An old, tired-looking dog ambled into a man’s backyard one afternoon. He was obviously well fed with a red collar and a good disposition.

The man pet the golden dog on his soft head for a few minutes, then the pooch stretched out and went to sleep on the sunny porch. The man went inside to make lunch and when he returned, the dog had left.

The dog came back the next day, and the day after that, sitting for attention until he fell asleep. Soon, he was coming every single day. The man didn’t mind, but he was curious, so one day he pinned a note to the dog’s collar: “Your friendly, sweet dog comes to visit

me every day for head pats and I wanted you to know that we enjoy his visits. Where does he live?”

The next day the dog arrived with a response tied to his collar: “Thank you! Our family lives in the blue house on the corner. We have five children at home and I think my dog might be trying to get some rest. Can I maybe come with him tomorrow?”

Canadian inflation, as measured by the Consumer Price Index (CPI), rose to 3.6% year-over-year in May, up from 3.4% in April. This is the highest level since May of 2011. Much of the increase in inflation was the result of base-year effects, as prices remained depressed in May of last year due to pandemic-induced shutdowns. On a seasonally adjusted month-over-month basis, the CPI was up 0.5% in May. The Bank of Canada's preferred measures of core inflation (which strip out volatile elements) rose an average of 0.2% from April, to 2.3% year-over-year. In BC, consumer prices were unchanged month-over-month and down from 3% year-over-year in April to 2.7% year-over-year in May.

While inflation is currently running higher than the Bank of Canada's 2 per cent target, much of the increase looks to be temporary and is likely to fade as base-year effects become less significant in coming months. Base-year effects are now beginning to fall out of the inflation statistics, as April was the CPI's nadir last year. How inflation evolves over the next 3 to 6 months will be very important for the stance of monetary policy over the next year. If higher inflation is not just a temporary phenomenon but is being driven by an over-stimulated economy, than we could see the Bank of Canada act on interest rates prior to 2023. However, if the uptick in inflation starts to fade in coming months, we expect the Bank will stay its current course.

For more information, please contact: Gino Pezzani.
Link: https://mailchi.mp/bcrea/canadian-inflation-may-2021

The Canadian economy contracted for the first time in 12 months in April as monthly real GDP fell 0.3 per cent due to restrictions put in place to contain the third wave of COVID-19. The largest declines were felt in high-touch services sector industries like retail trade and food services.  Output of the real estate sector also dipped in April, though coming off a record month of sales in March.

Many sectors are currently dealing with the complexities of recovering from a pandemic that has produced significant shortages of materials and labour. As a result, there is an adjustment process underway, highlighted by rapidly rising costs, as businesses scramble to recover back to pre-pandemic levels of production and service. That process will continue to create some ups and downs as the economy moves into a post-pandemic environment but the overall trend in the economy is overwhelmingly positive. Statistics Canada estimates that strong growth resumed in May and we anticipate the Canadian economy will expand at a 6 per cent rate this year.  The same is true of the BC economy, where we are tracking economic growth for 2021 at 6.2 per cent.

For more information, please contact: Gino Pezzani.

Link:  https://mailchi.mp/bcrea/canadian-monthly-economic-growth-real-gdp-april-2021

Canadian retail sales decreased 2.1% m/m to $53.8 billion on a seasonally-adjusted basis in May. Including the declines in April, sales were down 7.5% from the March peak. Declines occurred in 8 of 11 retail sectors measured by Statistics Canada, with the largest drops in building material and garden equipment and supplies dealers (-11.3%) and motor vehicle and parts dealers (-2.4%). The declines in April and May were driven by third-wave restrictions. In May, 5.6% of Canadian retailers reported being closed for at least one business day, up from 5% in April. Due to the rapidly evolving situation, Statistics Canada is reporting an advanced retail sales figure for June based on just 59.9% of respondents reporting. The agency's preliminary estimate is for a 4.4% increase in sales in June, erasing more than half of the cumulative drop in April and May. 

In BC, seasonally-adjusted retail sales declined 1.4% m/m as COVID-19 cases gradually declined from their record in mid-April. Retail sales declined 0.7% m/m in Metro Vancouver. BC retail sales were up by 24.4% compared to the same time last year.

In May, Canadian e-commerce sales were up 22% year-over-year to $4.2 billion. E-commerce accounted for 7% of total retail sales in May, the same proportion as in April. In May of last year, in the midst of the first wave, e-commerce accounted for 8.2% of retail sales.

For more information, please contact: Gino Pezzani.

Link:  https://mailchi.mp/bcrea/canadian-retail-sales-may-2021-july-23-2021