Commercial Activity Remains Stable in 2019 Q3

The BCREA Commercial Leading Indicator (CLI) fell slightly to 135.3 in the third quarter of 2019. The index remains unchanged compared to the same time last year.

Provincial economic activity continued to slow in the third quarter of 2019, with declines in retail and manufacturing sales more than offsetting a gain in wholesale trade. This left the economic activity component of the CLI negative for the fifth consecutive quarter. Office employment was up for the fifth consecutive quarter, edging out a decline in manufacturing employment, which resulted in a positive change in the employment component of the CLI. The financial component of the CLI was positive for a third straight quarter. The underlying trend in the CLI has been relatively flat over the past five quarters, suggesting a stable environment for commercial real estate activity in the province.

Following several years of robust growth, the BC economy continues to slow in 2019. Weak manufacturing sales in petroleum and coal, and lower retail sales at gasoline stations and auto dealers, put a drag on economic activity in the third quarter. Wholesale trade sales were positive in the third quarter due to a large expansion in machinery and equipment.

Employment growth in key commercial real estate sectors such as finance, insurance, real estate and leasing continues to be strong, up by 7,600 jobs in the third quarter. This measure of office employment now sits at an all-time high, signalling strong future demand for office space. In contrast, manufacturing employment fell by 4,200 jobs from the previous quarter.

The CLI’s financial component was positive in the third quarter due to an increase in benchmark Canadian REIT prices, which more than offset the expansion of shortterm credit spreads.

For more information, please contact: Gino Pezzani.

Bank of Canada Interest Rate Announcement – December, 2019

The Bank of Canada held its overnight rate at 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that there is evidence that the global economy is stabilizing and that US recession concerns are waning, though trade conflicts remain the biggest threat to the Canadian economy. The Bank expects modest growth in 2020 and for inflation to closely track its 2 per cent target.

With many central banks around the world lowering their policy rates, why is the Bank of Canada holding firm? Simply, the Bank judges the potential of lower rates igniting a further accumulation of household debt as a greater risk to the Canadian economy than the risk from deteriorating global economic conditions. Canadian policymakers have committed to bending the curve on the Canadian household debt-to-income ratio, through a combination of higher interest rates and stricter mortgage policy.

Balanced against the goal of restraining debt, the Bank sees the risk of a further disruption in global trade as manageable. The outlook for Canadian economic growth is roughly in line with trend growth for the economy and inflation is expected to be well tethered to its 2 per cent target. As long as that outlook holds, we expect that the Bank will remain on the sidelines in 2020.

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Light Up the Night

Have you ever noticed that December, so filled with the busiest days in the year, also happens to have the shortest days in the entire year? From summer onward, night slowly creeps up earlier and earlier each evening so that by the time we get to the solstice on roughly December 21, we face the shortest day of the year.

With those short days come long lists of errands to keep up with the hustle and bustle of the holidays and, if you are like me, you run out of daylight long before everything is completed. However, after the busy days draw to a close, those long nights are ripe for lingering around a table with friends and a second helping of dessert. And those cold winter mornings are the ideal time to put out food for the little birds that never seem to stop fluttering with joy. If you hang up holiday lights this time of year, consider this: you are not just hanging them up for yourself, but for everyone who is driving by on a dark evening and suddenly feels a bit of cheer at the sight of twinkling warmth.

Countless donation drives kick off in December with constant requests for contributions, but this month also makes for the perfect time to place a note of gratitude directly into the hands of someone you genuinely appreciate and tell them, with nothing held back, how they change your life for the better. No matter how much or how little time you have, give of yourself and light up the night.

The point is that we can choose how to perceive that short day in December just as we choose how to perceive the other 364 days in the year. The darkest day could not exist without the presence of light. Thank you for being a source of light in my life, and for being someone who can light up the night.

I’m sending back love and light with this letter, and hope you find joy in every day this December!


Gino Pezzani

Canadian Real GDP (Sept) – Nov, 2019

The Canadian economy grew by 0.1% in September, following the same growth in the previous month. Services reported growth of 0.2%, slightly outpacing growth in goods (+0.1%). There were gains in 13 of 20 industries, with increases in wholesale trade and construction offset in part by lower activity in rail transportation. Activity at offices of real estate agents and brokers increased 1.2% in September, rising for the seventh consecutive month, primarily due to higher housing resale activity in Vancouver and Fraser Valley.

Rounding out the third quarter, Canada’s economy grew by 1.3%, led by strong business investment (+2.6%) and household spending (+0.4%), while exports were down by 0.4% and imports were unchanged. Of note was growth in housing investment (+3.2%), which recorded the fastest pace since the first quarter of 2012. The increase was driven by both new home construction (mostly detached homes in Ontario) and higher ownership transfer costs from resales activity in B.C. and Ontario.

We expect growth in the Canadian economy will moderate to around 1.5 per cent in the second half of 2019 after posting strong second quarter growth and will post trend growth of about 1.8 per cent in 2020. Significant downside risks remain due to elevated trade tensions and their consequent impact on exports and business investment.

For more information, please contact: Gino Pezzani.

Improve Your Self-Discipline

Success in any endeavor is a matter of self-discipline. If you can’t stay focused on your goals, you’ll never achieve them. The Ladders website shares this list of tips for improving your self-discipline:

• Start on Monday. Begin working on your goals on the first day of the week. Researchers say this can help you follow through.

• Write down the reasons behind your goals. Positive affirmations can solidify your goals in your mind and help you stay focused.

• Visualize the benefits. Think about what you’ll gain as you work toward your goals and eventually achieve them. They’ll become more real in your mind and help you work past obstacles.

• Plan for temptation. You’ll sometimes want to abandon your goals, or at least set them aside. Think about how you can respond—“If I want to quit early, I’ll work 10 more minutes before making a final decision.”

• Combine needs and wants. For example, if you have to go to a networking event, concentrate on meeting old friends as much as on making new contacts. Or plan a reward once you’ve completed a particular step toward your goal.

• Don’t make snap decisions. A quick decision can easily lead you down the wrong path. Teach yourself to analyze information and consider your options before going ahead on a new move.

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You’re Mine, Molecule!

A solar-powered device that soaks up water from the air could provide relief in waterstarved regions, according to an article on the website of the American Association for the Advancement of Science.

The device is a metal-organic framework (MOF), a crystalline net that can extract water vapor out of the air—even in a desert— and then release it as liquid water. It’s the brainchild of Jordanian-born Omar Yaghi, now a chemist at the University of California, Berkeley. He and his colleagues created their first MOF in 1995, and tens of thousands have been produced since.

The MOFs are made of metal atoms that work like hubs in a Tinkertoy set. The atoms are connected in a porous network held together by organic linkers, creating containers that trap molecular particles. Using different metals and linkers, scientists can tailor the structure to capture molecules like water and carbon dioxide.

Early versions were expensive and degraded quickly, but Yaghi’s team has managed to create a more robust model that promises commercial applications. A recent market report predicted that sales of MOFs for detecting and storing gases will grow to $410 million annually over the next five years, up from $70 million in 2019.

The Clever Canine

A dog was on safari with his humans. One afternoon, he started chasing after a butterfly near the camp and suddenly found himself deep within
the wilderness. He saw a leopard approaching him
from the grass.

“Oh boy, guess I’m gonna have to show this cat who’s boss,” thought the dog as he plopped down next to a pile of bones. He reached for the largest
bone and began to chew on it.

The leopard hid in the tall grass and waited for just the right moment to pounce on the canine, yet the dog continued chewing on the bone as the leopard slowly inched closer.

When the dog heard the movement of the grass, he said loudly, “Mmm, mmm. That was one tasty leopard. I think I’ll eat another one.”

The leopard froze in his tracks. He figured he was no match for this vicious dog and retreated to safety. But there was a monkey seated in a nearby tree. He’d seen everything and impishly decided to tell the leopard what had really happened.

The dog realized that something was amiss when he saw the monkey chasing after the leopard. (After all, monkeys don’t usually chase leopards.) But the clever dog decided to outsmart both the leopard and the mischievous monkey.

When the monkey informed the leopard of what had happened, the leopard grew angry. “No one makes a fool of me,” the leopard growled. “Come, my little friend! Let’s show that dog who’s running things around here!”

The leopard ran back through the tall grass with the monkey on his back. “Here we go,” the dog thought to himself as he relaxed and chewed on the bones.

He could feel the big cat watching him from the grass. From the corner of his eye, he could see the monkey scampering toward a nearby tree— this was the moment to make his move.

“What has that monkey done with my dinner?” howled the dog. “I sent him to fetch me another leopard a half hour ago and he’s still not back!”