Canada Retail Sales Rise 1% in August, BMO Says BoC Not Done Easing Yet

09:59 AM EDT, 10/23/2025 (MT Newswires) -- Canadian retail sales rose 1.0% month over month in August, in line with expectations and Statistics Canada's flash estimate, said Bank of Montreal (BMO).

Most sectors posted higher sales, led by clothing and accessories (+3.2%), general merchandise (+2.4%) and autos (+1.8%). Spending excluding autos increased 0.7%, weighed by lower sales at gasoline stations (2.0%, as prices ticked up). That left sales excluding autos and gasoline rising 1.1%.

The 10 provinces were split down the middle, with half reporting higher spending. A 5.1% surge in Newfoundland & Labrador came off wildfire-related weakness in July.

Retail sales also increased 1.0% month over month in volume terms, suggesting real GDP growth will be in line with StatsCan's preliminary estimate (flat) when that report is released next week, stated BMO.

Meantime, the flash estimate for September points to a 0.7% month-over-month drop, which could look even softer in volume terms as goods prices jumped in the month.

Separately, the flash estimate for nominal manufacturing sales in Canada jumped 2.8% month over month in September.

Despite a decent August report, the disappointing September flash highlights the underlying weakness in Canadian retail spending, added the bank. Plus, net risks remain to the downside given ongoing trade uncertainty with the United States, keeping the Bank of Canada on its dovish path.

BMO continues to believe that Canada's central bank isn't done easing just yet.

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