Broader Consumer Spending Keeps Retail Momentum Alive

The data from May suggests Canadians are starting to spend again. At a time of subdued economic growth, this is a welcome trend. May’s retail report showed retail sales rose 1.0%, marking a fifth consecutive monthly increase, while core retail sales climbed 0.9% and sales volumes also moved higher. Importantly, consumers were buying more and not just paying more. Nearly every province and every major retail category advanced, with stronger spending on gasoline, motor vehicles, general merchandise, and groceries showing households broadened their spending after April’s more uneven performance and entered the summer with broader spending momentum.

At the same time, we’re watching closely the underlying trends. Our Business Sales Tracker, which draws on Moneris card spending data, shows nominal spending accelerated to 5.9% year over year in May, while real spending and real spending per person increased modestly. That suggests consumer demand is improving gradually. Canadians are still opening their wallets selectively. This is why many businesses continue to describe demand as steady rather than booming.

With Statistics Canada’s advance estimate pointing to another increase in June, consumer spending appears set to remain an important pillar of economic growth heading into the second half of the year. The next test is whether households can sustain this momentum with oncoming. It’s no surprise Canadians are considering their next big purchase carefully with instability around tariffs and global energy prices.

Key Takeaways

• Overall performance: Retail sales increased 1.0% to $73.7 billion in May, marking a fifth consecutive monthly increase. More importantly, core retail sales rose 0.9% and real volumes increased 0.3%, indicating consumers have started purchasing more goods overall rather than simply paying higher prices.
• Strengths: Consumer spending became considerably broader in May, with all nine retail subsectors posting gains. Motor vehicle and parts dealers rose 0.7% for a second consecutive month, with all four store types advancing. Meanwhile, gasoline station sales increased 3.1%, though volumes fell 2.7%, indicating higher prices—not stronger fuel demand—boosted nominal sales. General merchandise retailers (+1.0%) and sporting goods and miscellaneous retailers (+1.8%) both recorded their first increase in three months, pointing to broader and more balanced consumer spending heading into the summer.
• Consumer behavior: Our Business Sales Tracker, based on Moneris card spending data, shows nominal spending rose 5.9% year over year in May, while real spending increased 2.7% and real spending per person grew 1.9%. The more modest per-person gain suggests underlying demand remains measured despite improving overall spending.
• Regional trends: Retail sales increased in nine provinces, led by British Columbia (+2.1%), while Ontario, Alberta and Quebec also posted gains. Nova Scotia was the only province to record a monthly decline, highlighting the broad-based nature of consumer spending across much of the country.
• Advance estimate: Looking ahead, Statistics Canada’s advance estimate points to another increase in retail sales in June, suggesting consumer spending remains an important pillar of economic growth heading into the second half of the year. The key question is whether households can sustain this momentum as uncertainty surrounding tariffs, global energy prices and inflation expectations continues to shape spending decisions.

Charts and Tables