(March 21): Canadian consumers pared back their spending for a second straight month amid trade war uncertainty, partially reversing a year-end boost in sales after a federal sales tax was paused.

An advance estimate suggests receipts for retailers fell 0.4% in February, Statistics Canada said on Friday. That follows a 0.6% decline in January, a bigger drop than a median estimate in a Bloomberg survey of economists.

The first back-to-back decreases since mid-2023 point to mounting pressures from the US-Canada tariff war weighing on consumption, even as the Bank of Canada cut interest rates aggressively to boost activity. The declines follow a 2.6% spike in sales in December that coincided with a break in federal and some provincial sales taxes.

Policymakers reduced borrowing costs for the seventh straight meeting last week, and its surveys showed that Canadians are more worried about their job security and financial health and plan to spend more cautiously.

January's retail figures may reflect that sentiment. Car dealers led decreases in sales that month, with food and beverage retailers as well as sporting goods stores also seeing declines. Excluding autos, receipts grew 0.2% in January, a marked slowdown from December's 2.9% gain.

Core retail sales, which exclude gas stations and car dealers, were down 0.2% in January. In volume terms, retail sales fell 1.1%, the biggest decrease in two years.

Regionally, Quebec, Ontario and Manitoba were the three provinces that saw decreases in retail receipts in January. Sales in Quebec plunged 2.7% and fell 0.9% in Ontario. The two biggest cities in both provinces — Montreal and Toronto — also saw declines.

The statistics agency didn’t provide details for the February estimate, which was based on responses from 61.9% of companies surveyed, versus the average final response rate of 87.9% over the previous 12 months.

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