By Robb M. Stewart
OTTAWA--Canadian shoppers tightened up on their spending last month after opening their wallets the month before, a sign of the stress household budgets continue to face with high interest rates.
An advance estimate of retail sales receipts indicates sales retreated 0.6% from the month before in May, Statistics Canada said Friday.
That comes after sales in April rose for the first time this year, increasing 0.7% from the previous month to a seasonally adjusted 66.80 billion Canadian dollars, the equivalent of about US$48.79 billion. The advance, the strongest since last September, was in line with the data agency's earlier forecast and the consensus estimate of economists.
May's estimate was based on responses of roughly 48% of retailers surveyed and will be revised.
Canada's central bank is keeping a close eye on economic data for indications that monetary policy can continue to be loosened. Earlier this month, it became the first Group of Seven central bank to offer rate relief when it trimmed a policy interest rate that had been unchanged for almost a year at a more than two-decade high.
The economy rebounded in the first quarter, notching annualized growth of 1.7% after stalling in the second half of last year. Inflation has cooled steadily in recent months, and while hiring has continued it has failed to keep pace with rapid population growth and the unemployment rate has continued to pick up.
South of the border, American shoppers lifted their spending last month and retail sales rose 0.1% from the month before following a 0.2% drop in April.
Canadian retail sales in price-adjusted, or volume, terms were up 0.5% on-month in April. That suggests a tailwind to industry-level gross domestic product for the month, when factory and wholesaler sales also recovered strongly.
The largest driver of sales for the month was recorded at gasoline stations, rising for the first time in three months, in large part due to higher prices at the pump. That more than made up for a drop in sales by motor vehicle and parts dealers, as new car sales fell.
Core retail sales, which exclude car and auto-parts dealers and gas stations, increased 1.4% in April, following a retreat of 0.7% the month before.
Supermarkets and other grocery stores led a rise in sales of food and drinks, the agency said. Receipts at beer, wine and liquor retailers were up for the first time in four months.
The agency also noted increases in sales at sporting goods, hobby, musical instrument, book and miscellaneous store retailers and health and personal care retailers.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
06-21-24 0902ET
