Canadian retail spending took a step back in September, with new data showing a noticeable slowdown across the country — and Toronto feeling the impact more than most.

According to Statistics Canada, retail sales dropped 0.7% to $69.8 billion, largely driven by a sharp decline in auto and parts sales. Dealerships were hit hardest, with new car sales falling 3.6% after a strong August.

Toronto and Ontario Lead the Dip

Ontario posted the biggest provincial decline, down 1.2%, while retail sales in the Toronto area fell 2.3%, showing how closely the city’s economy is tied to the auto market.

B.C. also struggled, with a 0.9% drop linked to weaker spending on building materials and garden supplies.

Some Bright Spots

Not all sectors were down. Gas stations and fuel providers saw sales rise 1.9%, marking their first increase in three months — though actual fuel volumes sold dipped slightly.

Nova Scotia stood out as one of the only provinces to post growth, helped by stronger auto sales.

October Outlook

Early estimates for October suggest retail sales have stabilized, with spending expected to remain mostly flat. However, these numbers are preliminary and could change as more data becomes available.

Bottom Line

While Canada’s retail market cooled in September, Toronto took a bigger hit than most, driven by slowing vehicle sales. With October showing signs of leveling out, the coming months will be key to seeing whether this is a short dip or a longer trend.