Canadian shoppers boosted their spending in March, easing fears that a global trade war and a softening labor market would sharply curb consumer activity. Statistics Canada’s advance estimate showed retail receipts rose 0.7% last month, marking a rebound after a sluggish start to the year.

The flash estimate, based on responses from about 67% of retailers, is subject to revision but signals a temporary revival in consumer demand. Economists suggest the March lift may partly reflect higher prices following the expiration of a federal tax holiday, as well as households stocking up on goods that could be impacted by U.S. tariffs and Ottawa’s retaliatory measures.

In the U.S., retail sales jumped 1.4% in March, driven by vehicle purchases ahead of expected price hikes linked to President Trump’s tariffs. Similar behavior may have boosted Canadian spending, with economists predicting that the surge is temporary. “Consumer spending is likely to experience a temporary period of strength…but this is likely to be short-lived,” said Charles St-Arnaud, chief economist at Alberta Central.

Despite the March uptick, underlying consumer confidence remains fragile. Royal Bank of Canada’s spending tracker found only a modest 0.1% dip in overall spending in March, but the Conference Board of Canada reported a sharp 16% decline in its consumer confidence index. Rising fears about job security and a weakening employment market add to the risk of softer consumption ahead.

Detailed February data showed retail sales fell 0.4% to C$69.33 billion, largely driven by auto-sector weakness. However, core sales excluding autos rose 0.5%, suggesting resilient underlying demand for essentials like groceries and gasoline, even as discretionary spending on furniture and electronics declined.

Housing activity, a key component of consumer wealth, also showed strain. Home resales dropped 4.8% in March, extending a multi-month slide and leaving transactions down 20% from the recent November peak.

Economists expect Canadian consumer spending to soften materially into the summer if trade tensions persist, making the March bounce more of a temporary reprieve than a trend reversal.