Canada Retail Sales Drop 0.7% in July but Flash Estimate Signals August Rebound

Canadian retail sales fell 0.7% month-over-month in July to C$73.7 billion, but preliminary estimates point to a 1.3% rebound in August, marking the strongest gain since June 2025. The July contraction, the first monthly decline since December, slightly beat consensus expectations of a 0.8% drop after rising 0.6% in June. Weakness was broad-based across eight of nine subsectors, with sales volumes sliding 1.1% and core sales dropping 0.7%. The anticipated August recovery offers support to the Canadian dollar against the U.S. dollar by potentially easing pressure on the Bank of Canada to pursue aggressive rate cuts.