Canadian retail sales rose 1.2% month-over-month in August, Statistics Canada reported, landing just short of the +1.3% advance reading and rebounding from July, when sales fell 0.7%. Purchases increased across all nine subsectors, led by motor vehicles.

Excluding automobiles, sales climbed 1.2%, ahead of the +1.0% expectation. The prior ex-autos figure was a 0.7% decline.

The report also gave a first look at September: advance sales estimated up 0.7% m/m.

Advance reading in focus

The advance, or flash, figure has become the real market mover in this report, as it has generally corresponded closely with the final reading. The +0.7% month-over-month estimate for September is a sign of ongoing strength. That figure will remain an estimate until the next release, due roughly seven weeks after September ends, finalizes the data and delivers a first estimate for October.

That fits with RBC's cardholder spending tracker for September, released last week, which is typically a good cross-check on, and precursor to, the official report. It showed core sales up 0.5% m/m on strong discretionary categories.

With that backdrop, markets are pricing just under an 80% that the Bank of Canada will raise rates next week, a decision that will land before the September figures are finalized. Notably, pricing for Federal Reserve moves has come down quickly, opening an interesting policy divergence between the two central banks. USD/CAD has responded in kind, sliding to a one-month low and breaking below the 1.40 level.

The strong discretionary signal in the RBC data showed up in the official figures as well, with sales at food and beverage retailers up 1.1%. Furniture and appliance stores also posted solid gains, a notable contrast with a run of dismal housing data.

How the report works

For background, Statistics Canada publishes its retail trade report monthly at 8:30 am ET, roughly seven weeks after the reference month ends. Each release pairs full data for that month with an advance estimate for the following one, giving markets two readings: a detailed look back and an early flash on the most recent period.

The headline number measures the monthly change in total retail sales in current dollars. Because car sales and gasoline prices can swing the total sharply, markets focus on core retail sales, which exclude motor vehicle and parts dealers and gasoline stations and fuel vendors. StatCan also reports sales in volume terms, stripping out price changes to show how much consumers are actually buying. In periods of high inflation, nominal gains can mask flat or falling volumes.

The breakdown spans subsectors including food and beverage retailers, general merchandise, health and personal care, building materials and garden equipment, clothing and furniture. The report also tracks e-commerce sales and provincial results.

Why it matters for markets

Retail sales rank among the more market-moving Canadian releases, behind only jobs and CPI. A strong or weak core print can shift Bank of Canada rate expectations and move the Canadian dollar, though the advance estimate often matters more than the stale full-month figure. The data also feed into monthly GDP estimates.

One caveat is that the report covers only goods sold through stores and online, so it misses services spending such as travel, restaurants and entertainment, making it a partial gauge of consumer health. Its importance has grown as tariffs, higher prices and weaker sentiment test how much Canadian households can keep spending.

Source: ForexLive — Canada August retail sales +1.2% vs +1.3% expected