By Laura Dhillon Kane
(Bloomberg) — Canadian consumer spending slowed in the third quarter as a painful trade war with the U.S. persisted and population growth continued to wind down.
Retail sales grew 0.2% between July and September after rising 0.3% in the previous quarter, according to Statistics Canada data Friday. September sales fell 0.7%, matching the median estimate in a Bloomberg survey of economists, while a flash estimate suggested October sales were flat.
The quarterly retail figures — the weakest pace in more than a year — underscore consumer caution around spending in the face of economic and tariff uncertainty. They also likely reflect federal immigration curbs that have slowed Canada’s once-explosive population gains to a crawl.
The Bank of Canada plans to move to the sidelines after cutting its benchmark overnight rate to 2.25%, saying rates are at “about the right level” if the economy and inflation evolve as it expects. The central bank foresees household consumption slowing due to the immigration changes and a soft labour market.
In volume terms, retail sales fell 0.3% on the quarter and dropped 0.8% in September. Overall, sales were down in six of nine sub-sectors that month, led by autos, a volatile category this year amid US tariffs. Bank of Canada surveys have shown Canadians expect the levies to cause vehicle prices to surge.
Motor vehicle sales fell 2.9% in September, the first decline in three months and led by lower receipts at new car dealers. Still, auto purchases were still up 7.4% in the first nine months of the year compared with the same period last year, likely reflecting a rush by some consumers to get ahead of the tariff impacts.
Excluding autos, sales rose 0.2% on the month, beating economists’ expectations for a 0.5% decline. This suggests underlying consumer spending is holding up, Charles St-Arnaud, chief economist at Alberta Central, said in an email.
Still, he said the quarterly slowdown suggests consumer spending only contributed marginally to gross domestic product growth in the third quarter, which likely rose a meager 0.4% on an annualized basis. Statistics Canada reports those figures Nov. 28.
“Whether the labour market continues to be resilient remains key for the economic outlook,” he said.
Core retail sales, which exclude gas stations and car dealers, were relatively unchanged in September. The largest decrease to core retail sales came from building material and garden equipment dealers, which fell 2% and recorded a third monthly drop, while sales also dipped at general merchandise stores.
The largest increase to core retail sales came from food and beverage retailers, which rose 0.8% and were led by growth at beer, wine and liquor retailers, followed by supermarkets and grocery stores.
In September, sales declined in six of 10 provinces. The largest provincial decrease in dollar terms was seen in Ontario, the country’s manufacturing heartland, which dropped 1.2% while sales in Toronto were down 2.3%. British Columbia saw a decline of 0.9%, with a 1% drop in Vancouver.
The statistics agency didn’t provide details for the October estimate, which is based on responses from 54.2% of companies surveyed.
–With assistance from Erik Hertzberg and Mario Baker Ramirez.
©2025 Bloomberg L.P.
Visited 1 times, 1 visit(s) today
bloomberg news Charles St-Arnaud Dashboard economic data economic indicators retail sales statcan statistics canada
Last modified: November 21, 2025
