If you are like me, buying a car or truck is a very different kind of retail spending than getting a new pair of shoes or picking up some groceries.

For this reason, it’s helpful to exclude the “motor vehicle and parts dealers” category from the retail sales figures provided by Statistics Canada. If we also subtract spending at gas stations, which can make it difficult to identify trends because the price of gas is so volatile, we get something called “core” retail sales.

Core retail sales in Canada were 0.4% lower in August than in July.*

With that said, we don’t want to read too much into August’s results because core sales actually increased in June and July.

Taking a somewhat longer view, year-to-date (YTD) sales show that core retail spending was 0.9% higher over the first eight months of 2024.

That’s encouraging, but less so when you consider that Canada‘s population grew by 3% over roughly the same period and that real YTD sales were down by 1.0%.

These findings suggest that the Canadian consumer is, while not out of the game, feeling at least somewhat fatigued from the effects of past price increases and still-elevated borrowing costs.

This changes the story from one in which the consumer was a key driver of economic growth coming out of the pandemic—despite the run up in prices and interest rates—to one in which it is slowing down in their wake.

We’ve talked about how we are expecting a “softish” landing for the Canadian economy (i.e., not the hard landing of a recession, but definitely rougher than a truly soft landing) and the core retail sales data continue to support this.

They also add to the evidence that the national economy has cooled to the point that additional interest rate cuts by the Bank of Canada are both warranted and not unduly risky in terms of reigniting inflation.

*The sales data have been adjusted for regular seasonal variation.

Answer to the previous trivia question: At 13.5 million barrels per day, weekly U.S. oil production reached an all-time high for the week ending October 18.

Today’s trivia question: How many electoral college votes are needed to win the U.S. presidency?