Retail sales growth in B.C. took a breather in May, but overall activity remained steady following two months of hefty gains, pointing to a solid pace of consumer demand in the second quarter.
Total dollar-volume sales edged slightly lower by 0.1% from April to a seasonally adjusted $5.49 billion. While the performance fell short of the national gain of 0.7% for May, sales growth in B.C. was comparably stronger over the previous two months, and momentum remained positive. On a year-over-year basis, B.C. sales were up 6.4% in May, which was well above the Canada-wide gain of 4%.
For the most part, May's growth deceleration largely reflected some payback after a sharp April sales bump, rather than a downshift in demand. Sectors with the largest gains in April posted the most significant retrenchments, led by electronics and appliances, building and gardening materials retailers. Most other retail groups posted month-to-month gains.
Positive momentum has lifted year-to-date sales growth to a healthy 5.4% through May, with gains in Metro Vancouver of 6.3% outpacing the rest of the province. Meanwhile, the breadth of sales growth has been impressive. Sales are up in nearly all retail sectors, led by motor-vehicle-related businesses, general merchandisers and clothing sellers, which points to a general uptrend in consumer demand. With retail price inflation almost non-existent this year, most of the gains reflect more goods sold.
While the upshift in demand is putting a smile on the faces of retailers after weak growth in recent years, momentum is expected to ease. Housing-related sales have been boosted by an uptrend in home sales. However, higher mortgage rates expected by the end of the year will dampen the sales cycle and, by extension, retail activity. Meanwhile, employment growth remains tempered and is expected to post only modest growth through the end of the year. Dollar-volume growth in annual retail sales is expected to decelerate to about 3.5% by year-end.
