Two operators work on the underbody of a Dodge Grand Caravan at a Windsor Assembly Plant in Windsor, Ont. last May. New data from Statistics Canada show the auto industry played a major part in boosting Canadian retail sales in February. (FCA/REUTERS)

Retail sales in Canada rebound in February but variants present a challenge

New figures from Statistics Canada show that Canadian retail sales climbed in February–to $55.1 billion, a rise of 4.8 per cent.

The government recording agency said the rise was boosted by sales at new car dealerships, gas stations and clothing stores.

The agency also said its preliminary estimate for March suggests a gain of 2.3 per cent for the month, but cautioned the figure could be revised.

TD Bank economist Ksenia Bushmeneva said the February rebound–and the likely one in March–was due to an easing of restrictions aimed at slowing the spread of the pandemic.

Boosting core retail sales in February was a 6.1 per cent gain at general merchandise stores and a 23.7 per cent jump at clothing and clothing accessories stores, the first gain for the category since September 2020. (THE CANADIAN PRESS/Graham Hughes)

But with the increase in the spread of the more transmissible variants, resulting in lockdowns in many places across the country, it appears the increase may very likely slow.

“Progress,” Bushmeneva wrote in a report, “remains highly dependent on the path of the virus, which has since taken a turn for the worse as a vicious third wave led to higher caseloads and hospitalizations.”

April, Bushmeneva noted, is not looking good.

“Recent spending and mobility data suggests that retail sales are likely to weaken once again in April amid renewed restrictions and stay-at-home orders,” she wrote.

Benjamin Reitzes, director of Canadian rates and macro strategist at BMO Capital Markets, concurred, saying retail sales continue to perform well when stores are allowed to open.

“Accordingly, another good gain is expected in March, but April will see a big-time reversal with restrictions tightened in much of the country,” Reitzes said.

In its report, Statistics Canada said February’s overall increase came as core retail sales — which exclude gasoline stations and motor-vehicle and parts dealers — climbed 3.8 per cent–the first increase in three months.

Sales at motor-vehicle and parts dealers rose 5.0 per cent in February, boosted by a 5.6 per cent increase at new car dealers and a 9.2 per cent increase at automotive parts, accessories and tire stores.

Boosting core retail sales was a 6.1 per cent gain at general merchandise stores and a 23.7 per cent jump at clothing and clothing accessories stores, the first gain for the category since September 2020, according to the report.

In volume terms, overall retail sales rose 4.3 per cent in February.

Canada’s economy shrank by the largest amount on record last year. It continues to fight its way back, but new shutdowns because of COVID-19 variants appear likely to slow the pace (CBC/Francis Ferland)

Last month StatsCan reported that retail sales declined for the second consecutive month, in January, falling 1.1 per cent to $52.5 billion.

Last year Canada’s economy fell by 5.4 per cent.

It was the country’s worst year of economic output on record–as large parts of the economy were forced to shut down because of the pandemic.

It slowly began rebounding last summer, according to Statistics Canada.

With files from The Canadian Press, CBC News, RCI, Statistics Canada

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