Canada December Retail Sales Rise 2.5%, Expectations Exceeded

Canada's retail sales saw a significant increase of 2.5% in December, reaching C$69.6 billion, driven by strong performances in the food and beverage sector and motor vehicle and parts dealers. This growth exceeded analysts' expectations of 1.6% and is attributed to a government sales tax holiday and year-end shopping. All nine subsectors reported gains, with food and beverage retailers rising by 3.5%, while motor vehicle sales climbed by 1.9%. However, early estimates suggest retail sales may decline by 0.4% in January, indicating a potential slowdown in consumer spending. Despite the anticipated dip, economists expect overall consumption growth for the fourth quarter of 2024 to remain robust, benefiting from a resilient labor market and steady income growth. The data underscores the ongoing importance of retail activity in contributing to Canada's economic growth.