Canada retail sales surged in the final month of 2024, up 2.5 percent in December, exceeding the 1.6 percent jump expected in the Econoday consensus forecast. Statscan said sales were up in all nine subsectors, led by increased sales at food and beverage retailers, as well as motor vehicles and parts dealers.

Retail sales are up 3.9 percent from December 2023.

Core retail sales, excluding gasoline stations, fuel vendors and auto dealers, also came in strong up 2.5 percent and +3 percent year-over-year.

The Bank of Canada's aggressive rate cuts are having an effect on household spending; however, this encouraging report does not reflect the uncertain economic outlook in 2025. In particular, the significant downside risks from a potential trade war with the United States.

On a monthly basis, December's largest increase in retail sales was at food and beverage retailers (+3.5 percent). Higher supermarket and grocery sales (+3.9 percent) led the increase, followed by beer, wine, and liquor retailers (+3.9 percent).

Sales at motor vehicle and parts dealers were up 1.9 percent in December, fueled by higher sales at new car dealers (+2 percent), their third consecutive monthly increase.

Sales at gasoline stations and fuel vendors jumped 4.2 percent in December, the second consecutive monthly increase.

E-commerce sales rose again in December up 3.1 percent, making up 6.1 percent of total retail trade.

Forecasters agree with Stats Canada's preliminary forecast calling for a strong 1.6 percent rise in sales on the month in December after no change in November.

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.