| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 1.0% | 1.0% to 1.1% | 1.0% | -0.8% |
| Year over Year | 4.9% | 4.0% |
Highlights
Retail sales rebounded 1.0 percent in August after retreating 0.7 percent in July, reflecting widespread gains across six of nine subsectors. The recovery was due to stronger activity, as volumes were up 1.0 percent.
The momentum is likely short lived in light of the advance estimate for September pointing to a 0.7 percent contraction based on 48.4 percent of responses. Further ahead, the latest Bank of Canada's latest Survey of Consumer Expectations also provides a not-so-encouraging picture.
The third quarter survey published earlier this week shows consumer spending intentions remain weak, with a priority on Canada-first buying: Canadian goods and vacations in Canada.
High prices, economic uncertainty, and elevated housing costs are the most cited barriers to spending. In September, consumer prices were up 2.4 percent year-over-year, up from 1.9 percent in August. A 4.8 percent gain in rent and a 3.6 percent increase in mortgage interest cost were the top upward contributors.
Also weighing on spending prospects, consumers see further deterioration in the labor market, while the sister business outlook survey points to subdued hiring intentions and lower expectations for wage growth.
Against this backdrop, the 1.0 percent monthly increase, which was in line with expectations in an Econoday survey of forecasters, is unlikely to change Governor Tiff Macklem's most recent assessment downplaying the September strong employment numbers while expecting soft growth in the second half of 2025. It's not going to feel very good, and it's certainly not going to be enough to close the output gap, he said in comments on the margins of the IMF meetings.
In August, a 1.8 percent increase in sales of motor vehicles and parts led the overall gain. Without this subsector, sales would be up just 0.7 percent instead of 1.0 percent. By contrast, gasoline stations and fuel vendor receipts fell 2.0 percent. When also excluding this subcategory, core sales were up 1.1 percent on the month, nearly erasing the previous month's decrease of 1.2 percent.
Also weighing on sales were a 0.3 percent contraction in building material and garden equipment and supplies, and a 0.1 percent decrease in sporting goods, hobby, musical instrument, book, and miscellaneous sales.
These declines were largely offset by gains in all other categories, including a 3.2 percent increase in clothing, clothing accessories, shoes, jewelry, luggage and leather goods. Both furniture, home furnishings, electronics and appliances retailers and health and personal care retailers recorded a 1.2 percent gain. Sales of general merchandise rose 2.4 percent.
Regionally, the picture was mixed, with gains in five provinces, led by Ontario.
E-commerce sales increased 0.1 percent to C$4.3 billion in August, accounting for 6.1 percent of total retail trade, little change from the previous month.
The momentum is likely short lived in light of the advance estimate for September pointing to a 0.7 percent contraction based on 48.4 percent of responses. Further ahead, the latest Bank of Canada's latest Survey of Consumer Expectations also provides a not-so-encouraging picture.
The third quarter survey published earlier this week shows consumer spending intentions remain weak, with a priority on Canada-first buying: Canadian goods and vacations in Canada.
High prices, economic uncertainty, and elevated housing costs are the most cited barriers to spending. In September, consumer prices were up 2.4 percent year-over-year, up from 1.9 percent in August. A 4.8 percent gain in rent and a 3.6 percent increase in mortgage interest cost were the top upward contributors.
Also weighing on spending prospects, consumers see further deterioration in the labor market, while the sister business outlook survey points to subdued hiring intentions and lower expectations for wage growth.
Against this backdrop, the 1.0 percent monthly increase, which was in line with expectations in an Econoday survey of forecasters, is unlikely to change Governor Tiff Macklem's most recent assessment downplaying the September strong employment numbers while expecting soft growth in the second half of 2025. It's not going to feel very good, and it's certainly not going to be enough to close the output gap, he said in comments on the margins of the IMF meetings.
In August, a 1.8 percent increase in sales of motor vehicles and parts led the overall gain. Without this subsector, sales would be up just 0.7 percent instead of 1.0 percent. By contrast, gasoline stations and fuel vendor receipts fell 2.0 percent. When also excluding this subcategory, core sales were up 1.1 percent on the month, nearly erasing the previous month's decrease of 1.2 percent.
Also weighing on sales were a 0.3 percent contraction in building material and garden equipment and supplies, and a 0.1 percent decrease in sporting goods, hobby, musical instrument, book, and miscellaneous sales.
These declines were largely offset by gains in all other categories, including a 3.2 percent increase in clothing, clothing accessories, shoes, jewelry, luggage and leather goods. Both furniture, home furnishings, electronics and appliances retailers and health and personal care retailers recorded a 1.2 percent gain. Sales of general merchandise rose 2.4 percent.
Regionally, the picture was mixed, with gains in five provinces, led by Ontario.
E-commerce sales increased 0.1 percent to C$4.3 billion in August, accounting for 6.1 percent of total retail trade, little change from the previous month.
Market Consensus Before Announcement
Forecasters agree with the Stats Canada preliminary estimate calling for a rebound of 1.0 percent for September after August’s decline of 0.8 percent.
Definition
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.
Description
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.
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.
