By Robb M. Stewart
OTTAWA--Retail spend by Canadians rose in the early months of the year, a positive sign for household consumption amid otherwise gloomy signs for the broader economy.
Retail sales in the first month of 2026 rose 1.1% from the month before to a seasonally adjusted 70.71 billion Canadian dollars, the equivalent of about US$51.46 billion, Statistics Canada said Friday. An advance tall of receipts indicates sales in February were up 0.9%.
January's advance was softer than the 1.4% growth economists anticipated and follows a 0.4% drop the month before. Still, if the estimate for February holds, it would mark the first back-to-back increase for the country's retailers in almost a year.
Retail trade has for months been choppy, and a recent weakening of the job market and threat of a pick up in inflation due to the war in the Middle East have clouded the outlook for consumers.
Statistics Canada offered no detail with its forecast for last month, which was based on responses from a little over half of retailers surveyed and will be revised.
A tally of cardholder spending by the Royal Bank of Canada, the country's largest lender, indicated consumers continued to cut back on discretionary goods last month. Its tracking of retail sales on a three-month average showed a fall of 0.1% in February, a slight improvement from a 0.3% contraction in January, with weakness in spending on clothing and related goods but an increase in outlays on travel, entertainment and art.
Statistics Canada's retail survey for January showed sales in volume terms were up 1% for the month and 1.4% compared with a year earlier.
Sales were up in six of the nine industry segments the data agency tracks, led by a rebound in activity at motor-vehicle dealers with a 2% increase in trade following a 1.6% drop a month earlier.
Sales at gas stations and other fuel vendors slipped 0.4% after increases the previous two months.
Core retail sales, which exclude car and auto-parts dealers and gas stations, were up 0.9% between December and January. Stripping out just the auto sector, sales for January were 0.8% higher, weaker than the 1.3% increase economists expected.
Canadians spent more at general retailers in January for a fourth straight month. Sales also were up at sporting goods, hobby, musical instrument and book retailers, but fell at supermarkets and grocery stores.
Economists expect only modest growth in Canada's economy this year as uncertainty over U.S. trade policy remains heightened, and warn inflation could accelerate in the coming months due to the spike in crude oil prices since conflict in the Middle East broke out.
The Bank of Canada, which this week left its policy interest rate unchanged a third time in a row, has highlighted elevated risk from a prolonged war in the Middle East even as worries about trade between Canada and the U.S. linger. Gov. Tiff Macklem on Wednesday said that while it was too early to assess the impact of the Iran war on growth, if oil prices remain higher the cost will squeeze consumers and leave them with less income for other spending.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
March 20, 2026 08:56 ET (12:56 GMT)
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