Surging retail regains nearly all pandemic losses
Canadian retail sales have rebounded sharply after historic declines in March and April, with vendors making up almost all of their pandemic losses, Statistics Canada reported Tuesday.
Receipts rose 19 per cent in May, the agency said in its first full release for the month. June looks to have recorded another strong gain, with a flash estimate predicting another 25-per-cent increase.
That would bring sales last month to about 100 per cent of February levels, according to Bloomberg calculations.
The report confirms Canadian consumers are emerging from nationwide lockdowns with pent-up demand and keen to spend. At issue is whether the sharp rebound will be sustained in coming months. Policy-makers have warned a full rebound in consumer confidence could take years.
“At the moment, sales are still being buoyed by the enormous government income-support programs and consumers satisfying pent-up demand, both of which could fade in the second half of the year,” Royce Mendes, an economist at CIBC World Markets, said in a report to investors.
The retail numbers are consistent with alternative spending data tracked by Canadian banks.
According to a report Tuesday by Toronto-dominion Bank, consumer spending growth moved into positive territory in early July on an annual basis for the first time since the pandemic started. Three provinces — British Columbia, Alberta, and Ontario — have been driving the national improvement in consumption, the bank said.
“Re-openings have so far been by and large met with increased spending,” Brian Depratto, a senior economist at Toronto-dominion, said in the report.
Still, economists caution that the pace of spending growth will slow with millions still out of work and restrictions on some businesses likely to remain for some time.