Canadian Retail Sales (June 2025)

Retail sales rebound in June, but lose steam in July

• Retail sales rose 1.5% month-on-month (m/m) in June, just a tad lower than Statistics Canada's 1.6% advanced estimate.
• After adjusting for inflation, the volume of retail sales increased 1.5% m/m.
• Unlike in previous months, auto sales were not a major swing factor, with sales edging up just 0.2% m/m after a 1.8% decline in May.
• Receipts at gas stations and fuel vendors rose 1.8%, following three consecutive declines. In volumes terms, sales grew an even stronger 2.7% m/m, as lower fuel prices weighed on the nominal gain.
• Core sales – excluding auto sales and receipts at gas stations – were solid, rising 1.9% m/m in June. Food and beverage stores led the way (+1.2% m/m) with broad-based gains across most categories. Notably, sales at clothing and clothing accessories stores surged 5.1% m/m, while sales at general merchandise stores climbed 1.8% m/m. 
• The lone laggard category was furniture and home furnishings stores, which slipped 0.8% m/m.
• E-commerce sales declined by 1.7% m/m in June. 
• Statistics Canada's advanced estimate points suggests that sales pulled back in July, falling 0.8% m/m.  
• Responses to the supplementary questions showed that 27% of retailers reported being affected by trade tensions, down from 32% in May.

Key Implications

• Retail sales matched expectations at the headline level but surprised to the upside in core categories. This indicates that auto-driven gains seen in the spring now lost momentum. On a quarterly basis, real retail sales posted a respectable 3.1% annualized gain with June's strength leaving core sales as the main driver of the topline tally.
• Consumer spending held up better than we previously expected and we now see real spending tracking 1.2% in the second quarter (quarter-on-quarter, annualized). However, as the advance estimate indicates, momentum is likely to cool in Q3. With employment growth slowing and trade tensions clouding the outlook, there is little for the average Canadian household to get excited about.    

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