Canada retail sales increased 0.4 percent in September, matching the pace set in August, and as expected in the Econoday consensus forecast. Statscan said sales were up in six of nine subsectors, led by increased sales for food and beverage retailers.

Retail sales are up 0.8 percent from September 2023, slowing down from the 1.4 percent jump on an annual basis in August.

Core retail sales, excluding gasoline stations, fuel vendors and auto dealers, rebounded in September surging by 1.4 percent after a 0.5 percent decline in August. Core sales rose 1.9 percent compared to September 2023, a significant improvement on the 0.3 percent year-over-year increase reported for August.

September's retail sales data keeps another rate cut on the table at the Bank of Canada's next meeting in December but makes an aggressive move less likely. Still, it will take some time for lower borrowing costs to reverse the decline in consumer spending, with overall consumption not expected to pick up until the second half of 2025.

On a monthly basis, September's largest increase in retail sales was at food and beverage retailers (+3 percent). Higher sales at supermarkets and other grocery retailers (+3.3 percent) led the increase, followed by beer, wine, and liquor retailers (+4.4 percent). The only category within core retail sales that saw a decline in September was clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers (-0.8 percent).

Sales at gasoline stations and fuel vendors were down 2.3 percent in September, the fifth consecutive monthly decline. Sales at motor vehicle and parts dealers fell 0.7 percent in September, dragged down by both new car dealers (-0.7 percent) and used car dealers (-5.2 percent).

E-commerce sales bounced back in September up 3.3 percent following a 2.5 percent drop in August making up 6.2percent of total retail trade compared with 6 percent in August.

Forecasters agree with Stats Canada's advance retail indicator that looked for retail sales up 0.4 percent in September.

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.