Canada’s retail sales declined in October, highlighting growing caution among consumers facing economic uncertainty. While spending pulled back across several categories, underlying demand has shown resilience in parts of the retail and service sectors.
BNN Bloomberg spoke with Carl Gomez, chief economist and head of market analytics at CoStar Group, about the drivers behind the October decline, what may be supporting spending in November and how consumer behaviour could shift heading into 2026.
Key Takeaways
- Statistics Canada reported retail sales fell 0.2 per cent in October to $69.4 billion, coming in weaker than expected.
- Categories that had been resilient earlier in the year, including clothing and food and beverage retailers, showed signs of softening.
- An advance estimate for November points to a rebound in spending, potentially supported by seasonal activity and higher restaurant traffic.
- Discretionary spending has held up better than traditional consumer sentiment indicators would suggest, despite widespread uncertainty.
- Slowing population growth and a fragile labour market could weigh on retail demand heading into 2026.
Read the full transcript below:
ROGER: Statistics Canada has released its retail sales data for October, showing sales declined 0.2 per cent to $69.4 billion. Our next guest says economic uncertainty may have dampened consumer spending. However, the numbers could have been buoyed by excitement around the Blue Jays post-season, which may have caused restaurants and bars to be busier than usual. Let’s get more from Carl Gomez, chief economist and head of market analytics at CoStar Group. Carl, thanks for joining us.
CARL: Great to be here. Thanks very much.
ROGER: What do you see when you first look at those numbers?
CARL: Well, there’s some giveback here. The numbers were a little weaker than expected, down 0.2 per cent. Some of that weakness showed up in categories that have been strong for a while, like clothing, entertainment, and food and beverage sales. So the data came in softer than expected.
That said, the advance estimate for November is interesting, showing a strong increase of 1.2 per cent. When we think about what happened in November, the Blue Jays were heading toward the World Series, so there may have been some spending tied to that. Overall, October looked fairly flat, coming off some weaker numbers heading into the third and fourth quarters, but the pickup in November is a positive sign for what’s ahead for holiday shopping.
BARRY: What were the major drivers on the positive side? Was it auto sales? Was it people buying Labubu dolls?
CARL: Motor vehicle sales were definitely a contributor, as were building materials. The declines came mostly from food and beverage retailers.
To your point about Labubu dolls, there was some spending in miscellaneous stores and sporting goods stores. There’s nothing definitive to suggest one sector is swinging more than another. Over the longer term, what we’ve noticed is that discretionary spending — which you would normally expect to show more weakness — has actually held up relatively well. I expect the November numbers to reflect that as well, with spending on entertainment, clothing and other discretionary items picking up, as they have for most of the year.
ROGER: Just out of curiosity, do we know what the Blue Jays effect was on any of this? Is there a way to quantify it? And is this continued spending part of the doom spending you mentioned?
CARL: That’s a good question. Food and beverage retailers would likely be impacted to some extent. Looking at eating establishments, restaurant and entertainment spending was down in October. The Blue Jays effect probably kicked into higher gear at the end of October and early November, so it’s more likely reflected in the stronger November flash estimate.
Doom spending is interesting because it has created some choppiness. Most consumer surveys and other soft data suggest people are feeling fairly glum. There’s financial uncertainty, trade tensions, a weak housing market and limited job growth. While the Bank of Canada has lowered interest rates, it has since paused.
Despite that, consumer spending — especially on discretionary items — has held up quite well. Our research suggests a demographic shift, where younger consumers who might otherwise be saving for a home down payment are instead spending disposable income on things that make them feel good. That includes entertainment, restaurants and even clothing. Foot traffic across retail has generally been quite solid, partly reflecting strong population growth. Doom spending is something to watch, because while consumers don’t feel great, they’re still spending on experiences and goods that improve their quality of life.
BARRY: We’re nearly 11 months into 2025. There was so much uncertainty at the start of the year. Have the numbers held up better than you expected?
CARL: Yes, absolutely. Consumer spending in 2025 looks like a healthy increase over 2024 and has been a significant contributor to economic growth in the first half of the year. Despite trade tensions and tariffs, consumers stayed engaged. I expect 2026 may not be as strong, but 2025 was surprisingly resilient.
ROGER: What makes you more cautious about 2026?
CARL: There are a few factors. The economy remains tentative, and businesses aren’t leaning toward strong job growth. The biggest factor is population growth, which has started to slow. Foot traffic drives retail, and much of the strength in 2025 reflects lagged population growth.
We’ve already started to see negative population growth in the latter half of 2025 — the first time in Canada’s recorded history. That’s likely to weigh on consumer-dependent sectors like retail. Combined with economic uncertainty and concerns around the labour market, weaker population growth could translate into softer spending patterns.
ROGER: We’ll have to leave it there. Carl, thanks, as always, for joining us.
CARL: My pleasure. Thanks very much.
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This BNN Bloomberg summary and transcript of the Dec. 19, 2025 interview with Carl Gomez are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
