Continuing what has been a volatile year for consumers, Canada’s retail sales decreased by 0.6% in July compared to June, according to data released on Thursday by Statistics Canada.
The decline is just the latest swing in what has been an ever-changing consumer landscape amid uncertainty concerning the delta variant. But overall, retail sales this year have been on an upward trend, as they were before the pandemic and indicating recovery.
Spending in food and beverage stores, grocery stores and supermarkets declined by more than 4% and reached their lowest since February 2020, before the pandemic.
As vaccinations have ramped up and the economy has reopened, consumers have diverted spending away from food toward recreational activities like traveling and shopping for other, less essential goods.
Sales of building materials led the declines in July, falling by nearly 9% on the month after a year of robust construction activity.
The decline is a reflection of shortages of raw materials and labor, which drove up prices, that have prompted many construction companies to delay projects. When these delays are combined with dwindling inventories, the result was low total sales.
The takeaway
We expect turbulence to continue in retail sales for the rest of the year because of global supply chain shortages and shifting consumer behaviors as the delta variant remains a factor. Still, despite a slight drop in July, Canada’s retail sales show an overall upward trend on the year, which is a strong indicator of consumer confidence and a recovering economy.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
