Retail sales advanced in almost all sectors in May, marking the largest monthly sales increase in almost a decade, Statistics Canada reported today.

Total retail sales rose 2.8% to an estimated $35 billion in May.

Gains in seven of eight retail sectors boosted sales, making May the fourth monthly increase in a row for Canadian retailers.

The last time sales increased more than 2.8% was December 1997, when sales advanced 3.7%. When sales of new, used and recreational vehicles and parts dealers are excluded, retail sales jumped 2.3%, more than offsetting April’s 0.3% decline.

The Quebec public service pay equity settlement was a key factor in May’s retail sales. Sales in this province surged 4.9% in May, the strongest monthly sales growth since February 1998. Excluding Quebec, retail sales rose 2.2%.

Sales advanced in all retail sectors in May except in the furniture, home furnishings and electronics stores sector. Retailers in this sector saw sales decline 0.8%, after six consecutive monthly gains.

The automotive sector registered a 4% sales increase in May, extending the strong sales performance this sector has experienced in the previous two months.

Sales in several non-auto sectors rebounded from poor performances in April to register strong increases in May, possibly as a result of unseasonably poor weather in April and warmer-than-usual weather in May. After a 3.7% drop in April, sales in the building and outdoor home supplies stores sector soared 6.0%, the largest increase since August 2003. Sales in clothing and accessories stores surged 4.6% after falling 3.1% in April.

Sales at miscellaneous retailers rose 3.7% in May following a 1.8% decline in the April. General merchandise stores’ sales were up 3.2%, offsetting the 1.2% decline in April. Prior to April’s decline, sales in both of these sectors had risen for four consecutive months.

The 2.5% sales increase at pharmacies and personal care stores in May was the strongest monthly growth for this sector since January 1999, and more than offset the 1.3% decline in April.

Price changes did not have a significant effect on overall retail sales in May as retail sales at constant prices increased by 2.5%, a rate of growth not seen since the 2.9% increase in November 2001.