Canadian retail activity cools in December before expected January rebound

Investing.com -- Canadian retail sales slipped 0.4% to $70.0 billion in December as consumers pulled back on big-ticket purchases during the holiday month. The decline was primarily driven by a 1.6% drop at motor vehicle and parts dealers, marking a second consecutive monthly contraction for new car showrooms.

Core retail sales, which strip out the volatile automotive and fuel sectors, fell 0.3% following a robust gain in November. This weakness was concentrated in building materials and home furnishings, which saw receipts tumble 4.0% and 1.7% respectively.

Despite the end-of-year cooling, the broader 2025 data reveals a resilient Canadian consumer with total annual sales rising 4.0% to $837.2 billion. Growth over the year was spearheaded by the automotive sector, where sales increased 4.7% even with the late-year stumble.

Regional performance varied significantly as Alberta saw the steepest provincial decline of 2.1% due to sluggish vehicle demand. Conversely, Quebec bucked the national trend with a 0.6% increase, providing a rare bright spot in a generally subdued month.

Digital commerce remains a growing force, with seasonally adjusted e-commerce sales jumping 3.6% to reach $4.3 billion in December. Online transactions now represent 6.1% of total retail trade, up from 5.8% in the prior month.

Looking ahead, early data suggests the December slump was a temporary pause rather than a prolonged downturn. Statistics Canada issued an advance estimate indicating that retail sales are on pace to increase 1.5% in January.

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