Canadian Real GDP Growth (Q2’2019), August 2019

The Canadian economy rebounded in the second quarter, surging at an annual rate of 3.7 per cent. That follows two quarters of lackluster sub-1 per cent real GDP growth.  Growth was primarily led by a recovery in export volumes which masked underlying weakness in domestic demand, which actually declined as household spending slowed and business investment declined.

Despite a solid second quarter growth, we are forecasting that the Canadian economy will expand by only 1.5 per cent this year, a slight deceleration from 1.8 per cent growth in 2018.  Moreover, inflation remains closely tied to its 2 per cent target, and unemployment remains very low, which should translate to a sidelined Bank of Canada. That said, risks to the economy are very clearly tilted to the downside. The US continues to flirt with potentially disastrous trade wars and global financial markets are anticipating a US recession in the next twelve months.  Should those fears be realized, the next move by the Bank will certainly be to lower its overnight rate.

For more information, please contact:  Gino Pezzani.

Canadian Retail Sales – August, 2019

Canadian retail sales were unchanged in June, as stronger sales across most sub-sectors were offset by lower sales at motor vehicle and parts dealers and gasoline stations. Retail sales were down in 4 of 11 sub-sectors in June, representing 48% of sales. Provincially, Saskatchewan reported the largest decline (-2.7%) and Manitoba reported the largest gain (1.3%).

In B.C., retail sales declined 0.4% from the previous month to $7.16 billion. Vancouver also reported a 3% decline in sales. Provincial sales were down in most sub-sectors, except at electronics and appliance stores, sporting goods/hobby/book/music stores, and miscellaneous retail stores. On a year-over-year basis, B.C. retail sales were up 1 per cent in June.

Canadian retail sales were unchanged in June, as stronger sales across most sub-sectors were offset by lower sales at motor vehicle and parts dealers and gasoline stations. Retail sales were down in 4 of 11 sub-sectors in June, representing 48% of sales. Provincially, Saskatchewan reported the largest decline (-2.7%) and Manitoba reported the largest gain (1.3%).

In B.C., retail sales declined 0.4% from the previous month to $7.16 billion. Vancouver also reported a 3% decline in sales. Provincial sales were down in most sub-sectors, except at electronics and appliance stores, sporting goods/hobby/book/music stores, and miscellaneous retail stores. On a year-over-year basis, B.C. retail sales were up 1 per cent in June.

Excluding the volatile motor vehicle and parts dealers and gasoline sub-sectors, June national retail sales increased 1.7%. This is a positive hand-off to the third quarter. Keeping in mind that some of the gains were due to the Toronto Raptors games in the NBA finals (as reported by Statistics Canada), supporting increased sales at clothing and sporting stores.

For more information, please contact: Gino Pezzani.

Canadian Inflation – August, 2019

Canadian inflation, as measured by the Consumer Price Index (CPI), rose by 2 per cent compared to the same time last year, matching the increase in the previous month. Excluding the impact of lower energy prices, the CPI was up 2.5 per cent year-over-year. The Bank of Canada’s three measures of trend inflation continued to average 2 per cent in July.

In B.C., CPI slowed to 2.1 per cent in July compared to a year ago, due to a combination of a decline in prices for gasoline, clothing and footwear, and household furnishings.

With national inflation right at 2 per cent, the Bank of Canada will likely remain on hold at its next meeting in September. Complicating this however, are uncertainty around deteriorating global trade conditions between the U.S. and China, and the Federal Reserve’s recent rate cut.

For more information, please contact: Gino Pezzani.

Housing Demand Improves in July

Vancouver, BC – August, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 7,930 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in July, an increase of 12.4 per cent from the same month last year. The average MLS® residential price in the province was $684,497, a decline of 1.6 per cent from July 2018. Total sales dollar volume was $5.43 billion, a 10.5 per cent increase from the same month last year.

“BC home sales climbed higher for the first time in 18 months on a year-over-year basis in July,” said BCREA Chief Economist Cameron Muir. Housing demand has also trended higher since March, rising 21 per cent on a seasonally adjusted basis. “Households appear to be adjusting to the tighter credit environment as the shock of the B20 stress test dissipates.”

MLS® residential active listings in the province trended lower in July, down 3 per cent from June and 6 per cent from April on a seasonally adjusted basis. Active listings were up 12.4 per cent to 41,621 units on a year-over year basis, while overall market conditions remained unchanged from 12 months ago with the sales-to-active listings ratio at 19.1 per cent.

Year-to-date, BC residential sales dollar volume was down 18.9 per cent to $30 billion, compared with the same period in 2018. Residential unit sales decreased 14.4 per cent to 43,612 units, while the average MLS® residential price was down 5.3 per cent to $687,413.

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For more information, please contact: Gino Pezzani.

Canadian Employment – August, 2019

Canadian employment declined by 24,200 jobs in July with the largest decline reported in Alberta. The national decline was evenly split between full-time and part-time work, notably in private sector employment in the service sector (retail and wholesale trade). The national unemployment rate rose 0.2 percentage points to 5.7 per cent, as more people were looking for work in July.

Meanwhile in BC, employment held steady for the second consecutive month in July. The unemployment rate was also little changed at 4.4 per cent.  Compared to one year ago, employment in BC is up 4.8 per cent.

For more information, please contact: Gino Pezzani.