Canada Retail Sales Research Brief

Borrowing costs influence consumer spending. Canada retail sales edged up 0.4 per cent monthly in August, translating into a 1.4 per cent year-over-year gain. This uptick was mainly driven by a 3.5 per cent monthly increase in motor vehicle and parts dealers, which may reflect lasting effects from the rebound in sales that followed a cyber attack on car dealerships in June. In contrast, core retail sales – which excludes gasoline and motor vehicle sales – were down 0.4 per cent, as consumers continued to readjust spending in the face of still-restrictive borrowing costs. While August’s numbers were largely one-sector driven with a core decline, sales volumes showed some momentum on a three-month annualized basis and also rose 0.7 per cent month over month. Moreover, flash estimates for September point to a 0.4 per cent jump in sales values. With interest rates now firmly trending down, consumption could inch higher over the coming quarters.