by 1.3% in May. Retailers in this province have been enjoying strong sales growth since 2003.

Consumer spending in retail stores in the Atlantic provinces edged up 0.2% in May, mainly due to increases in Nova Scotia (+0.7%) and Prince Edward Island (+1.3%).

Related indicators for June

Following large gains in the previous month, employment was little changed in June, leaving the unemployment rate at a 32-year low of 6.1%.

Housing starts were up 4.5% in June. Despite this increase, however, housing starts ended the second quarter more than 9% below their first quarter level.

Based on preliminary sales figures from the auto industry, the number of new motor vehicles sold declined slightly for a third consecutive month in June. Though there was a turn-around in car sales, this was offset by a sizable decrease in the sale of trucks, minivans, sport-utility vehicles and buses.

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

Data on retail trade for June will be released on August 21.

For more information or to order data, contact Client Services (toll-free 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.