Canada’s retail sector hit a rough patch in June 2024, with sales dipping by 0.3% to $65.7 billion. According to data released by Statistics Canada, the retail sales decline in June was driven by a significant drop in sales at motor vehicle and parts dealers, which fell by 2.1%. This sector saw new car dealers report a 2.9% decrease, while used car dealers experienced a more modest 0.6% decline. Interestingly, other motor vehicle dealers managed to buck the trend with a 2.5% increase in sales.
The report also highlighted a decrease in sales at gasoline stations and fuel vendors, which dropped by 0.5%. Despite this, the volume of sales rose by 2.6%, suggesting that price fluctuations may have played a role in the decline in dollar terms.
In contrast to the overall decline, core retail sales—which exclude motor vehicle and parts dealers as well as gasoline stations—saw a 0.4% increase in June. This follows a 1.3% decrease in May, indicating a potential recovery in consumer spending on essential goods.
The growth in core retail sales was primarily driven by higher sales at food and beverage stores, which rose by 1.2%. Supermarkets and other grocery stores led the way with a 1.8% increase, while beer, wine, and liquor stores posted a modest 0.4% gain. Specialty food retailers also contributed to the growth, albeit with a smaller 0.5% increase. However, not all areas of core retail fared well, as sales at sporting goods, hobby, musical instrument, and book stores decreased by 0.8%.
The impact of the retail sales decline was uneven across Canada, with seven provinces recording decreases. Ontario, Canada’s most populous province, saw the largest provincial decline at 0.4%, driven largely by lower sales in the motor vehicle and parts sector. Despite this, Toronto, the country’s largest city, managed a slight increase of 0.3% in retail sales.
Manitoba experienced the most significant drop among the provinces, with sales falling by 2.2% in June. As in Ontario, the decrease in Manitoba was primarily due to lower sales at motor vehicle and parts dealers.
Conversely, Newfoundland and Labrador stood out as the only province to see an increase in retail sales, albeit a modest 0.2% rise.
June also saw a drop in retail e-commerce sales, which fell by 2.4% to $3.8 billion on a seasonally adjusted basis. E-commerce accounted for 5.7% of total retail trade, down slightly from 5.8% in May.
As the industry looks to July for signs of recovery, retailers and policymakers alike will be closely monitoring consumer spending patterns and economic indicators. The advance estimate suggests a potential rebound, but the final outcome will depend on a variety of factors, including inflation, interest rates, and consumer sentiment.