Canada Retail Sales Pull Back After 1.3% Rise in November — 2nd Update

By Robb M. Stewart

OTTAWA--Canadians remain cautious with their spending, with retailers registering a pullback in sales for the final month 2025 that rounds out a year of choppy trade.

Retail sales in November increased 1.3% from the month, only for sales to drop an estimated 0.5% in December, based on an advance tally of receipts by the national data agency.

November's increase, while the strongest in five months and modestly sharper than the 1.2% rise in sales that economists had expected, followed weakened sales the previous two months, including a 0.3% slide in October.

Statistics Canada offered no details with its forecast for last month, which was based on the responses of roughly 61% of retailers surveyed and will be revised.

Consumer spending showed surprising resilience early last year in the face of the Trump administration's threats and tariffs, but slowed in the back half of 2025 with uncertainty heightened and the unemployment rate remaining elevated despite a recent recovery in hiring. A tentative recovery in the housing market also stalled in December, with resale activity and prices both declining.

"Volatility in monthly retail sales readings has been greater than usual in 2025 and makes a trend of spending harder to discern," Citi economist Veronica Clark said. "But available data so far, with Statistics Canada estimating a 0.5% decline in retail sales in December, suggest real goods consumption is likely to decline again in the fourth quarter."

Industry-level GDP figures covering November and an estimate for the last month of the year are set to be released in a week, two days after the Bank of Canada next decides on interest rates. Policymakers have forecast slowing household consumption due to the jobless picture and as population growth slows, but have forecast sluggish economic growth of about 1% annualized for the latest quarter, which may prove a stretch.

The forecast for retail weakness in December covers nominal sales and will have been affected by a decline in gasoline prices, so sales volumes may have been firmer for the month. Still, economists at Desjardins say that while retail sales over the fourth quarter were largely rangebound, the highs and lows for the period were lower than in the previous quarter and volumes likely fell 1.6% on an annual basis for the three months.

Cardholder tracking by Royal Bank of Canada, the country's biggest bank, showed spending in December was up 0.7% on a three-month average, slightly lower the pace in October but still marking a 13th consecutive period of growth. The increase was driven over the critical holiday period by purchases of discretionary goods, particularly clothing and apparel, while outlays on discretionary services and household essentials were little changed over the past three months.

Statistics Canada's retail survey for November showed sales were up broadly, increasing in eight of the nine industry segments it tracks, led by a rebound in food and drink trade. On a volume basis, sales increased 1.1% in November and 1.5% on the a year earlier.

Higher receipts at food and beverage retailers for the month was led by a strong 14.3% jump in alcohol, recouping much of the prior months' drop when a strike at British Columbia liquor stores weighed heavily on purchases of beer, wine and liquor. Higher sales were also recorded at Canadian supermarkets and other grocery stores.

Gas station sales provided another source of strength for November, helped by higher seasonally adjusted fuel prices.

Core retail sales, which exclude car and auto-parts dealers and gas stations, climbed 1.6% after faltering the previous two months. Stripping out just the auto sector, sales for November were 1.7% higher, topping the 1% increase economists had expected.

Canadians also spent more on clothing and accessories following declines the two prior months, and sales at building materials and garden equipment and supplies dealers were up a second straight month. The only segment to record weakened sales in November was sporting goods, hobby, musical instrument, book, and miscellaneous retailing, the data agency said.

"The still unfriendly trend in retail sales even after accounting for November's gain shows that consumers are still being cautious regarding spending," Andrew Grantham, senior economist at CIBC Capital markets, said.

For Grantham, that caution will likely translate into a further easing in core measures of inflation, supports CIBC's view that the Bank of Canada can keep interest rates steady at current levels to try and support an acceleration in growth. For other economists, including Citi's Clark, slowing spending highlights the risk weakness in trade-exposed sectors of Canada's economy is spreading more widely and could mean layoffs, which backs her case for the central bank to resume lowering rates later in 2026.

Write to Robb M. Stewart at robb.stewart@wsj.com

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January 23, 2026 11:21 ET (16:21 GMT)