Canada's retail sales flatline, supporting case for Bank of Canada rate cut
Canadian consumers haven’t tightened their belts this much in nearly a year, and there are no signs of spending growth since the start of 2024.
Retail sales were unchanged in March, according to an advance estimate from Statistics Canada released Wednesday. That followed a 0.1 per cent drop in February, missing expectations for a 0.1 per cent gain in a Bloomberg survey.
Taken together with the 0.3 per cent plunge in January sales, the figures point to a flat reading in the first three months of the year, the weakest pace since the second quarter of 2023.
After the release, yields on two-year Canadian government bonds fell about three basis points to 4.25 per cent, while the Canadian dollar weakened about 0.3 per cent to 72.9 US cents as of 9:08 a.m. Ottawa time.
February’s decline was led by lower sales at gas stations, while car sales rose. Excluding these two subsectors, core retail sales were unchanged. All in, the report shows consumers cutting back on discretionary products including clothing and accessories as well as sporting goods.
In volume terms, retail sales decreased 0.3 per cent in February. Excluding autos, retail sales fell 0.3 per cent, lower than expectations for a 0.1 per cent increase, while the previous month’s growth was revised down to 0.4 per cent.
February’s decline was more widespread than weakness seen in January, underscoring the challenges facing consumers amid rising costs of living and financing, Maria Solovieva, economist at Toronto Dominion Bank, said in an email.
“Despite the overall softness, auto sales emerged as a bright spot, demonstrating their usual roly-poly resilience by bouncing from previous declines,” she said, adding that the bank’s internal data points to solid spending in
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