Retail sales decreased 0.7% to $73.7 billion in July. Sales were down in eight of nine subsectors, led by declines at general merchandise retailers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were down 0.7% in July. In volume terms, retail sales decreased 1.1% in July, reported Statistics Canada on Thursday.
Following an increase of 1.2% in June, core retail sales declined 0.7% in July. The largest decrease was observed at general merchandise retailers, in which retail sales were down 1.9% in July, after increasing 2.5% in June. In July, lower sales were also recorded at clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers (-1.2%). The sole increase to core retail sales in July came from building material and garden equipment and supplies dealers (+0.8%), up for a fourth consecutive month, explained the federal agency.
Statistics Canada provided an advance estimate of retail sales, which suggests that sales increased 1.3% in August.
In July, the federal agency said sales at motor vehicle and parts dealers were down 0.8% in July, posting their first decline in four months. Lower sales at new car dealers (-1.3%) led the decrease in this subsector. The largest increase in the motor vehicle and parts dealers subsector came from used car dealers (+2.9%).
Sales at gasoline stations and fuel vendors declined 0.9% in July, posting their second consecutive monthly decline. In volume terms, sales at gasoline stations and fuel vendors decreased 3.5%, it added.
Sales decrease in eight of nine subsectors in July
Retail sales decreased in five provinces in July. The largest provincial decrease in dollar terms was observed in Ontario (-2.0%), led by lower sales at general merchandise retailers. In the census metropolitan area (CMA) of Toronto, retail sales decreased 4.7%. In British Columbia, retail sales were down 1.4% in July, led by lower sales at motor vehicle and parts dealers. In the CMA of Vancouver, sales were down 1.6%. The largest provincial increase in retail sales in July was observed in Alberta (+1.4%). This increase was led by higher sales at general merchandise retailers, said Statistics Canada.
On a seasonally adjusted basis, retail e-commerce sales decreased 3.5% to $5.5 billion in July, accounting for 7.5% of total retail trade, compared with 7.7% in June, it noted.
“Monthly retail sales data is very volatile, and while the third quarter is showing an acceleration, we doubt the momentum can last given renewed trade tensions that are set to cause the unemployment rate to rise, while elevated gasoline prices will also eat into discretionary spending power in the near term. It likely won’t be until 2027 when we see signs of consumer spending showing a sustained pickup, and the BoC (Bank of Canada) is therefore not going to hike rates in 2026,” said Katherine Judge, Senior Economist, CIBC Capital Markets.
Maria Solovieva, Economist, TD, said some reversal was in the cards following an exceptionally strong second quarter.
“With a rebound indicated for August, nominal retail sales are tracking roughly flat in Q3. This is consistent with our TD Spend data, where goods spending is also tracking flat, while services outlays are firmly in growth territory,” she explained.
“Having seen three consecutive quarters of real consumption growth above 2%, we believe households have the capacity to spend, supported by accumulated wealth and savings as the most difficult phase of the mortgage renewal cycle recedes. We expect some moderation rather than a retrenchment, with real personal consumption expenditure forecast to grow 2.6% annualized in Q3 2026.”
Shelly Kaushik, Vice-President, Senior Economist, BMO Capital Markets, said: “A decent August flash takes a bit of the sting out of a weak July retail sales report. While significant trade uncertainty and the energy price shock remain material headwinds, consumers have so far stayed resilient.”
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