Retail sales in Canada were once again lower than expected as they contracted 0.2 percent in March, while the consensus forecast had centered on a 0.1 percent decline. Volumes were even weaker, as they dropped 0.4 percent on the month. Sales were up 1.9 percent year-over-year. For the first quarter as a whole, sales fell 0.2 percent though volumes managed to increase 0.3 percent. The advance estimate for April sales, however, points to strong opening for the second quarter with a 0.7 percent rebound.

The advance estimate for April points to a 0.7 percent rebound after three consecutive months of declines that drove sales down 0.2 percent in the first quarter, while volumes managed to increase 0.3 percent.

In March, when consumer prices appreciated 2.9 percent year-over-year, retail sales declines were broad based across seven of nine subsectors and six provinces led by Ontario.

Furniture, home furnishings, electronics and appliances, down 1.6 percent, led the monthly contraction, while the other housing-related category, building material and garden equipment and supplies, stood out with a 1.3 percent expansion. Motor vehicles and parts, up 1.0 percent on the month, were the only other core sector to expand. Excluding the latter sector, sales were down 0.6 percent. Core sales, which also exclude gasoline and fuel, fell 0.6 percent as well. Gasoline stations and fuel vendors receipts were down 0.7 percent.

With today's report, Econoday's Relative Performance Index stands at minus 6, pointing to a limited monetary policy easing risk, but just one point away from pointing to a stable stance. The Bank of Canada expects the contribution of housing and consumption to GDP growth to increase in the first quarter from the fourth quarter of 2023 before diminishing in the second quarter while remaining positive. The central bank expects population growth to drive consumer spending in the first half of the year, while per capita growth consumption should remain negative.

Retail sales in March are expected to slip 0.1 percent on the month after slipping 0.1 percent and 0.3 percent in the two prior months.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are reported in cash terms and disaggregated into eleven main subsectors. Aggregate volume figures are also provided.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.