Retail sales slide 1% in March

Canada's retail sales activity came in softer than expected in March, with economists warning of a weak second quarter for the economy.
Retail activity at new car dealerships was off by three cent in March, Statistics Canada said Friday. (John Bazemore/Associated Press)

Canada's retail sales activity came in softer than expected in March, with economists warning of a weak second quarter for the economy.

Statistics Canada reported Friday that overall sales were down one per cent nationally — worse than the contraction of 0.6 per cent that economists have been forecasting. 

Factoring out inflation, retail activity in terms of constant dollar sales declined by 1.3 per cent.

"Of course there remains a great deal of diversity in the underlying trends by province, although for March most saw declines in sales compared with the prior month," said Andrew Grantham of CIBC World Markets.

"That includes the likes of Ontario and B.C., where sales had previously been surging and are running hot in terms of year over-year growth. The oil-producing provinces of Saskatchewan and Alberta saw declines in sales not just on the month, but also in year-over-year terms," he said.

Statistics Canada said the largest decrease in dollar terms in March was a 2.9 per cent decline at motor vehicle and parts dealers. This was mainly due to a three per cent sales decline at new car dealers, while sales at used car dealers and other motor vehicle dealers also retreated.

Sales at furniture and home furnishing stores were down, along with gas station sales.

On the upside, sales at clothing and accessories stores rose 0.8 per cent, Statistics Canada said.

"The bad news is that the economy looks to have slowed to end Q1 — with negative ramifications for Q2," Scotiabank economists Derek Holt and Dov Zigler said in a commentary. 

"Between soft manufacturing figures and trade figures, and now retail sales… the end of Q1 and thus the outlook for Q2 was looking bad to begin with even before the economy had to contend with the Alberta fires," they said.