Canada Retail Sales Research Brief

Tariff front-loading comes to an end. Retail sales fell 1.1 per cent monthly in May, largely aligned with preliminary estimates. The biggest monthly drop was seen in the automotive sector at 3.6 per cent amid in-place car tariffs. Nevertheless, total sales were still up nearly 5.0 per cent year over year in May, and consumer confidence has also rebounded from the recent trade-induced lows. Preliminary estimates for June show a solid 1.6 per cent monthly increase in retail sales. As a result, the contraction in May likely reflects a normalization after tariff front running, rather than the start of a marked downturn in consumer spending. Together with recent GDP and employment data, signs of economic resilience are promising for a nation highly dependent on trade with the United States.