Lockdowns Hold Canadian Retailers Back at Start of New Year

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Canadian retailers started 2021 on rocky footing as lockdown measures across the country limited shopping.

Retail receipts were down 3.3% in January, according to a preliminary estimate released Friday by Statistics Canada. That’s on top of a 3.4% decline in December as provinces -- particularly Ontario and Quebec -- imposed aggressive containment measures to curb the spread of Covid-19. The results for the two months were worse than most analysts had anticipated.

“The result was worse than expected, but not out of line with our view that, after a strong run through the summer and fall, the Canadian economy went into hibernation for the winter,” Robert Kavcic, an economist at Bank of Montreal, said in a report to investors.

The setback reverses most of the gains in the second half of last year that saw a sharp rebound for retailers from a collapse in sales last April, supported by massive government income support measures. But those gains have quickly come to a halt -- in stark contrast to what retailers south of the border experienced at the start of the year.

U.S. retail sales rose by the most in seven months in January, as some states began to ease restrictions and some consumers put their latest round of $600 stimulus payments to work.

In Canada, January sales actually dropped below pre-pandemic levels for the first time since May, according to Bloomberg calculations.

For all 2020, retailers recorded sales of C$606 billion ($480 billion), a 1.4% decline from 2019. That’s the first annual decline since the 2009 recession as Covid-19 forced temporary closures for many non-essential stores. Retail e-commerce sales increased 71% in 2020.

©2021 Bloomberg L.P.

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