Canadian retail sales decline for first time in seven months
Canadian retail sales fell 0.7% month over month in July to C$73.7 billion, marking the first monthly decline since December 2025 and ending a six-month streak of gains. Weakness was broad-based, with eight of nine subsectors posting declines led by general merchandise retailers, while sales excluding motor vehicles also fell 0.7%. Retail sales volumes — the Bank of Canada’s (BoC) preferred gauge of underlying consumer demand — declined 1.1%, notable given gasoline prices rose during the month, suggesting higher fuel costs continued to crowd out discretionary spending. Statistics Canada’s advance estimate points to a 1.3% rebound in August, which would more than reverse July’s decline.
Why this matters: July’s decline follows a strong second quarter, making some moderation in spending unsurprising rather than a sign of underlying weakness, with the stronger August estimate keeping consumption growth on track for the third quarter. The mixed signal lands just ahead of the BoC’s October 22nd rate decision, and since policymakers will decide before the official August data is released, markets will be watching the advance estimate closely for signals on the path ahead.
U.S. business activity hits five-year high on broad-based growth
U.S. business activity accelerated sharply in September, with the Composite Purchasing Managers’ Index (PMI) climbing to 58.4 from 56.0 in August — its highest level since July 2021 — marking a fourth consecutive month of faster growth. Both manufacturing and services firms reported stronger activity, with services reaching a nearly five-year high and manufacturing its strongest reading since 2022. New business growth reached some of the highest levels since early 2022, and companies increased hiring at the fastest pace in more than four years to keep up with expanding workloads.
Why this matters: According to S&P Global, the composite PMI readings registered in the third quarter would historically imply annualized economic growth of roughly 4%, pointing to notably strong underlying momentum. However, the report also flagged mounting inflationary pressure, with input costs rising at their fastest pace since October 2022 amid higher fuel, transportation, and labour costs, along with intensifying supply chain delays — suggesting capacity constraints may be beginning to emerge in some industries.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.05 | 0.15 | 1.65 | 2.29 | 194 |
| Canadian Bonds | -0.06 | -0.71 | -0.27 | -0.20 | 1,197 |
| Canadian Equities | -0.01 | -1.14 | 14.71 | 23.22 | 35,801 |
| U.S. Equities | 1.23 | 0.84 | 14.07 | 18.60 | 7,743 |
| International Equities | 0.20 | -2.48 | 11.50 | 19.02 | 3,149 |
| Emerging Market Equities | 1.29 | 0.94 | 25.50 | 31.77 | 1,732 |
| European Equities | 0.63 | -1.73 | 11.00 | 19.68 | 214 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | -1.10 | -2.04 | -2.95 | -1.42 | 0.71 |
| C$/Euro | -0.29 | -0.08 | 0.06 | 0.93 | 0.62 |
| C$/Pound | 0.00 | 0.23 | -1.28 | -0.69 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | -3.82 | 9.93 | 62.35 | 47.67 | 92 |
| Gold ($/oz) | -2.34 | -3.58 | -3.92 | 10.05 | 4,321 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
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