Canadian Retail Sales up 2.5% to $69.6-Billion in December

Canadian retail sales saw their largest monthly increase since May 2022, with a 2.5% increase in December to $69.6 billion. However, the momentum from the strong finish to 2024 appeared to evaporate as the preliminary estimate for January pointed to a 0.4% decline to start the new year. 

CIBC senior economist Andrew Grantham said consumer spending was clearly improving during the second half of 2024, even before accounting for the temporary boost in December from the GST holiday. However, recent tariff uncertainty may have resulted in households tightening the purse strings again.

Statistics Canada reported that December sales were up in all nine sub-sectors, with food and beverage retailers rising 3.5% for the month. Motor vehicle and parts dealers also saw a 1.9% increase, boosted by a 2.0% gain at new car dealers. Automotive parts, accessories, and tire retailers rose 4.7%, and used car dealers added 3.2%. Core retail sales, which exclude gasoline stations and fuel vendors, rose 2.5% in December. Building material and garden equipment and supplies dealers saw a 0.9% change from December 2023 to December 2024. 

In volume terms, retail sales in December rose 2.5%. BMO senior economist Shelly Kaushik wrote that these figures add to the argument for the Bank of Canada to pause at next month’s meeting. The Bank of Canada’s next scheduled interest rate decision is set for March 12.

Canadian retailers finished 2024 with a 1.3% increase in sales, reaching $803.1 billion. Motor vehicle and parts dealers saw the most sales, with 2.9% growth, followed by new car dealers. Gasoline stations and fuel vendors saw the largest decrease, largely due to lower prices. Core retail sales increased by 1.3%, with higher sales at general merchandise retailers and health and personal care retailers. Food and beverage retailers also saw growth, with supermarkets and other grocery retailers seeing gains in seven of the 12 months.

Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Statistics Canada

Canada’s Economy is Better than Expected in Last Quarter of 2024a 

The Canadian economy surpassed expectations in the final quarter of the year, with real GDP rising 2.6% on an annualized basis in the fourth quarter. This is well above the consensus of economists polled by Reuters and the Bank of Canada, both of which expected real GDP to rise 1.8% annualized. The Canadian economy also grew 2.2% annualized in the third quarter of 2024, revised up from initial estimates for 1% growth. 

Household spending rose 1.4% in the fourth quarter, the fastest pace in more than two years, driven by purchases of new trucks, vans, and sports utility vehicles. 

Retail activity was particularly strong in the final month of the year, with December’s 2.6% growth in retail trade being the biggest jump since June 2021. The transportation sector also saw a surge in business for couriers and the end of rail and port strikes in November, leading to a rebound in growth. 

Residential construction also rose at its fastest rate in more than three years in the fourth quarter. 

Real GDP per capita grew 0.2% last quarter, with the Canadian economy having contracted in five of the last seven quarters. However, the trajectory is at risk under tariffs from U.S. President Donald Trump.

Source: CBC
Source: Statistics Canada