Canadian Retail Sales Decline by 0.7% in September Amid Weak Auto Sector; October Expected to Remain Flat
Canada’s retail sector experienced a noticeable slowdown in September 2025, with total retail sales falling by 0.7% from August, according to Statistics Canada. The decline brought total retail revenue to C$69.81 billion ($49.47 billion), driven primarily by lower sales at motor vehicle and parts dealerships. Looking ahead, early estimates indicate that retail sales likely remained unchanged in October, suggesting that consumer spending momentum is losing strength heading into the final months of the year.

Breakdown of September Retail Performance

The September downturn was widespread across the retail sector. Statistics Canada reported that six out of nine retail subsectors experienced lower sales, accounting for approximately 66.2% of total retail revenue. In terms of volume, which adjusts for price changes, retail sales fell by 0.8%, reflecting a slowdown in actual goods sold rather than just price effects.

A detailed monthly breakdown shows:

Category	MoM Change	YoY Change	Previous MoM
Total Retail Sales	-0.7%	+3.4%	+1.0%
Excluding Autos/Parts	+0.2%	+3.5%	+0.8%

All figures are seasonally adjusted. Exchange rate: $1 = C$1.4111.

The decline in motor vehicle and parts sales is a key factor behind the overall drop. When excluding these sectors, retail sales actually posted a slight increase of 0.2%, showing that non-auto retail activity remains relatively resilient.

Factors Influencing Canadian Retail Trends

Several factors may be influencing the soft retail performance in Canada:

• High interest rates: Elevated borrowing costs have made consumers more cautious about large purchases, particularly vehicles and durable goods.
• Cross-border shopping and tariffs: Trade dynamics between Canada and the United States can influence pricing and availability of certain products, affecting retail demand.
• Consumer confidence: Despite overall economic growth, uncertainties about inflation and household budgets may lead shoppers to reduce discretionary spending.

Outlook for the Canadian Retail Sector

Early estimates from Statistics Canada suggest that October retail sales likely remained flat, indicating that the sector may be entering a period of slower growth. Analysts will be closely watching holiday shopping trends and consumer sentiment to gauge whether retail activity can rebound before the end of 2025.

Key Takeaways

• Total retail sales fell by 0.7% in September 2025, driven by weaker motor vehicle and parts sales.
• Non-auto retail sectors showed minor growth (+0.2%), highlighting relative strength outside the automotive industry.
• Retail sales are expected to be unchanged in October, signaling potential slowdown in consumer spending.
• Factors such as interest rates, tariffs, and consumer confidence are critical to watch for the coming months.

As the Canadian economy approaches the end of the year, retail trends will remain a key indicator of consumer behavior and economic health. Businesses and policymakers alike are monitoring these developments to adjust strategies and forecasts.