(Bloomberg) — Canadian retail sales made up for the worst start to a third quarter since 2022 with a relatively healthy gain last month.
An advance estimate suggests receipts for retailers grew 1% in August, wiping out July’s 0.8% decline, according to Statistics Canada data Thursday. Sales also fell 0.8% in volume terms in July, and when auto sales were excluded, receipts slid 1.2%.
The statistics agency didn’t provide details for the August estimate, which is based on responses from just more than half of companies surveyed. But it correctly projected the extent of July’s drop, which also matched the median projection in a Bloomberg survey of economists.
The report suggests Canadian consumption — which was stronger than expected in the second quarter even as gross domestic product contracted — remains resilient. The Bank of Canada, however, expects slow population growth and labour market weakness to weigh on household spending in the months ahead.
In July, sales were down in eight of nine subsectors, with food retailers leading the decreases. Core retail sales, which exclude gas stations and car dealers, were down 1.2%.
Supermarkets and grocers saw receipts drop 2.5% that month, although beer, wine and liquor stores saw sales jump 3.2%.
While Canadians cut back on clothing and accessories with a 3.2% decline, they appeared to still be buying cars, with those dealers seeing a 0.2% increase.
“Looking through the monthly volatility still shows a lackluster trend in real spending, supporting the need for another Bank of Canada cut in October,” Katherine Judge, economist at Canadian Imperial Bank of Commerce, said in a report to investors.
Regionally, the figures showed different patterns in spending. Half of the 10 Canadian provinces saw sales decrease, led by Ontario, the most populous province and the country’s manufacturing heartland hit hard by auto and steel tariffs.
Prince Edward Island, Nova Scotia, Quebec and Manitoba, on the other hand, saw increases in retail sales. Sales in Saskatchewan were unchanged.
The data support a view that the Canadian economy is not deteriorating, but the path forward may be volatile, Charles St-Arnaud, chief economist at Alberta Central, said in an email.
“The trajectory of consumer spending in the coming months will depend on the labour market,” he said. “However, with the labour market expected to remain tepid, with further increases in the unemployment rate likely, any improvement in retail sales over the next few months will be modest.”
–With assistance from Mario Baker Ramirez.
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Last modified: September 20, 2025
