Canada: Retail sales benefited from improved health context in March, sharp retreat expected in April – NFB

Data released on Friday showed retail sales rose 3.6% in April in Canada surpassing expectations. Analysts at the National Bank of Canada point out sales benefit from the health context. They point out consumption may have contributed to growth during the first quarter.

Key Quotes:

“Retail sales expanded 3.6% in March, a lot more than the median economist forecast calling for a 2.3% progression. Adding to the good news, the previous month’s result was revised from +4.8% to +5.8%.”

“Retail sales continued to advance in March, reaching a new all-time high of C$57.6 billion. As the epidemiological situation improved in the country, more retailers were able to resume their activities. Statistics Canada noted that only 2.1% of shops were closed during the month, down from 12% in February.”

“Regarding the quarterly picture, a small expansion in sales volumes in Q1 suggests consumption on goods could have made a minor contribution to growth in the quarter - we expect a 6.7% annualized expansion of real GDP in Q1.” 

“After two solid results in February and March, retail sales look set for a steep contraction in April. A surge in COVID-19 caseloads in the month forced several provincial governments to tighten social distancing rules, something that undoubtedly translated into another fit of weakness for consumer spending. Statistics Canada is flagging a 5.1% retreat that would still leave retail sales 5.2% above their pre-crisis level.”