Retail sales fell in September and early indications suggest a flat reading for October, ahead of the key holiday shopping season.
Statistics Canada said Friday retail sales were down 0.7% to $69.8 billion in September as sales of new cars fell.
TD Bank economist Maria Solovieva said retail sales are heading into the holiday season on shaky footing.
“September recorded a renewed decline, and early signals point to a flat reading in October,” Solovieva wrote in a note to clients.
“Despite recent volatility, the underlying trend is weaker real spending with major categories now in outright contraction.”
Statistics Canada reported retail sales in September fell in six of the nine subsectors it tracks.
Sales for motor vehicle and parts dealers fell 2.9%, weighed down by a 3.6% decline at new car dealers. User car dealers saw a gain of 0.5%, while other motor vehicle dealers dropped 1.6% and automotive parts, accessories and tire retailers fell 0.4%.
Core retail sales — which exclude gasoline stations and fuel vendors, along with motor vehicle and parts dealers — were relatively unchanged in September.
Sales at building material and garden equipment and supplies dealers fell two per cent, while general merchandise retailers saw a 0.5% decline.
Food and beverage retailers gained 0.8%, helped by a 3.4% increase at beer, wine and liquor retailers and a 0.3% rise at supermarkets and other grocery retailers.
In volume terms, overall retail sales dropped 0.8% in September.
The retail sales report comes ahead of the Bank of Canada’s next interest rate decision set for Dec. 10.
The central bank cut its policy interest rate in October to 2.25% as members of its governing council felt a weak economy hampered by U.S. tariffs was expected to keep inflation around its two per cent target for the foreseeable future.