Shoppers hit the brakes in July, with retail sales down 0.7% after seven straight monthly gains. A flash estimate from Statistics Canada suggests the pullback may be short lived, calling for a 1.3% increase in August. For July, sales also shrank 1.1% after adjusting for price changes. Economists surveyed by Bloomberg had looked for a 0.8% decline.
General merchandise stores saw the sharpest July pullback, falling 1.9% after a 2.5% rise in June. Auto and parts dealers also posted their first drop in four months, with new vehicle sales down and used vehicle sales up. Spending at gas stations slipped 0.9% by value, and 3.5% by volume, as elevated pump prices tied to the Iran war nudged drivers to buy less fuel. The home improvement and garden category was the lone bright spot, logging a fourth straight monthly increase.
Sales fell in five provinces in July. Ontario led the declines with a 2% drop, including a 4.7% slide in Toronto. Alberta was the standout gainer, up 1.4%.
The economy snapped back in the second quarter, but momentum is expected to cool in Q3. A preliminary read suggests real GDP was unchanged in July. "We don't expect the momentum to extend, as lingering trade uncertainty will likely weigh on discretionary spending ahead," said Katherine Judge, an economist with Canadian Imperial Bank of Commerce.
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Canada's shopper slowdown looks broad but likely brief if August holds up. Still, autos and discretionary categories may feel choppier demand while gas prices pinch. If growth flattens and spending cools, that can ripple to wages, hours, and small business traffic. Keep an eye on August's finalized print and how your local economy is moving, not just the national headline.
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