Rosenberg Sees Weak Retail Data Bolstering Case for Another Bank of Canada Rate Cut

08:30 AM EDT, 09/22/2025 (MT Newswires) -- Rosenberg Research says last Wednesday's Bank of Canada rate cut could hardly have been better timed, coming two days before a "woeful" July retail sales report.

Headline sales fell 0.8% month over month as expected, but the ex-auto category dropped 1.2%, double the consensus call for a 0.6% decline. A June revision to 2.2% growth from 1.9% offered little relief, Rosenberg said.

Even if Statistics Canada's advance estimate of a 1.0% August rebound proves accurate, total retail sales would remain roughly flat year to date.

In volume terms, sales slid 0.9% and have dropped in two of the past three months. Real sales for Q3 are tracking a 1.3% annualized decline, pointing to likely downward revisions to GDP growth, Rosenberg warned.

The chained retail price deflator inched up less than 0.1% in July, slowing the annual trend to 1.3% from 1.4%, giving the Bank of Canada more reason to consider another cut in October, the firm added.

July's weakness was broad-based, with nearly 90% of retail index components contracting. The auto sector eked out a gain of less than 0.1%, while housing-related categories slumped: furniture and appliances fell 0.7% and building materials dropped 1.5%, the worst since February.

Clothing sales fell 2.8%, the steepest drop since December 2023, while sporting goods slid 2.2%. Grocery sales lost 1.7% and have fallen in four of the past five months. Even cannabis stores recorded a rare 1.5% decline.

Rosenberg said the data underscore weakening domestic demand and a lack of economic vitality.

Interest rates are low, but obviously not low enough, and the economy needs a spark. The Canadian dollar (CAD or loonie), as such, has more downside risk than upside potential, it added.

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