Author: Laura Dylan Kane
(Bloomberg) — Consumer spending slowed in Canada in the third quarter as a painful trade war with the United States persists and population growth continues to slow.
Data released by Statistics Canada on Friday showed that retail sales increased by 0.2% from July to September, following a 0.3% increase in the previous quarter. Sales fell 0.7% in September, in line with the median estimate in a Bloomberg survey of economists, while preliminary estimates showed sales were flat in October.
The quarterly retail sales data were the weakest pace in more than a year, underscoring consumers’ caution about spending in the face of economic and tariff uncertainty. They may also reflect federal immigration restrictions that have slowed Canada’s once explosive population growth.
The Bank of Canada plans to take a wait-and-see approach after cutting its benchmark overnight interest rate to 2.25%, saying rates will be at “roughly the right level” if the economy and inflation develop as it expects. The central bank expects household consumption to slow due to immigration changes and a weak labor market.
In terms of quantity, retail sales fell by 0.3% month-on-month and 0.8% in September. Overall, sales fell in six of nine subsectors for the month, led by a decline in the automotive industry, which has seen sales fluctuate this year due to the impact of U.S. tariffs. A Bank of Canada survey shows Canadians expect the tax to cause car prices to spike.
Motor vehicle sales fell 2.9% in September, the first decline in three months, mainly due to a drop in new car dealer revenue. Still, car purchases in the first nine months of this year were up 7.4% from the same period last year, which may reflect some consumers’ rush to cope with the impact of tariffs.
Excluding cars, sales rose 0.2% for the month, beating economists’ expectations for a 0.5% decline. Charles Saint-Arnaud, chief economist at the Central Bank of Alberta, said in an email that this suggests underlying consumer spending is maintaining growth.
However, he said the quarterly slowdown suggested consumer spending would contribute little to third-quarter gross domestic product growth, likely at an annualized rate of just 0.4%. Statistics Canada released the data on November 28.
“Whether the labor market continues to remain resilient remains key to the economic outlook,” he said.
Core retail sales, which exclude gas stations and auto dealers, were relatively flat in September. The biggest declines in core retail sales were at building materials and garden equipment dealers, down 2%, the third straight month of declines, with department store sales also falling.
The largest increase in core retail sales was at food and drink retailers, up 0.8%, led by growth at beer, wine and alcohol retailers, followed by supermarkets and grocery stores.
Sales fell in six out of 10 provinces in September. In dollar terms, the province with the largest decline was Ontario, the country’s manufacturing heartland, down 1.2 per cent, while sales in Toronto fell 2.3 per cent. British Columbia fell 0.9%, including a 1% drop in Vancouver.
The statistics agency did not provide details of the October forecast, which was based on responses from 54.2% of companies surveyed.
–With assistance from Eric Herzberg and Mario Baker Ramirez.
©2025 Bloomberg
Visited 1 times, visited 1 time today
Bloomberg News Charles St-Arnaud Dashboard Economic Data Economic Indicators Retail Sales Statcan Statistics Canada
Last modified: November 21, 2025
