Canadian shoppers look like hanging in there after fourth-quarter
retail gross sales
rose 0.1 per cent — a seventh consecutive quarterly improve — regardless of falling 0.4 per cent month over month in December.
In 2025, retail gross sales elevated 4 per cent yr over yr, led by good points at motorcar and components sellers. Gross sales volumes rose 2.3 per cent.
Statistics Canada estimated
retail gross sales jumped 1.5 per cent in January.
“Finally, shopper spending is holding on regardless of ongoing financial uncertainty,” Shelly Kaushik, an economist at BMO Economics, mentioned in a word, including that the January estimate “would mark the strongest tempo since 2024.”
The declines in December had been concentrated in three of the 9 sectors lined:
constructing supplies, furnishings and electronics and auto gross sales. These had been offset by good points in gasoline, sporting items, hobbies and books, and well being and private care.
“Retail gross sales have been fairly unstable in latest months, affected by the elevated uncertainty, the drop in shopper confidence earlier this yr and the dearth of enchancment in buying energy in recent times,” Charles St-Arnaud, chief economist at Servus Credit score Union, mentioned in a word.
For instance, retail gross sales pulled again in December after rising 1.2 per cent in November, however most economists mentioned that retail gross sales adjusted for inflation have been “transferring sideways.”
St-Arnaud mentioned retail gross sales adjusted for slowing inhabitants development and inflation got here in flat in December and rose 1.7 per cent from the identical time final yr.
He mentioned comparatively “degree” gross sales throughout 2025 converse to shoppers’ resiliency, particularly going into 2026, which may assist help
gross home product
within the first quarter and offset weak enterprise funding and slowing exports.
Some economists are much less optimistic about shoppers’ resiliency.
“We proceed to count on shopper outlays in (the primary quarter) will develop solely modestly,” Tony Stillo, head of Canada Economics at Oxford Economics Ltd., mentioned in a word.
He mentioned the retail sector will likely be hit by a declining inhabitants, job insecurity as a result of ongoing commerce battle, “modest” job losses and one other wave of mortgage renewals at larger
rates of interest.
However the federal grocery and necessities profit may present a lift by mid-year, he mentioned.
David Rosenberg, president of Rosenberg Analysis & Associates Inc., mentioned in a word that “cyclically delicate expenditures” sagged after stripping out necessities comparable to private care objects, meals and gasoline.
He mentioned disinflation was additionally evident, provided that retailers reduce their costs by 0.3 per cent month over month.
Statistics Canada will launch its fourth-quarter gross home product knowledge subsequent week and economists count on the flat retail volumes are indicative of a possible weak end result.
Sturdy retail gross sales in November and the January flash estimate recommend shopper spending is poised to select up, Andrew Grantham, an economist at CIBC Capital Markets, mentioned in a word.
“If that’s the case, it justifies the present on-hold stance from the
Financial institution of Canada
, though we’ll want just a few extra months of knowledge to verify if this upward pattern will maintain,” he mentioned.
However he factors out the January estimate, if it holds, is only one month’s price of knowledge.
“I
t will take just a few extra months of knowledge to guage if the January determine is the beginning of a brand new uptrend,” Grantham mentioned.
Rosenberg additionally questioned how effectively the flash estimate will maintain up.
“The veracity of that quantity can definitely be referred to as into query, provided that we all know that the economic system misplaced 25,000 jobs final month,” he mentioned.
Rosenberg additionally thinks the retail sector has fallen right into a recession primarily based on two consecutive annualized declines within the third and fourth quarters.
“Disinflationary momentum to this extent needs to be opening the door for the Financial institution of Canada to offer the home economic system the aid it desperately wants,” he mentioned.
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