Statistics Canada reported that retail sales slipped 0.8% in July to $69.6 billion, with declines across 8 of 9 subsectors.
Core sales, which strip out gasoline stations and motor vehicle and parts dealers, fell 1.2%. In real terms, sales were also down 0.8%, underscoring weaker volumes rather than price effects.
The agency’s early read for August, however, points to a 1% month over month gain, hinting at fresh momentum as the third quarter progresses. The advance indicator is based on responses from roughly half of surveyed retailers and is subject to revision, but it would fully offset July’s drop if confirmed.
Grocery and clothing stores led July’s decline. Food and beverage retailers fell 1.3%, driven by a 2.5% drop at supermarkets and other grocery stores after a solid June.
Apparel also softened, with clothing and related categories down 2.9%. The one bright spot was autos, where motor vehicle and parts dealers edged up 0.2%, helped by gains at other vehicle dealers and steady new-car demand.
Gasoline station receipts decreased 0.9%, though volumes ticked higher, consistent with stable fuel demand.
Ontario posted the largest decline in dollar terms at 1.6%, reflecting lower vehicle sales, while Quebec saw a slight 0.2% increase and Montréal advanced 0.7%. Newfoundland and Labrador dropped 8.8%, a slump that coincided with wildfire activity.
E-commerce continued to carve out a bigger role, rising 2.2% to $4.3 billion and accounting for 6.1% of total retail trade, up from 6.0% in June. The provincial and channel mix suggests consumers are still selective, favoring big-ticket categories supported by supply normalization while trimming day to day discretionary and grocery spending.
July’s broad based pullback raised the risk that consumption would weigh on growth, but a solid August would help stabilize the trajectory.
Grocers and apparel retailers face a tougher backdrop after a strong June, while auto dealers and parts suppliers may see steadier throughput. The move higher in online sales supports platforms and logistics names tied to fulfillment and last mile delivery.
The Bank of Canada has been watching consumer demand for signs that earlier rate increases have cooled the economy enough to tame inflation without choking off growth.
July’s drop in both nominal and volume terms points to ongoing restraint, but a clean rebound in August would argue for patience rather than urgency in further easing.
Markets will parse September price and jobs data alongside the full August retail report, scheduled for October 23, for confirmation of whether the midyear softness marked a brief detour or the start of a slower trend.
