Canada's Retail Sales Are A "Mixed" Bag, Says Rosenberg Research

11:13 AM EDT, 03/24/2025 (MT Newswires) -- Canadian retail sales disappointed Friday at the headline level in January, receding 0.6% month over month, which was a tad worse than the 0.4% consensus drop estimate, said Rosenberg Research.

However, the decline was confined to just three of the nine subsectors, notably autos -- outside of that, sales actually rose 0.2% month over month, which was actually better than the 0.2% drop the consensus had penned in, noted Rosenberg Research.

The January drop should have been expected for overall sales, given that Canada came off a huge 2.6% month-over-month surge in December (+2.9% for ex-auto receipts) as Canadians took advantage of the temporary sales tax holiday. Be that as it may, Statistics Canada is predicting a further 0.4% month-over-month pullback for February, and that points to the problem of these sorts of government gimmicks -- they only end up creating a vacuum in the economic data as consumers are spending now at the expense of future spending growth, stated Rosenberg.

In real terms, sales fell a hard 1.1% month over month to kick off the year -- the steepest pullback since July 2022 -- and have lost ground in two of the last three months and interrupted by the 2.6% bounce in December. Sales volumes for February look to have sunk again by around 1%.

With one month left in the quarter, the "build in" for Q1 real retail sales growth is as flat, pointed out Rosenberg.

Spending momentum is waning and the full effects of the trade war with the United States have yet to begin. Be that as it may, the Bank of Canada is performing a delicate balancing act, and it surely won't be too impressed at the fact that retailers took advantage of the sales tax holiday by boosting prices by 0.6% month over month in the sharpest spike since October 2022 -- while accelerating of late, the year-over-year trend is still running at a modest 1.7% gain, according to Rosenberg.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.