By Robb M. Stewart


TORONTO--The strain on Canadian household budgets from high interest rates continues to show, with retail trade flat-lining last month after a second monthly decline in a row in February.

An advance estimate of retail receipts indicates sales were unchanged in March, Statistics Canada said Wednesday.

Sales in February edged down 0.1% to a seasonally adjusted 66.73 billion Canadian dollars, the equivalent of about $48.8 billion, the data agency said. The monthly dip was softer than the modest 0.1% advance forecast by the agency and by economists, and follows a 0.3% pullback in January sales.

Compared with a year earlier, retail sales in February were up 1.2%.

Statistics Canada's advance estimate for March sales was based on responses of roughly 62% of retailers surveyed and will be revised.

February sales were down in five of nine retail segments tracked by the agency, led by a drop in trade at gas stations and fuel vendors.

In volume terms, price-adjusted sales fell 0.3% from January, with a sharp fall in gasoline and fuel volumes. That suggests a modest headwind to industry-level gross domestic product, which Statistics Canada had previously projected to have grown for a second month running, with a 0.4% increase in February.

Factory sales rose 0.7% in February, and edged up 0.1% in volume terms from the month before, but a flash estimate of manufacturing shipments released Wednesday points to a 2.8% retreat in nominal sales in March.

After stalling in the second half of last year, economic activity in Canada has picked up. The central bank, which has for several months held its policy interest rate at a more than two-decade high, has forecast growth will accelerate this year, thanks in part to soaring population growth and a recovery in household spending.

Retail receipts for February showed Canadians spent more at general merchandise retailers and, to a lesser extent, health and personal care stores. However, that was countered by a drop in sales at furniture, home furnishings, electronics and appliances retailers, as well as at clothing, accessories, luggage and leather goods retailers, and building material and garden supplies and equipment dealers.

After falling in January, sales at motor vehicle and parts dealers rose 0.5%. Core sales, which exclude car and auto-parts dealers and gas stations, were unchanged in February.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

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