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Highlights:

• Despite the Bank of Canada lowering its policy rate, fixed mortgage rates may not drop significantly as markets have already priced in the expected rate cuts.

• Canada faces a weak economic outlook and a softening labour market, but growth is expected to pick-up in 2025.

After the Bank's rate cut in June, what comes next? 

For more information, please contact: Gino Pezzani.

Canadian retail sales rose 0.7 per cent to $66.8 billion in April. Excluding volatile items, sales were up 1.4 per cent on a month-over-month basis. In volume terms, adjusted for rising prices, retail sales rose 0.5 per cent in April.

Retail sales in BC were up by 1.3 per cent in April and up by 2.2 per cent from the same time last year. In the CMA of Vancouver, retail sales were up 0.4 per cent from the prior month and were up 2.5 from April 2023. 

Link: https://mailchi.mp/bcrea/canadian-retail-sales-april-2024-june-21-2024

For more information, please contact: Gino Pezzani.

Canadian housing starts rose 10 per cent to 264,506 units in May at a seasonally adjusted annual rate (SAAR). Starts were up 35 per cent from the same month last year. Single-detached housing starts were largely unchanged from last month at 54,410 units, while multi-family and others rose 13 per cent to 210,093 units (SAAR). 

In British Columbia, starts fell 15 per cent from last month to 46,507 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 7 per cent to 4,360 units while multi-family starts dropped 18 per cent to 39,959 units. Starts in the province were 14 per cent above the levels from May 2023. Compared with last year, year-to-date starts were up by 20 per cent in Victoria, 52 per cent in Kelowna, and 41 per cent in Abbotsford. Year-to-date starts were down by 8 per cent in Vancouver and by 14 per cent in Nanaimo. 

Link: https://mailchi.mp/bcrea/canadian-housing-starts-may-2024

For more information, please contact: Gino Pezzani.

Canadian employment edged up by 27,000, or 0.1 per cent, to 20.518 million in May. The unemployment rate ticked up to 6.2 per cent. Average hourly wages rose 5.1 per cent year-over-year to $34.94 last month, while total hours worked were up 1.6 per cent from May of last year.

Employment in BC fell 0.3 per cent to 2.863 million, while employment in Metro Vancouver fell 1.1 per cent to 1.610 million in April. The unemployment rate rose 0.6 points in BC to 5.6 per cent while rising in Metro Vancouver by 0.8 points to 6.1 per cent last month. 

Link: https://mailchi.mp/bcrea/canadian-employment-may-2024-june-7th-2024

For more information, please contact: Gino Pezzani.

The Bank of Canada lowered its overnight lending rate this morning by 25 basis points from 5 per cent to 4.75 per cent. In the statement accompanying the decision, the Bank noted that first quarter real GDP growth was below forecast, and recent data suggests the economy in operating in excess supply. On inflation, the Bank sees downward momentum in core inflation, while noting that shelter inflation remains high. Overall, the Bank is confident that inflation will continue to move toward its 2 per cent target and that monetary policy no longer needs to be as restrictive. 

This Bank of Canada rate-lowering cycle will be one of the few times this century that rates are being cut for reasons other than in response to a global crisis. As such, we should expect a gradual pace of rate cuts measuring 25 basis points per meeting over the next 18 months until the Bank’s policy rate hits the mid-point of the Bank’s estimated neutral range of 2.25-3.25 per cent.  Where the policy rate ultimately ends up will be dictated by economic conditions. A good baseline is 2.75 per cent, but a worse than expected economy could mean the Bank’s policy rate needs to fall under 2.25 per cent for a period, and conversely, more stubborn than anticipated inflation could mean that this lowering cycle stalls out north of 3.25 per cent.

Now that the Bank of Canada is at long last lowering its policy rate, the impact on fixed mortgage rates may not be that significant. The bond market, and by association the mortgage market, is a machine that digests all available information about current and future economic conditions and, since late 2023, markets have strongly anticipated falling policy rates. As a result, 5-year fixed mortgage rates have likely already priced in the entirety of expected rate cuts. As for variable rates, current market pricing has settled around prime minus 60 basis points. If that discount holds, it will take seven rate cuts or 175 basis points, before the average variable rate falls back under the average 5-year fixed rate.

Link: https://mailchi.mp/bcrea/bank-of-canada-interest-rate-announcement-qlvnj3hf3

For more information, please contact: Gino Pezzani.

Almost everyone has experienced it: You're smoothly navigating a grocery store with your shopping cart when, suddenly, it squeaks. Quickly, one wheel rebels and spins erratically, and you find yourself struggling with the cart as if it were a stubborn animal.

Why does this issue seem to plague grocery carts? The reason is simple: Unlike carts in pharmacies or clothing stores, which usually carry lighter items and stay indoors, grocery carts endure heavy loads and face the harsh outdoor environment.

This exposure to rain, snow, collisions and debris — especially in parking lots — takes a toll, particularly on the wheels and the caster plates attaching them to the cart, which leads to malfunctions. According to CNN, this wear and tear, coupled with the high replacement cost of more than $200 a cart, explains the frequent cart malfunctions.

So, the next time you wrestle with a wobbly grocery cart, remember it's a small price to pay for the convenience of hauling your heavy groceries. It's also a testament to the unseen battles these carts endure in their daily parking lot adventures.