Canada Retail Sales Recover Following First Fall of Year in July — Update

By Robb M. Stewart

OTTAWA--Canadian retail sales look to have rebounded in August following a broad retreat in spending the month before.

Sales in July fell for the first time this year, declining 0.7% from the previous month to a seasonally adjusted 73.7 billion Canadian dollars, the equivalent of about US$52.25 billion, Statistics Canada said Thursday. That was the first pullback for retailers since December.

Still, an early tally of receipts indicates sales recovered in August, rising an estimated 1.3%.

The data agency offered no detail with its forecast, which was based on the responses of roughly 58% of retailers surveyed and will be revised. The rise in last month coincided with an increase in energy prices as tensions in the Middle East heated up after calming the month before.

Advance data from Statistics Canada showed factory activity also picked up in August, rising an estimated 1.1% month-over-month following the first fall in manufacturing sales in six months in July.

Analysis of cardholder activity by Royal Bank of Canada, the country's largest lender, showed that consumer spending remained positive last month and continued to be led by outlays on travel, entertainment and arts. Spending by the bank's customers was up 1.1% between July and August, and rose 0.6% on a three-month average.

Statistics Canada's retail survey for July showed sales fell in eight of the nine industry segments it tracks, led by general merchandise stores.

Sales at motor vehicle and parts dealers were down 0.8%, the first pull back in four months, led by lower activity at new car dealers.

Trade at gasoline stations and fuel vendors was 0.9% lower in July, a second straight fall. In volume terms, fuel sales dropped 3.5% for the month.

Core retail sales, which excludes gas stations and vehicle and parts dealers, were 0.7% lower for the month. Stripping out just the auto sector, sales were also down 0.7%, slightly sharper than the 0.5% fall economists expected.

In volume terms, overall sales were down 1.1% in July, though up 1.7% on the same month last year.

In addition to lower spending at general merchandise retailers, sales of clothing, accessories, shoes, jewelry, luggage and leather goods also fell.

The sole segment were sales rose was at building material and garden equipment and supplies dealers, were trade was up a fourth consecutive month.

Household spending in Canada has remained resilient this year, despite headwinds from elevated gas prices and worries over the fallout from tense trade relations between Canada and the U.S.

Canada's central bank has made clear it is grappling with inflation risk that has intensified as the war in the Middle East has continued and a return of trade uncertainty. In a speech this week, Bank of Canada Gov. Tiff Macklem said officials are prepared to adjust monetary policy depending on how those threats evolve.

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

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September 24, 2026 08:56 ET (12:56 GMT)