Recent data shows a significant decline in California retail sales in February 2025. Total sales fell 0.4% to $69.3 billion. This decline was driven by declines in sales in four of nine subsectors.
The sectors most affected were those related to the auto industry, which contributed significantly to the overall decline. Despite this decline, some key sectors performed positively, giving markets some hope for near-term stability.
Automotive Sector Leads Sales Decline
The auto and parts dealer sector recorded the largest decline among all sectors in February. Sales in this sector fell by a sharp 2.6%. All four store types within this subsector experienced significant declines.
New vehicle dealer sales led the decline, falling 3.0%, the second consecutive decline. Sales of parts, accessories, and tires declined by 1.6%, further weighing on the overall figures. This weak performance in the auto sector reflects continued sluggish demand, along with challenges related to supply chains and high interest rates. Higher insurance and financing rates also contributed to reduced demand for new and used vehicles.
Slight Gains in Fuel Sales
In contrast, sales at gas stations and fuel distributors rose 0.3% during the same period. This is the fifth consecutive increase for this sector, reflecting increased transportation traffic and relatively stable fuel prices.
Measured by volume, sales rose 0.8%, reinforcing the positive performance of this sector. This continued increase points to a partial improvement in economic activity related to transportation in the state.
Despite the overall decline, some limited growth indicators provide cautious optimism to markets. Higher fuel and food sales reflect relatively stable consumer demand. However, economic challenges remain, especially in light of rising living costs and interest rates. Markets are awaiting the results of the coming months to assess the ability of the California retail sector to recover.
Moderate Growth in Core Retail Sales
Core retail sales, which exclude automobiles and fuel, rose 0.5% in February. This growth was primarily supported by the food and beverage sector, which posted a strong gain of 2.8%.
Supermarkets and other grocery stores recorded a notable 3.7% increase, following a previous decline of 3.2% in January. This increase reflects improved demand for basic consumer goods.
In addition, alcoholic beverage sales contributed to the boost, rising 2.3%. This was attributed to promotional offers and increased consumer spending at the end of winter.
Mixed Performance for General Goods and Furniture
General goods sales showed positive performance, rising 1.2% in February. This growth is considered moderate, but it reflects relative stability in this sector compared to other sectors.
In contrast, the furniture, electronics, and home appliances sector recorded the largest decline within core retail sales. Sales in this sector fell by 2.9%, indicating continued weakness in demand for durable goods. Consumers appear to be more conservative in spending on non-essential goods, due to inflationary pressures and high interest rates. Consumer behavior is also shifting toward essentials rather than luxuries.
Sales Decline in Seven Canadian Provinces in February
Seven Canadian provinces reported declines in retail sales in February 2025. Quebec led the decline in dollar terms, with sales declining by 0.9%. This is the second consecutive decline for the province, raising concerns about a slowdown in consumer activity there.
In the Montreal metropolitan area, sales fell by an even greater 2.5%. This decline reflects the city’s impact on local economic factors such as rising living costs and severe winter weather.
British Columbia Faces Decline in Durable Goods Sales
Retail sales in British Columbia fell 0.6% in February. Declining sales at furniture, electronics, and appliance stores contributed to this negative performance.
In Vancouver, the province’s main city, the decline was 0.9%. This reflects continued weak demand for durable goods, especially in light of rising interest rates and increased financing costs.
Strong performance in Manitoba supports provincial figures.
Conversely, Manitoba recorded the largest provincial increase in retail sales in February, rising 1.8%. This growth was primarily driven by a rebound in auto and parts sales.
This positive performance reflects improved consumer confidence within the province and indicates stable domestic demand for transportation-related goods. It also demonstrates a marked divergence in economic performance among Canadian provinces.
E-commerce declines despite strong digital market
Despite continued growth in internet use, Canadian e-commerce retail sales declined 0.3% in February. Online sales totaled $4.3 billion, representing only 6.3% of total retail trade. This slight decline may reflect a temporary shift in consumer behavior, as some have returned to traditional shopping. However, e-commerce still represents a significant portion of sales, underscoring the ongoing digital transformation.
Retail Sales Expected to Rise in March
Statistics Canada has provided a preliminary estimate indicating a 0.7% increase in retail sales in March. Although this figure is not final, it reflects a potential positive trend in the sector’s performance.
This early estimate was based on data from 67.1% of the surveyed companies. The final average response rate is 91.2%, giving these forecasts a degree of reliability.
It is worth noting that these estimates contribute to strengthening market confidence and providing forward-looking insights into the country’s consumer activity.
