The latest figures from Statistics Canada show that retail turnover rose 0.6 % in June, reaching $74.3 billion, but a preliminary estimate for July points to a 0.8 % contraction, suggesting the June uplift may be short‑lived. The agency cautioned that the July number is subject to revision, while economists note that the broader trend remains gently upward and could persist into 2025.
June’s mixed performance across categories
In June, seven of the nine retail subsectors recorded gains. General merchandise stores posted a 2.7 % increase, while the clothing, accessories, footwear, jewellery, luggage and leather goods segment climbed 3.1 %. Conversely, food and beverage retailers slipped 0.4 %, with supermarkets (excluding convenience outlets) down 0.6 %. Core retail, which strips out fuel stations and motor‑vehicle dealers, advanced 1.2 %. Sales at motor‑vehicle and parts dealers rose one per cent, buoyed by a 1.5 % rise at new‑car dealerships, whereas gasoline stations and fuel vendors fell 4.1 %. In volume terms, total retail activity increased 1.5 % for the month.
CIBC senior economist Andrew Grantham observed that the second‑quarter surge tapered off at the start of the third quarter, but the underlying trajectory stays positive. “However, through the monthly volatility the underlying trend still appears to be gradually upwards and that improvement should continue into next year,” he wrote in his report.
Economists caution about July volatility
TD Bank economist Maria Solovieva described the June outcome as “another solid month for retail sales, with both core spending and real activity rising for a second consecutive time.” She added that the data indicate sustained real personal consumption growth in the second quarter despite inflationary pressures. “Taken together, the data point to ongoing real personal consumption growth in Q2 despite rising prices,” she noted in her analysis.
Core retail and vehicle sales hold steady
Core retail sales, which exclude gasoline stations, fuel vendors, motor‑vehicle and parts dealers, grew 1.2 % in June. The motor‑vehicle sector contributed positively, with a one‑per‑cent rise driven by a 1.5‑per‑cent increase at new‑car dealers. Meanwhile, the decline at fuel stations was pronounced, falling 4.1 % month‑on‑month, reflecting lower pump prices and reduced travel activity.
The preliminary GDP estimate for June suggests a modest 0.2 % monthly expansion, while the annualised growth for the second quarter is projected at 3.4 %. These figures will be confirmed in the full GDP release scheduled for 28 August.
Why it Matters
The resilience of retail sales, especially in core and vehicle segments, signals robust consumer confidence and spending power, which are crucial drivers of economic growth in Canada. A continued upward trend could reinforce the Bank of Canada’s cautious optimism about inflation containment and support broader fiscal planning, while the July dip warns of seasonal swings that may affect inventory management and pricing strategies across the retail landscape.
