08/22/2013 08:40 EDT | Updated 10/22/2013 05:12 EDT

Canada Retail Sales Fell 0.6 Per Cent In June, StatsCan Says, Surprising Experts

OTTAWA - Canadian retail sales fell a surprisingly large 0.6 per cent in June to $40.1 billion, partially offsetting a large gain in May, as consumers pulled back from purchases of a wide range of products, according to Statistics Canada data.

"Canadian consumers fared a bit worse than expected," CIBC World Markets economist Emanuella Enenajor said in a research note, noting a 0.8 per cent decline when auto sales are excluded.

"Autos sales were roughly flat, but most other sectors posted acute weakness, including furniture, electronics, building materials, food and clothing," Enenajor wrote.

The June data is disappointing but follow a very strong performance in May, she added.

"To some extent, the month's numbers were affected by a Quebec labour strike (where the decline in provincial sales was twice the national average) and floods in Alberta (although sales there did no worse than the national average)."

The biggest decrease in dollar terms was a 1.2 per cent drop at food and beverage stores, with weaker sales reported by all types of stores in this subsector.

Sales at beer, wine and liquor stores dropped by 2.1 per cent to $1.629 billion from $1.663 billion in May and sales at convenience stores also fell 2.1 per cent to $536 million from $548 million.

Supermarkets and other grocery stores, which account for more of the overall food and beverage sales, had a smaller percentage decline of 0.9 per cent but a bigger number of dollars. Their sales fell to $6.275 billion from $6.334 billion.

There were also large declines at stores that sell building materials and garden equipment and supplies, down 1.9 per cent from May, as well as with merchants of clothing and clothing accessories, where store sales fell 1.8 per cent.

The automotive sector did better than expected, however, showing a month-month gain rather than a loss.

"Motor vehicle and parts dealers (up 0.2 per cent) reported increased sales for a sixth consecutive month," Statistics Canada reported.

"Sales gains at new car dealers (up 0.7 per cent) more than offset declines at automotive parts, accessories and tire stores (down 2.7 per cent ), used car dealers (down 1.7 per cent) and other motor vehicle dealers (down 1.1 per cent)."

Analysts had expected the auto sector to drag the overall retail sales in June to a decline of 0.4 per cent, with other sectors holding steady overall.

Statistics Canada says retail sales in the first six months of 2013 were still up 1.8 per cent compared to the same period last year.

Statistics Canada says retail sales fell in Ontario, Quebec, Alberta and Newfoundland and Labrador in June, while British Columbia, Manitoba and Saskatchewan all reported sales gains.

In volume terms, retail sales declined 1.2 per cent after three straight months of gains.

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