Update On Retail Sales: TD Joins CIBC In Seeing BoC On Hold Next Month

09:45 AM EST, 11/21/2025 (MT Newswires) -- TD Economics has joined CIBC in saying Friday that the Bank of Canada is likely to remain on hold with its benchmark interest rate next month.

TD's Maria Solovieva's said retail sales are "heading into the holiday season on shaky footing", while noting September recorded a renewed decline, and early signals point to a flat reading in October. "Despite recent volatility, the underlying trend is weaker real spending with major categories now in outright contraction," Solovieva said, although she added: "Some good news comes from our internal credit and debit card data, which continues to point to relatively healthy gains in services spending, especially travel and recreation."

TD expects real personal spending growth to drift to a below trend pace in the second half of 2025, with Q3 consumption tracking in a flat to 0.5% range. "At this stage," Solovieva said, "the Bank of Canada has largely priced in this softer demand profile, giving policymakers sufficient justification to remain on hold."

Over at CIBC, Andrew Grantham said earlier that Friday's retail sales data doesn't change the view that the BoC will move to the sidelines and hold interest rates steady at its December meeting.

Grantham noted Canadian retail sales fell as expected in September, and advance data suggested there was no rebound to be seen in October. However, he said the details were "a little more positive", with much of the headline drop driven by the volatile auto component.

Among highlights, Grantham noted core sales (ex auto and gasoline) were little changed on the month, with gains in sporting goods and food stores offset by declines in building equipment and clothing. Total retail sales volumes fell by 0.8% in September, and were down by a modest 0.3% (unannualized) for Q3 as a whole, although that decline follows solid growth earlier in the year. The advance estimate for October suggested headline sales were little changed to start Q4.

"Overall," Grantham said, "Canadian consumer spending doesn't appear to be particularly strong, but also isn't as weak as we would likely have expected given an unemployment rate close to 7%."

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