Retail sales fall more than expected

Retail sales fell 2.0 per cent in April to $36.2 billion, Statistics Canada reported Wednesday.

Most economists had predicted a decline of 0.4 per cent.

Sales decreased in 10 of 11 retail subsectors and in all provinces.

Car dealers experienced a drop of 4.8 per cent in sales of vehicles and parts. New car sales were the biggest part of this decline, falling 5.3 per cent. Used cars sales fell by 4.4 per cent.

Sales at automotive parts, accessories and tire stores rose for a third consecutive month, by 2.4 per cent.

Clothing and clothing accessories stores saw sales decline 5.2 per cent.

"This decline comes after a strong increase in March that was likely influenced by warmer than usual weather in much of Canada," Statistics Canada said.

Gasoline stations sales were down 2.0% after recording increases for the previous 11 months.

The only subsector to register a gain was electronics and appliance stores, where sales increased 0.6 per cent. 

"At least part of April’s setback can be blamed on falling prices for goods such as gasoline," Derek Burleton, TD Bank's deputy chief economist, said in a commentary.

"This outperformance marked a reversal from the prior month, when prices helped to inflate cash registers," he said. 

Among provinces, Quebec had the largest drop, with a decline of 3.9 per cent, after five consecutive monthly increases.

The smallest decline in retail sales was in British Columbia, at 0.7 per cent.

"The race to beat out low interest rates earlier this year has probably brought sales forward from the future and sapped pent-up demand," wrote Burleton. 

"With many consumers now facing heavy debt-loads — amounting to almost 150 per cent of their after-tax incomes, on average — and with interest rates on a gradual upward path, household purse strings will likely be tightened," he added.