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Economic News

Canadian Retail Sales: May’s a Bust, but June’s Looking to Boom

July 24, 2025
Florence Jean-Jacobs
Principal Economist

Highlights

  • As expected, retail sales declined by 1.1% m/m in May, in line with Statistics Canada’s flash estimate and one tick below consensus expectations.
  • For May, sales were down or flat in 9 of the 10 provinces and were largely driven by a fall in motor vehicle purchases (-3.6%). Excluding autos, retail sales were down 0.2%. The table below summarizes key data points.
  • Canadians also decreased their purchases at gas stations, with sales dropping in both nominal and volume terms. This is the third consecutive monthly decline for nominal gasoline sales.
  • This leaves core sales—which exclude autos and gas—unchanged in May. Falling receipts at food and beverage retailers were offset by higher sales in all other core categories, led by building material and garden equipment.
  • Overall, real retail sales were down 1.4% m/m, in a month were prices inched up (graph 1). 
  • But the real surprise came from June’s flash estimate, pointing to a 1.6% rebound. If that proves correct, retail sales likely rose 1.7% annualized in Q2. And with seasonally-adjusted goods prices up 0.2% month-on-month, this upswing in June looks like it’s much more than a price story. Purchase volumes appear to have rebounded in June, essentially offsetting May’s decline.

Implications

May’s retail sales release was largely a one subsector story. Falling momentum in motor vehicle sales was expected and effectively drove most of the decline in May. That said, this category (a key driver of retail sales, averaging 27% of sales annually) has been in seesaw mode over the last few months, influenced by factors such as changes in electric vehicle rebates and consumers trying to get ahead of potential tariff-induced price hikes (graph 2). But at a time when less than 15% of households feel it’s a good time to make large purchases like a house or a car (according to Conference Board data) and seasonally adjusted motor vehicle sales volumes from Ward’s Automotive contracted in the month, June’s 1.6% flash is puzzling.  

After today’s release, early indicators suggest Q3 real GDP growth should improve after a likely flat to negative print in Q2. This further supports our view that the Bank will choose to be cautious and leave its policy rate unchanged at next week’s meeting. 

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.