By Robb M. Stewart
OTTAWA–An early look at retail receipts suggests Canadians spending continues to defy broader worries about the economy, building on a recovery in March when outlays on cars jumped.
An advance survey of retailers indicates sales increased 0.5% from the month before in April, Statistics Canada said Friday.
That would mark a second straight month of modest gains, taking back some of the pullback in shopping following a surge in spending at the end of last year when a temporary tax break on some purchases kicked in.
The data agency offered no details with the estimate for the latest month, which was based on the responses of roughly 60% of companies surveyed and will be revised.
The increase in retail spending defies a slump in sentiment this year since President Trump imposed sweeping U.S. import tariffs and targeted Canada as a possible 51st state.
Tracking of card spending by Royal Bank of Canada, the country’s largest lender, indicated customer spending remained relatively resilient in April with purchases up broadly. The bank said purchases were up strongly for discretionary goods and on services including food and dining and entertainment, though travel spending was weak.
Statistics Canada’s survey found retail sales rose 0.8% during March to a seasonally adjusted 69.83 billion Canadian dollars, the equivalent of about $50.39 billion. The advance was a tick stronger than the 0.7% rise economists expected and was previously forecast by the data agency.
Still, while sales were up in six of the nine retail segments tracked by the agency, the strength was driven by motor vehicle and parts dealers, supporting indications consumers rushed to buy before Trump’s tariff targeting autos came into effect in April.
Sales of vehicles and parts climbed 4.8% month-over-month, the first increase in three months and the strongest advance since January 2023. Stripping out the segment, retail sales dropped 0.7%, dampened by a sharp fall in gas station sales as prices at the pump retreated.
Core retail sales, which exclude car and auto-parts dealers and gas stations, rose a modest 0.2% in March after a 0.6% gain the month before.
Sales at building material and garden equipment and supplies were up for the month, and Canadians spent more on clothing, accessories and shoes, and on furniture, home furnishings, electronics and appliances. The sharpest fall in core sales came from general merchandise retailers.
In volume terms, price-adjusted sales increased 0.9% from February and were 3.3% higher than a year earlier.
The outlook for Canada’s economy has deteriorated after a solid first quarter as U.S. tariffs and the risk of further levies has dented household spending intentions and business investment and hiring plans. The Bank of Canada, which last month held its policy interest rate steady after seven cuts in a row since last June, has outlined a pair of scenarios that anticipate the economy could flatline or contract in the current quarter and economists have forecast unemployment will continue to edge higher through the year.
The White House in early April imposed a 25% levy on imported vehicles, and in early May imposed a 25% tariff on imported auto parts with a carveout on those duties if the vehicle is made in the U.S. That followed early rounds of U.S. levies the month before aimed at Canada and Mexico, and steel and aluminum.
Despite the uncertainty thrown up by trade uncertainty, several of Canada’s well-known retailers recorded stronger sales in the first quarter of the year. Grocery chain revenue benefited from demand for discounted brands and promotional offers, and rival Metro reported higher sales compared with last year in both its food and pharmacy segments. Car-parts to homeware and clothing retailer’s sales also rose for the quarter.
Overall, Canadian retail sales were up for a fourth consecutive quarter, rising 1.2% for the first three months of the year, though slowing from a 2.4% increase the quarter before, Statistics Canada said.
Write to Robb M. Stewart at [email protected]
(END) Dow Jones Newswires
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