Canadian retail sales drop 0.6% in January 2025, below analyst forecasts

Investing.com -- Retail sales in Canada experienced a 0.6% decrease in January 2025, falling to $69.4 billion, as reported by Statistics Canada. This decline was greater than the anticipated 0.4% decrease predicted by analysts and was 3.2% lower than the previous month's retail sales, which had seen a 2.6% increase.

The drop in sales was observed in three out of nine subsectors, with the most significant decrease found in motor vehicle and parts dealers. Sales in this sector were down by 2.6%, driven by a decline in new car dealers (-3.2%) and automotive parts, accessories, and tire retailers (-2.8%). However, used car dealers within this sector saw a rise in sales (+1.6%).

On the other hand, sales at gasoline stations and fuel vendors increased for the fourth consecutive month, rising by 3.2%. In volume terms, these sales saw a minor increase of 0.1%.

Core retail sales, which exclude gasoline stations and motor vehicle and parts dealers, also saw a decrease in January, dropping 0.2%. This decline was primarily due to lower sales at food and beverage retailers, which fell by 2.5%. Supermarkets and other grocery retailers (except convenience retailers) saw a 3.4% drop in sales. Beer, wine, and liquor retailers also contributed to the decline, with a decrease of 2.0%.

Additionally, sales at sporting goods, hobby, musical instrument, book, and miscellaneous retailers fell by 2.2%. However, the furniture, home furnishings, electronics, and appliances retailers sector saw the largest increase in core retail sales, with a rise of 3.0%.

Retail sales decreased in three provinces in January, with the largest decrease in dollar terms observed in Quebec (-2.7%), followed by Ontario (-0.9%). However, Saskatchewan saw the largest provincial increase in retail sales (+2.7%).

Furthermore, retail e-commerce sales on a seasonally adjusted basis decreased 0.9% to $4.2 billion in January, accounting for 6.1% of total retail trade.

Looking ahead, Statistics Canada provided an advance estimate suggesting a further 0.4% decrease in retail sales for February. However, this figure is subject to revision. This estimate was based on responses received from 61.9% of surveyed companies, with the average final response rate for the survey over the previous 12 months being 87.9%.