Insights 
VT 
In April, Canada’s retail sales rose by 0.3%, falling short of the expected 0.5% increase. The advance report showed an earlier March rise of 0.8%. When excluding automobiles, sales decreased by 0.3%, while forecasts anticipated a 0.2% drop. The previous ex-auto figure was revised downwards to -0.8%. Preliminary data for May suggests consumer spending may decline by 1.1%.
At the report’s release, the USD/CAD exchange rate was 1.3713. The May data hints at reduced consumer activity. Specific reasons for the lower sales are not detailed, but auto sales affected by tariffs could be a factor.
Additional information includes:
April Retail Sales Details
– A year-on-year increase of 5.0% in headline sales.
– Motor vehicle and parts dealers saw a 1.9% monthly increase, with new car dealers up by 2.9% and used car dealers by 2.1%.
– Gasoline station sales decreased by 2.7% month-on-month.
– Sales in sporting goods and hobbies rose by 1.0%.
– Furniture, electronics, and appliances sales increased by 0.8%.
– Food and beverage sales had a 0.2% rise.
– Clothing and accessories sales experienced a decrease of 2.2%.
The existing figures offer a clear picture of where consumption trends are heading and how macro pressures are feeding into daily consumer decisions. Sales ticked up ever so slightly in April, but not enough to meet forecasts, and this underperformance was more telling when stripping out autos—where declines deepened. That downward revision of March’s ex-auto number, paired with indications of a broader drop in May, removes any illusion that this was a one-off blip. What we’re seeing instead is flatness at best, softening more likely.
April’s marginal 0.3% rise would often be brushed off as stable, however, context is everything. Expectations were higher, and they often reflect sentiment in the macro community. The drop in ex-auto sales suggests households are reining things in when it comes to discretionary spending. It’s not just about cars either—gas station receipts were lower, and clothing retailers posted one of the weaker readings among subsectors. That’s not the sort of setup that brings acceleration or builds momentum into summer.
On the other hand, car sales did outperform. That might explain why the headline was held up, but without them, the consumer story is noticeably fragile. The fact that food and beverage spending increased, albeit modestly, does offset some of that weakness, yet its scale wasn’t enough to change the broader trend.
Impact on Currency and Market Trends
From our perspective, trends like these tend to feedback into rate expectations, particularly when set next to headline inflation and broader GDP performance. This matters because price discovery already factors in forward-looking signals—if the consumer’s losing steam, probabilities shift. We’ve noticed that when household activity slows, financial instruments tied to short-term policy expectations often start adjusting well in advance of official revisions.
From the currency side, the Canadian dollar usually responds more to energy exports and yield differentials, but consumer data like this can still affect intra-day volatility, especially when it diverges from consensus. The dip in gasoline station sales contributes to that too—it speaks to both price changes and volume demand, and likely intersects with energy-sensitive sectors elsewhere. Meanwhile, upward moves in furniture and electronics were too narrow to offset losses in apparel, which points to seasonality or even household budget tightening.
Looking ahead, the preliminary May indication of a 1.1% dip isn’t something to ignore or write off as early estimation error—it follows a trend. What this tells us is that demand over Q2 could come in softer than models had embedded previously. Adjustments are probably happening now in how we interpret upcoming earnings expectations or CPI prints due in the next cycle.
We’ve found that when retail weakness persists across two consecutive months and coincides with hints of rate cuts or policy reangling, there’s often a chain reaction in interest rate markets. So even if this is driven more by rotation within sectors, the macro outcomes remain the same—less support from the consumer side means we pivot earlier.
It’s worth underlining too that some subsectors—like sporting goods—can depend on season or promotion cycles. But when major groups like clothing and fuel slide together, that takes on more weight.
Take note of how the March figure got revised—a downward movement, which suggests either optimistic initial sampling or delays in reporting. That possibility alone adds caution to the preliminary reading for May—we’ll treat it as a warning, not just a number.
Positioning strategies that missed this might need reshifting. Reallocation becomes especially relevant as economic releases continue to lean soft. Any incoming communication from policymakers will need to be read with data like this front of mind—we assume they’re seeing the same things.
