Retail sales show biggest monthly increase in 3 years: StatsCan

Retailers across the country had a much better May than economists expected as sales rose 1.9 per cent, the biggest month-to-month jump since March 2010, according to Statistics Canada.

Retail sales climbed to $40.4 billion in May, following two months of relatively flat sales.

The gains were widespread, with higher sales in all 10 provinces and nine of 11 subsectors representing about 94 per cent of total retail trade in the country, the federal agency said.

Economists had been expecting a month-to-month increase of 0.4 per cent, according to Thomson Reuters, picking up the pace from April’s increase of 0.1 per cent and a flat March.

In volume terms, retail sales were also up 1.9 per cent.

The agency said the biggest increase in dollar terms was in motor vehicles and parts dealers, with a 4.3 per cent increase from April.

“Sales were up at new car dealers (+3.3 per cent) for a fifth consecutive month, mainly because of higher sales of light trucks,” Statistics Canada reported.

Retail sales at dealers for other types of motorized vehicles, such as RVs, motorcycles and boats, was up 13.1 per cent — more than offsetting a decline in April.

Sales at food and beverage stores rose 1.1 per cent overall as sales of alcoholic beverages increased in sync with the delayed start to the National Hockey League playoffs, Statistics Canada said.

“Supermarkets and other grocery store sales increased 0.7 per cent following declines in March and April. Beer, wine and liquor store sales increased 2.2 per cent, following declines the three previous months.

The two sectors that fell were at electronics and appliance stores (down 0.8 per cent) and miscellaneous store retailers (down 0.5 per cent). But the declines in May did not offset the sales gains in April.

May was far better for retailers than economists had been expecting.

BMO economist Benjamin Reitzes said the strong showing in May suggests the economy may do better in the second quarter than anticipated by the Bank of Canada in its latest forecast.

However, Reitzes said the June results could be affected by the Calgary flood and Quebec construction strike.

“The surprisingly strong gain in retail sales, coupled good readings for wholesale trade, housing starts and home sales, suggests that May real GDP growth could be as high as 0.4 per cent. That suggests there’s some upside to our call for 1.4 per cent annualized growth in Q2 — the Bank of Canada’s one per cent forecast looks quite light,” Reitzes wrote in a commentary.