Canadian Retail Sales (May 2025)
Maria Solovieva, CFA, Economist | 416-380-1195
Date Published: July 24, 2025
- Category:
- Canada
- Data Commentary
- Consumer
Retail sales plunge as auto sales pull-back in May
- Retail sales contracted by 1.1% month-on-month (m/m) in May, matching Statistics Canada's advanced estimate.
- After adjusting for inflation, the volume of retail sales declined 1.4% m/m.
- The sharp pull-back was led by auto sales, which fell by 3.6% m/m as the tariff-driven front-loading seen in the prior two months reversed course. Ex-autos, sales were down 0.2%.
- Receipts at gas stations and fuel vendors plunged by -2.7%, reflecting the second consecutive monthly decline in fuel prices due to the removal of the consumer carbon tax.
- Excluding auto sales and receipts at gas stations, core retail sales were flat in May. Sales at food and beverage stores – the biggest contributor to core sales – declined by 1.2% m/m in May. Most other categories rose, with building material and garden equipment and supplies dealers leading with 1.9% gain.
- E-commerce sales declined by 1.7% m/m in May.
- Statistics Canada's advanced estimate suggests a rebound in June, with a gain of 1.6%.
Key Implications
- The two-month surge in auto sales came to an abrupt halt in May. While we expect some rebound in June, the reversal will likely be limited. Core sales activity remains soft. On a real per capita basis – a metric that gained attention last year as a recession signal when adjusted for rapid population growth – sales are now in contraction for the second straight month.
- Consumer caution remains the dominant theme. Despite some recovery in traditional confidence measures, Canadians appear to be treading carefully as they assess the impact of tariffs. The Bank of Canada’s new sentiment index declined in Q2, weighed down by soft consumer spending data. Similarly, our internal Spend data suggests only a weak recovery in June, with quarterly momentum still muted. This persistent weakness in household demand will weigh on growth in the second quarter.
Disclaimer
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.