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Retail sales fell by nearly 6% in April, the biggest drop in a year, as the third wave of COVID-19 in Canada closed stores and kept shoppers’ wallets closed.
Statistics Canada reported on Wednesday that sales in 9 out of 11 retail industries have fallen. The two exceptions are food and beverage stores, and miscellaneous retailers, both of which increased slightly this month.
The so-called core retail sales-excluding volatile items such as gas station receipts and vehicle purchases-fell even more sharply, at 7.6%. This is the second largest drop in history, only exceeding the drop of COVID-19 in the same month a year ago.
TD Bank economist Ksenia Bushmeneva pointed out that the decline in car sales was not only due to the COVID lockdown, but also because of the continued shortage of microchips, which limited their inventory and affected sales that month.
“Although the shortage of microchips may continue for some time, other unfavorable factors will ease,” she said.
Sales of things considered “non-essential” plummeted, mainly because many provinces imposed a lockdown this month, making it almost impossible to buy clothes, shoes, and most types of furniture and electronic products.
Ontario and Manitoba implemented the strictest lockdown measures in April, so most of the decline in retail sales came from these two provinces. Bank of Montreal economist Doug Porter calculated that if they were excluded, sales would fall by 0.7%.
He said: “Since the country is now in various stages of reopening, we hope that sales in June and July will rebound significantly.” “However, please note that even if the activity in April (and May) fell sharply, retail sales Still above pre-pandemic levels-so the rebound may not completely reverse the recent decline.”
Online shopping is also slowing down
Online sales surged during the pandemic, but the closure of physical stores in April did not seem to increase online spending this month. Sales actually fell by 0.4% from March levels, just over US$4 billion. However, this is still 7.4% higher than the number of Canadians buying online a year ago.
Preliminary data in May showed that retail sales dropped another 3.2% from the low level in April. Although the data for the two months of April and May did not look good, Porter was not surprised. He was optimistic that since Canada’s vaccination campaign has already begun, there will be a rebound later this year. High gear.
“Although today’s pessimistic report is an in-depth observation of the rearview mirror, it reveals the full scope of the third wave of restrictions-retail is at the forefront of economic pain,” Porter said.
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