February's retail gains will be given back due to third wave: RBC senior economist
OTTAWA -- Canadian retail sales climbed in February, boosted by sales at new car dealerships, gas stations and clothing stores, but economists cautioned the pandemic's third wave will again dent sales.
Statistics Canada said Wednesday that retail sales rose 4.8 per cent to $55.1 billion in February, while core retail sales -- which exclude gas stations and motor-vehicle and parts dealers -- climbed 3.8 per cent in February, the first increase in three months.
It also said that its preliminary estimate for March suggested a gain of 2.3 per cent for the month, but cautioned the figure would be revised.
TD Bank economist Ksenia Bushmeneva said retail sales rebounded in February, and likely in March, amid the easing of restrictions put in place to slow the spread of the pandemic.
"However, progress 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," Bushmeneva wrote in a report.
Governments across the country have imposed a fresh round of restrictions in recent weeks in an attempt to slow a surge in COVID-19 cases even as vaccination rates pick up.
"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," Bushmeneva wrote.
Benjamin Reitzes, director of Canadian Rates and Macro Strategist at BMO Capital Markets, said 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.
Statistics Canada said 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.
Sales at clothing and clothing accessories stores also rose 23.7 per cent, the first gain for the category since September 2020, as clothing store sales rose 20.8 per cent, shoe store sales added 43.1 per cent and the jewelry, luggage and leather goods subcategory climbed 25.4 per cent.
Sporting goods, hobby, book and music stores saw a 23.5 per cent increase in sales for the month, while furniture and home furnishings stores gained 18.0 per cent.
In volume terms, overall retail sales rose 4.3 per cent in February.