The Canadian economy rose 0.1 per cent in June, up for the fifth consecutive month. Goods-producing sectors rose 0.1 per cent while services-producing industries were up 0.2 per cent. Canadian real GDP is now roughly 2.3 per cent above its pre-pandemic, February 2020 level. However, preliminary estimates suggest that output in the Canadian economy declined 0.1 per cent in July.

Growth in the second quarter of 2022 registered 3.3 per cent at an annualized rate from the prior quarter, rising for the fourth consecutive month. Growth was driven by increased business investment in inventories and household spending. As consumers returned to offices amid easing COVID restrictions, consumer purchases of semi-durable goods like garments and footwear increased (+5.6 per cent). However, falling activity in the real estate sector was a drag on growth, with economic activity from home sales and renovations slowing. Investment in housing declined 7.8 per cent in Q2. 

GDP growth in the second quarter, though still strong, is showing signs of slowing. Growth was lower than the Bank of Canada's expectations and likely contracted slightly in July. That slowdown will likely continue as the Bank continues its tightening cycle, particularly in interest rate sensitive sectors like housing. The Bank is expected to raise its overnight rate by another 0.75 per cent in September to 3.25 per cent, but increases in the overnight rate are expected to slow in subsequent announcements. 

Link:  https://mailchi.mp/bcrea/canadian-economic-growth-real-gdp-q2-2022

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In BC in July, home sales continued to decline, while starts and new listings were largely steady. Sales fell once again in all areas of the province, with the lower mainland, Vancouver Island and Thompson Okanagan now below pre-pandemic levels. Rental costs in Vancouver and Victoria continue to rise and remain elevated relative to most other points since the onset of the pandemic. 

Retail sales rose in June to a fresh record. Restaurant reservations in Vancouver are currently about 8 per cent above their pre-pandemic level. In BC, Google’s measure of movement trends is currently just 2 per cent below pre-pandemic levels.

Although aggregate employment has recovered to pre-pandemic levels, the accommodation and food service sector was about 13 per cent below the pre-pandemic level in July. The labour market has served high-income workers much better than low-income workers. Employment in high-income industries is about 11 per cent above pre-pandemic employment levels, while employment in low-income industries is about 4 per cent below pre-pandemic employment levels.

Exports and manufacturing sales fell in June, while imports rose slightly.
Consumer confidence retreated in July, likely on continuing fears related to higher inflation expectations and rising interest rates.

The number of US and non-US tourists rose again in June, with both US and non-US tourists reaching the highest level since the onset of the pandemic.

BCREA's updated COVID-19 Recovery Dashboard is available here

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Canadian seasonally-adjusted retail sales increased 1.1 per cent in June, hitting $63.1 billion. Sales grew in 8 of 11 subsectors, but were led by higher sales at gasoline stations and motor vehicle and parts dealers. Core retail sales, which strips out gasoline and motor vehicle and parts dealers, increased 0.2 per cent in June. In volume terms, sales were up 0.2 per cent. 

In BC, seasonally-adjusted sales rose 1.1 per cent in June. Compared to the same month last year, retail sales were up 3.5 per cent in the province. In the Greater Vancouver region, sales rose 1.1 per cent month-over-month and were up 3 per cent year-over-year. 

In June, Canadian e-commerce sales were flat month over month, corresponding to 5.4 per cent of retail sales. This percentage remains elevated relative to pre-pandemic levels, but is lower than during core months of the pandemic in 2020 and 2021. 

Link:  https://mailchi.mp/bcrea/canadian-retail-sales-june-2022

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 7.6 per cent on a year-over-year basis in July, down from 8.1 per cent last month. The deceleration was driven by declining gasoline prices, but price growth remains high among other components of the index. Excluding gasoline, the CPI rose 6.6 per cent year over year in July, up from 6.5 per cent in June. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent, the slowest rate since December. In BC, consumer prices rose 8 per cent year-over-year, up from 7.9 per cent last month. Average hourly wages grew 5.2 per cent year-over-year in July, indicating a decline in purchasing power. 

July's CPI numbers provided some encouraging signs that inflation may be slowing, particularly in combination with a flat month-over-month data point in the United States for July. However, markets will want to see sustained declines in the rate of inflation over the next several months before mortgage rates decline significantly. Certain bond yields have been softening in recent weeks, but so far this hasn't translated substantially into mortgage rates. Markets are still expecting an aggressive Bank of Canada, singularly focused on bringing inflation back to its 2 per cent target.

Link: https://mailchi.mp/bcrea/canadian-inflation-july-2022

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Canadian housing starts rose by 2.9k (1.1 per cent) to 275.3k units in July at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were up from July of 2021 (0.5 per cent). Single-detached housing starts rose 1.6 per cent to 72.6k, while multi-family and others rose 0.9 per cent to 202.7k (SAAR). 

In British Columbia, starts fell 12.1 per cent in July, declining to 49.2k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 4.5 per cent m/m to 7.2k units while multi-family starts fell 16.6 per cent to 38.4k units. Starts in the province were 3.6 per cent below the levels from July 2021. Starts were down by 9.1k units in Vancouver, 7.4k in Kelowna, and flat in Abbotsford from last month, while rising by 8.7k in Victoria. The 6-month moving average trend rose 4 per cent to 44.7k in BC in July. 

Link: https://mailchi.mp/bcrea/canadian-housing-starts-july-2022

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For the complete news release, including detailed statistics, click here.

Vancouver, BC – August, 2022. The British Columbia Real Estate Association (BCREA) reports that a total of 5,572 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in July 2022, a decrease of 42.4 per cent from July 2021. The average MLS® residential price in BC was $923,449, a 3.6 per cent increase from $891,376 recorded in July 2021. Total sales dollar volume was $5.1 billion, a 40.3 per cent decline from the same time last year. 

“High mortgage rates continued to lower sales activity in July,” said BCREA Chief Economist Brendon Ogmundson. “Many regions around the province have seen sales slip to levels well below normal for this time of year.”

As the pace of sales activity declines below normal levels, inventory is accumulating. Provincial active listings rose 28 per cent year-over-year, though from a very low level in July 2021. Inventories remain quite low, but the slow pace of sales has tipped some markets into balanced or even buyers’ market territory.

Year-to-date, BC residential sales dollar volume was down 20 per cent from the same period in 2021 to $58.7 billion. Residential unit sales were down 29.3 per cent to 56,801 units, while the average MLS® residential price was up 13.2 per cent to $1.03 million.


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