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2026-02-20 21:46:04
[Canadian Retail Data Shows Mixed Performance: December Decline, January Strong Rebound] ⑴ After a year-end decline, the Canadian retail market is poised for a significant rebound at the start of the new year. Statistics Canada released data on Friday showing that seasonally adjusted retail sales fell 0.4% to C$70.01 billion in December, slightly better than economists' expectations of a 0.5% decline. Preliminary sales data for January, however, indicate a strong rebound, with an expected increase of 1.5%, potentially marking the largest monthly increase since the end of 2024. ⑵ The December decline continued the volatile trend for retailers. After a 1.2% increase in November, retail activity weakened again in December. Overall retail activity is projected to increase slightly by 0.1% in the fourth quarter of 2025, with a cumulative increase of 4% for the year. ⑶ By sector, motor vehicle and parts dealers saw the largest decline, becoming the main drag on December's retail sales. Gas stations and fuel suppliers, on the other hand, performed strongly, with revenue increasing by 2.8%, marking the second consecutive month of growth, and fuel sales increasing by 4.5% in terms of volume. ⑷ Core retail performance was weak. Core retail sales, excluding car dealerships and gas stations, fell 0.3% between November and December, erasing some of the 1.5% increase from the previous month. Sales of building materials, gardening equipment, furniture, and electronics all declined. (5) Preliminary forecasts for January contrasted with data from RBC's cardholder tracking system. The bank's data showed that customer spending cooled in the first month of 2026, with retail spending declining 0.3% on a three-month average basis, the first decline after 13 consecutive months of growth. Economists pointed to severe weather and post-holiday fatigue as possible factors dampening spending. (6) The macroeconomic backdrop is complex. While inflationary pressures in Canada have been largely contained over the past two years, unemployment remains high. Trade uncertainty and continued tariffs continue to weigh on the economy, which may have stalled in the last quarter of last year. The Bank of Canada expects resilient domestic consumption to help drive moderate economic growth this year.
