Canada’s March retail sales beat expectations on auto sector

Investing.com -- Canada’s retail sales rose 0.8% to $69.8 billion in March, modestly beating economists’ expectations for a 0.7% uptick, Statistics Canada reported Friday. This marks a bounce back led largely by motor vehicle and parts dealers, which saw their strongest increase in three months.

In volume terms, retail sales advanced 0.9%, pointing to underlying demand strength despite economic uncertainty. Core retail sales, which strip out gasoline and auto sales, rose 0.2%, driven by gains in building materials and apparel retailers.

Motor vehicle and parts dealers posted a robust 4.8% gain, with new car dealers up 5.2% in March. The rebound contributed to a 1.2% increase in total retail sales over the first quarter of 2025, the fourth straight quarterly gain.

CIBC (TSX:CM)’s Andrew Grantham responded in saying, "Overall, consumer spending growth does appear to have slowed relative to the second half of last year, but not worryingly so as yet."

Sales decreased at gasoline stations and fuel vendors, falling 6.5% in March, snapping a five-month streak of increases. The decline in fuel sales follows falling crude oil prices and weaker demand expectations due to tariff uncertainty and signs of slowing global growth.

Eight of Canada’s provinces posted gains in March, led by Quebec, where sales jumped 1.6% overall and 3.1% in Montréal. Ontario registered a 0.6% gain, though Toronto retail sales slipped 1.0%, highlighting regional divergence in consumer activity.

Among core categories, building materials and clothing retailers each saw sales climb 2.6%, while electronics and home goods rose 2.1%. However, general merchandise retailers registered a 2.7% drop, softening overall core growth.

Online retail sales fell 2.1% month-over-month to $4.2 billion, accounting for 6.0% of total retail trade, down from 6.2% in February. Looking ahead, Statistics Canada’s advance estimate suggests retail sales rose 0.5% in April, though this preliminary figure is subject to revision.

Grantham suggested the April estimate of 0.5% was somewhat positive, calling it "a little firmer" than expected.