- The advance August reading was +1.3%
- Prior was -0.7%
- Sales up in all 9 subsectors, led by motor vehicles
- Ex-autos +1.2% vs +1.0% expected
- Prior ex-autos was -0.7%
- September advance sales +0.7%
The advance (or flash) reading is the real market mover in this report now as it generally corresponds with the final reading. The +0.7% m/m number for September is a good sign of ongoing strength.
RBC last week was out with its cardholder spending data for September and that’s usually a good cross-check and precursor to the official report. It showed core sales up 0.5% m/m on strong discretionary categories.
With that, the market should feel increasingly comfortable that the Bank of Canada will hike rates next week, as is priced at just under 80%. What’s notable though is that Fed pricing has come down quickly so there is an interesting divergence opening up and — not surprisingly — USD/CAD is at a one-month low and broke 1.40 today.
The RBC data showed strong discretionary numbers and that showed up here as well with sales at food and beverage retailers up 1.1%. Furniture and appliances were also strong against a run of dismal housing numbers.
For background, Statistics Canada publishes its retail trade report monthly at 8:30 am ET, roughly seven weeks after the reference month ends. The release includes full data for that month plus an advance estimate for the following month, so each report gives markets two readings: a detailed look back and an early flash on the most recent month.
The headline figure is the monthly change in total retail sales in current dollars. Because car sales and gasoline prices can swing the total sharply, markets focus on core retail sales, which exclude motor vehicle and parts dealers and gasoline stations and fuel vendors. StatCan also reports sales in volume terms, stripping out price changes, which gives a better sense of how much consumers are actually buying. In periods of high inflation, nominal gains can mask flat or falling volumes.
The report breaks sales down across subsectors, including food and beverage retailers, general merchandise, health and personal care, building materials and garden equipment, clothing and furniture. It also tracks e-commerce sales and provincial results.
Retail sales are one of the more market-moving Canadian releases after jobs and CPI. A strong or weak print in core sales can shift Bank of Canada rate expectations and move the Canadian dollar, though the advance estimate often matters more than the stale full-month figure. The data also feed into monthly GDP estimates.
The report covers only goods sold through stores and online, so it misses spending on services such as travel, restaurants and entertainment. That makes it a partial gauge of consumer health. Its importance has grown as tariffs, higher prices and weaker sentiment test how much Canadian households can keep spending.
