Canadian Retail Sales (December 2024)

Retail sales jump in December, with real activity reporting its strongest month since mid-2022. 

• Retail sales rose 2.5% month-over-month (m/m) in December, much stronger than Statistics Canada’s advance estimate of 1.6% growth.  
• In real terms, sales growth accelerated to 2.5% m/m, reflecting robust spending supported by the GST/HST tax break. This is the highest reading since June 2022. 
• Motor vehicle and parts dealers saw sales increase 1.9% m/m, building on November's strong 2.0% m/m gain. Ex-autos, sales increased 2.7% m/m, surpassing the 2.0% m/m consensus expectation. 
• Receipts at gas stations and fuel vendors rose by 4.2% m/m in nominal terms but only 0.7% m/m in real terms, reflecting the impact of higher fuel prices. 
• Excluding both auto sales and gas station receipts, core retail sales rose by 2.5% m/m in December, rebounding from a 1% decline in November. 
• Gains were reported across all core categories except furniture and home furnishings stores (-0.5% m/m), with food and beverage stores (+3.5% m/m) being a key driver of growth. 
• E-commerce sales rebounded by 3.2% m/m, recovering from a 0.7% decline last month.  
• Statistics Canada’s advance estimate for January suggests that sales were down 0.4% m/m.

Key Implications

• Retail activity ended the year with a bang. Given the dampening effect of the GST/HST tax break on nominal figures, real sales provide a better measure of consumer activity, pointing to a swift rebound in spending behaviour.  As a result, we expect consumption growth for Q4 2024 to reach around 4% (annualized), pushing GDP growth above trend. 
• The key question now is how long this momentum will last. Given the negative flash estimate for January, some of December's strength is likely to fade into early 2025, with consumption growth expected to slow to around 2.0% (annualized) in Q1 2025. That said, the fundamentals remain solid: steady income growth a resilient labour market, accumulated savings along with two-percentage point reduction in the overnight rate, and easing debt-servicing pressure should continue to support consumer spending. However, tariff threats pose a significant risk to this positive outlook. If they begin to erode labour market strength, consumer spending could quickly lose steam.    

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