April retail sales fall 0.8% as consumers hold back

April's retail sales fell by 0.8 per cent from March, to $33.5 billion, Statistics Canada reported Friday, their sharpest decrease since December. Economists had expected sales to rise by 0.1 per cent.

Sales are down 6.2 per cent from April 2008.

"This disappointing result reinforces the view that the economy is not poised to snap back quickly," said BMO Capital Markets economist Douglas Porter in a note. "Consumer spending continues to grapple heavily with a weak job market, heavy-duty wealth losses of the past year and now rising gasoline prices. Even so, early results from the spending side in May, including auto and home sales, as well as consumer confidence, point to firmer retail activity in coming months."

Five of the eight sectors tracked by Statistics Canada saw falling sales, including automotive and food and beverages, which together constitute nearly 60 per cent of sales each month.

The automotive sector fell by 1.9 per cent as all three of its component areas -- new cars, used cars and recreational vehicles -- posted declines, as did gasoline sales.

Statistics Canada noted in its report that the price of food fell in April for the first time in more than a year, according to the Consumer Price Index.

"Sales at supermarkets were down 0.7 per cent, while beer, wine and liquor stores (-1.7 per cent) registered their first monthly decline in 2009."

CIBC economist Krishen Rangasamy noted it's not unusual for retailers to have a hard time in a recession.

"In the first quarter, retail revenues fell more than volumes did, implying some deep discounting in the quarter," said Rangasamy. "It looks like Q2 started similarly, with retailers continuing to sacrifice their bottom lines to empty their shelves."

Continuing job losses and a rising savings rate will likely be reflected in the retail sales figures by keeping consumption down over the next few months, added Rangasamy, who expects the economy to continue to contract in the second quarter.

Sales rose in three sectors: General merchandise stores, the third-largest sector in terms of sales, which has been steadily growing since January, saw their sales increase by 0.5 per cent. Sales at miscellaneous retailers grew by 0.7 per cent, and building and outdoor home supplies stores saw their sales increase by 0.3 per cent.

"When adjusted for inflation, retail sales were also down 0.6 per cent month over month, which suggests that sales were indeed quite bad, as the actual volume of retail goods fell quite dramatically in April," TD Bank economic strategist Charmaine Buskas said in a note.

After leading the sales gains in the previous two months, Quebec and Ontario weighed heaviest on national sales figures in April, declining 2.5 per and 1.1 per cent, respectively. Those losses were offset by gains in British Columbia (1.3 per cent) and Alberta (0.6 per cent), which had both posted declines for the previous five months. The country's largest increase in retail sales came in Prince Edward Island, which built on its performance in March, posting 1.7 per cent growth

-- Canwest News Service

Provincial comparison

Retail sales in April by province (percentage change from March)

Newfoundland and Labrador +0.1

Prince Edward Island +1.7

Nova Scotia -0.2

New Brunswick -1.0

Quebec -2.5

Ontario -1.1

Manitoba -0.4

Saskatchewan -1.4

Alberta +0.6

British Columbia +1.3

Yukon -1.9

Northwest Territories -5.6

Nunavut +1.5

Sector comparison

Retail sales in April by sector (percentage change from March)

Total retail sales -0.8

Automotive -1.9

Furniture, home furnishings and electronics stores -0.8

Building and outdoor home supplies stores +0.3

Food and beverage stores -1.0

Pharmacies and personal-care stores -0.4

Clothing and accessories stores -0.6

General merchandise stores +0.5

Miscellaneous retailers +0.7

Republished from the Winnipeg Free Press print edition June 20, 2009 B11