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Retail sales plunged 5.7% in April amid third wave of COVID-19

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Canadian retail sales in April posted their largest drop since the start of the pandemic as governments moved to deal with its third wave.

Statistics Canada said Wednesday retail sales fell 5.7 per cent to $54.8 billion in April, the largest decline since April 2020 during the pandemic’s first wave.

The agency also said its preliminary estimate suggested an additional drop of 3.2 per cent for May, but cautioned the figure would be revised.

TD Bank economist Ksenia Bushmeneva said third wave-related restrictions on non-essential and in-person shopping held back retail sales in April as expected.

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“In addition to restrictions, auto dealers were also impacted by the shortage of microchips, limiting their inventory and weighing on sales that month,” Bushmeneva wrote in a report.

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“While the microchip shortage may persist for some time, other headwinds will ease. With the vaccination campaign gathering speed and most provinces gradually lifting restrictions in June, consumer spending is on track to rebound strongly in the second half of the year.”

The drop in April sales was concentrated in retailers deemed “non-essential” as sales fell in nine of 11 subsectors.

Core retail sales – which exclude gasoline stations and motor vehicle and parts dealers – fell 7.6 per cent.

Sales at clothing and clothing accessories stores plunged 28.6 per cent in April, while general merchandise stores dropped 8.1 per cent.

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Statistics Canada said sales at building material and garden equipment and supplies dealers fell 10.4 per cent, their first drop in nine months.

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Meanwhile, sales at motor vehicle and parts dealers and gasoline stations also fell for the first time in four months

Sales at motor vehicle and parts dealers fell by 1.4 per cent, while sales at gasoline stations fell 4.1 per cent in April.

Retail sales in volume terms fell 5.6 per cent in April.

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