Last Friday, Statistics Canada (StatsCan) announced that retail sales in Canada rose for a third straight month. For most of 2024, retail sales have been wobbly, with Canadian households grappling with tight financial conditions. But financial conditions are shifting, and the rise in spending could be a sign of Canada’s economy turning the corner. And more support could be coming from the Bank of Canada (BoC).

• Retail sales in Canada rose by 0.4% in September, matching August’s rate of growth and marking the third straight increase overall. According to a Bloomberg survey, economists estimated a 0.4% increase. Compared to the same month in 2023, retail sales rose by 0.8%.
• Sales were relatively broad-based over the month. September’s increase was driven by a 3.0% increase in sales at food and beverage retailers. Sales at furniture and health care stores also increased over the month. Conversely, sales at gasoline stations declined, due in part to lower oil prices.
• Looking ahead, StatsCan estimated that retail sales grew by 0.7% in October, marking four straight months of growth. This would be a good start to the fourth quarter of 2024. The Canadian federal government is also hoping to do its part by removing the GST on certain items over the holiday season.
• The Bloomberg Nanos Canadian Confidence Index fell over the week ended November 22. While spending has picked up, Canadians remain concerned about their employment and the overall economy. Further deterioration in confidence could begin to weigh on spending.

Canadian consumers have proven their relative resiliency in recent months, buoyed by lower inflation and four straight rate cuts from the BoC. Still, several risks, including a troubled labour market, could impact the outlook for consumer strength. The BoC is closely monitoring these developments ahead of its final rate decision of 2024 on December 11. Markets are currently expecting a 25-basis-point rate cut.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.