Canadian Goods Spending Boosted by Strong Auto Sales in Q4

According to National Bank of Canada, while November’s retail sales report was disappointing, with overall goods spending stagnating and volumes declining due to rising prices, a surge in car sales provided a significant boost to spending in the fourth quarter.

Car sales are estimated to have grown by 19.1% annualized in the fourth quarter, contributing substantially to overall goods consumption. However, this surge may be short-lived. The expiration of several subsidy programs for electric and hybrid vehicles in January is likely to dampen car sales in the first quarter of 2025.

Despite this anticipated slowdown, the strong car sales in Q4 are expected to have contributed significantly to overall GDP growth.

It’s important to note that excluding car sales, goods spending may have actually contracted during the quarter, highlighting the significant impact of this single category on overall retail sales.