Retail sales decreased 0.7% to $69.8 billion in September. Sales were down in six of nine subsectors, led by decreases at motor vehicle and parts dealers. Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—were relatively unchanged in September, according to a report by Statistics Canada which was released on Friday.
In volume terms, retail sales decreased 0.8% in September. Retail sales were up 0.2% in the third quarter. In volume terms, quarterly retail sales were down 0.3%, said the federal agency.
“The largest decrease in retail sales in September was observed at motor vehicle and parts dealers (-2.9%), which fell for the first time in three months. Lower sales at new car dealers (-3.6%) led the decrease in this subsector after rising 1.8% in August,” explained Statistics Canada.
“Sales at gasoline stations and fuel vendors rose 1.9% in September, posting their first increase in three months. In volume terms, sales at gasoline stations and fuel vendors fell 1.0%.”
Following a gain of 1.1% in August, core retail sales were relatively unchanged in September. The largest decrease to core retail sales in September came from building material and garden equipment and supplies dealers (-2.0%), which fell for the third month in a row. Lower sales were also recorded at general merchandise retailers (-0.5%), added the federal agency.
“The largest increase to core retail sales in September came from food and beverage retailers (+0.8%). Higher receipts in this subsector were led by increases at beer, wine and liquor retailers (+3.4%), followed by supermarkets and other grocery retailers (+0.3%).”
Retail sales decreased in six provinces in September. The largest provincial decrease in dollar terms was observed in Ontario (-1.2%) on lower sales at motor vehicle and parts dealers. In the census metropolitan area (CMA) of Toronto, retail sales were down 2.3% in the month. In British Columbia, retail sales decreased 0.9% in September on lower sales at building material and garden equipment and supplies dealers. In the CMA of Vancouver, retail sales were down 1.0%. The largest provincial increase in retail sales in September was observed in Nova Scotia (+1.5%). This increase was led by higher sales at motor vehicle and parts dealers, according to Statistics Canada.
“On a seasonally adjusted basis, retail e-commerce sales decreased 3.5% to $4.1 billion in September, accounting for 5.9% of total retail trade, compared with 6.1% in August,” it said.
“Statistics Canada is providing an advance estimate of retail sales, which suggests that sales were relatively unchanged in October. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 54.2% of companies surveyed. The average final response rate for the survey over the previous 12 months was 88.8%.”
Andrew Grantham, Senior Economist, CIBC Capital Markets, said Canadian retail spending appears to be softening following a stronger-than-expected second quarter, but it isn’t yet slumping and as a result likely won’t worry the Bank of Canada at this stage.
“We continue to forecast that the Bank will move to the sidelines and hold rates steady in December, with that pause potentially lasting throughout 2026 as well . . . Overall, Canadian consumer spending doesn’t appear to be particularly strong, but also isn’t as weak as we would likely have expected given an unemployment rate close to 7%. As a result today’s data doesn’t change the view that the Bank of Canada will move to the sidelines and hold interest rates steady at its December meeting.”
Maria Solovieva, Economist, TD Economics, said: “Retail sales are heading into the holiday season on shaky footing. September recorded a renewed decline, and early signals point to a flat reading in October. Despite recent volatility, the underlying trend is weaker real spending with major categories now in outright contraction. Some good news comes from our internal credit and debit card data, which continues to point to relatively healthy gains in services spending, especially travel and recreation.
“We expect real personal spending growth to drift to a below-trend pace in the second half of 2025, with Q3 consumption tracking in a flat to 0.5% range. At this stage, the Bank of Canada has largely priced in this softer demand profile, giving policymakers sufficient justification to remain on hold.”
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