Retail gross sales fell 1.1% in Might, coming in barely worse than economists anticipated, Statistics Canada reported this morning. Though declines have been concentrated in simply three of 9 sectors, they have been steep sufficient to drag complete gross sales decrease.
When it comes to quantity, retail gross sales decreased 1.4% general.
Motorized vehicle and components sellers (-3.6%), gasoline stations and gasoline distributors (-1.4%), and meals and beverage retailers (-1.2%) have been the sectors that weighed most closely on Might’s outcomes.
Conversely, the biggest enhance in Might got here from constructing materials and backyard tools and provides sellers, which rose 1.9% after a 0.2% decline the earlier month. Gross sales at well being and private care retailers additionally climbed 0.7%, marking the eleventh consecutive month-to-month achieve.
Extra steady indicators for retail commerce confirmed a much less pessimistic image. Core retail gross sales—which exclude fuel stations and motorcar and components sellers—remained largely flat in Might.
Regionally, 9 of the 13 provinces and territories reported declines in Might. The most important drops have been in Ontario (-2.1%), New Brunswick (-1.5%) and Alberta (-1.0%). Nova Scotia was the one province to publish a rise, with gross sales edging up 0.3%.
On-line purchasing additionally declined to start out the summer season, falling 1.7% to $4.3 billion in Might. E-commerce accounted for six.2% of complete retail commerce.
Retail gross sales rebound in early June; economists see no case for price reduce
Might’s decline didn’t come as a shock to economists, as a pullback in auto gross sales had been extensively anticipated.
Trying forward, the company’s early estimate for June factors to a 1.6% enhance in retail gross sales, an indication that shopper spending could also be stabilizing. Nonetheless, economists are tempering expectations for a powerful rebound.
“An honest flash estimate for June suggests the downward momentum in spending might be stabilizing,” wrote BMO’s Shelly Kaushik. “As Canada and the U.S. work in the direction of a commerce deal, it’s clear that extra commerce certainty may also help assist Canadian customers and broader financial exercise.”
Whereas hopes stay for larger commerce certainty, companies proceed to really feel the impression of tariffs. In keeping with StatCan, 32% of corporations reported being affected by commerce tensions in Might, down barely from 36% in April.
Different economists stay cautious about June, pointing to broader indicators that counsel underlying retail weak spot.
“Whereas we count on some rebound in June, the reversal will seemingly be restricted. Core gross sales exercise stays comfortable,” TD’s Maria Solovenia wrote in a analysis be aware. She famous that actual per capita gross sales, a key metric usually considered as a recession sign, have now declined for the second consecutive month.
Solovenia additionally flagged softening shopper information mirrored within the Financial institution of Canada’s newest sentiment index and TD’s inner spending figures, which present that “quarterly momentum stays muted.”
Nevertheless, some specialists view the June flash information as an early signal of a stronger third quarter. CIBC’s Andrew Grantham pointed to advance estimates for manufacturing shipments, which confirmed a modest enhance, although he cautioned that it stays a “trade-sensitive sector.”
“Early proof means that the financial system discovered a firmer footing in the direction of the tip of Q2, which bodes effectively for a return to progress within the second half of the yr following a probable stall in GDP in the course of the second quarter,” he wrote.
As for the Financial institution of Canada’s upcoming price choice, Grantham stated he expects the Financial institution to carry its coverage price subsequent week however added that “additional price reductions should still be wanted later within the yr to make sure progress is powerful sufficient to shut the slack that has constructed up within the financial system, which ought to begin to put downward stress on core inflation.”
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Final modified: July 24, 2025
