Canadian retail sales swung from +0.6% to -0.7% m/m in July, slightly better than expectations for a 0.8% decline, while sales excluding autos fell from +0.5% to -0.7%, weaker than the -0.5% consensus. The headline weakness was broad, with sales falling in eight of nine subsectors, while retail volumes declined an even steeper 1.1%. Statistics Canada’s core measure, which excludes both motor vehicles and gasoline, also dropped 0.7% after rising 1.2% in June, indicating that the setback extended beyond volatile auto and fuel spending.
General merchandise retailers recorded the largest core decline at -1.9%, while clothing-related sales fell 1.2%. Motor vehicle and parts dealers dropped 0.8%, led by a 1.3% decline at new-car dealers, while gasoline stations and fuel vendors fell 0.9%, or 3.5% in volume terms. Regional weakness was also notable: Ontario sales fell 2.0%, including a 4.7% decline in Toronto, while British Columbia dropped 1.4%. E-commerce sales decreased 3.5%. Together, the composition points to a broad pullback in household spending rather than a decline driven by a single category.
The main offset came from Statistics Canada’s advance estimate for August, which indicated a 1.3% rebound in retail sales. If confirmed, that would more than reverse July’s nominal decline and argue against extrapolating the weakness into a sustained downturn in consumption. However, the estimate was based on responses from only 57.8% of surveyed companies, compared with an average final response rate of 87.1%, leaving scope for revision. July therefore delivers a clearly soft and broadly based consumption signal, but the early August reading suggests some of that weakness may prove temporary.
Data Summary
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| Retail Sales m/m | -0.7% | -0.8% | +0.6% |
| Retail Sales ex Autos m/m | -0.7% | -0.5% | +0.5% |
| Core Retail Sales m/m* | -0.7% | — | +1.2% |
| Retail Sales Volume m/m | -1.1% | — | — |
| August Advance Estimate m/m | +1.3% | — | — |
*Statistics Canada’s core measure excludes both motor vehicle and parts dealers and gasoline stations/fuel vendors. July sales fell in eight of nine subsectors, while real retail volumes declined more sharply than nominal sales.
Key Takeaways
- Canadian retail sales reversed from +0.6% to -0.7% m/m in July, slightly better than the -0.8% consensus.
- Sales excluding autos fell from +0.5% to -0.7%, weaker than expectations for -0.5%.
- Weakness was broad, with sales declining in eight of nine subsectors rather than being concentrated in autos or gasoline.
- Statistics Canada’s core retail sales fell 0.7% after a 1.2% June gain, led by a 1.9% decline at general merchandise retailers.
- Retail volumes dropped an even steeper 1.1%, pointing to softer underlying consumption after stripping out price effects.
- Motor vehicle and parts sales fell 0.8%, while gasoline and fuel sales declined 0.9%; Ontario dropped 2.0% and Toronto fell 4.7%.
- E-commerce sales also weakened, falling 3.5% in July.
- The main offset is the preliminary August estimate, which suggests a 1.3% rebound, although the low 57.8% response rate leaves meaningful revision risk.
- Overall, July points to a broad pullback in household spending, but the early August rebound argues against treating it yet as the start of a sustained deterioration.
