Canadian retail sales fall as higher interest rates weigh on shoppers | kbnmart

Canadian consumers are likely to continue to cut back on spending in June after a sharp decline in spending in May, marking a weak first half of the year for the country’s retail sales.

Retailers’ revenues fell 0.3% in June, according to a preliminary estimate from Statistics Canada released Friday. That followed a 0.8% decline in May, which was less than the 0.6% decline forecast in a Bloomberg survey.

April’s 0.6% rise in sales was the only monthly increase in sales so far this year.

Revenue fell in eight of nine subsectors in May, led by sales declines at hardware stores, food and beverage retailers and apparel retailers. The only retailers to see sales rise were auto dealers, which posted their third monthly gain in four months.

Overall, the report shows that consumers cut back on discretionary purchases, which include furniture, electronics and sporting goods. The Bank of Canada cut its key interest rate to 4.75% in June, but tight monetary policy is still weighing on Canadians.

In volume terms, retail sales fell 0.7% in May. Excluding autos, retail sales fell 1.3%, well below the 0.5% decline economists had forecast.

Regionally, sales fell in nine provinces in February, with the biggest declines in Alberta, led by a drop in auto sales — bucking the national trend. British Columbia and its largest city, Vancouver, also saw big declines. The only province where retail activity rose in May was Nova Scotia, driven by higher vehicle sales.

The statistics agency did not provide details on the June estimate, which was based on responses from 50.3% of companies surveyed. The average final response rate to the survey over the previous 12 months was 90%.