Canadian Retail Sales – July 23, 2013

Canadian retail sales rose 1.9 per cent in May, following two consecutive months of flat sales. The close to 2 per cent growth marks the largest rate of growth in retail sales since March 2010. Given today’s data release, second quarter GDP growth is currently tracking in a range of 1 to 1.5 per cent, though there is significant uncertainty around that number due to the impact of flooding in Alberta and other significant economic disruptions in recent months.

Retail sales in BC once again posted only modest growth, rising 0.4 per cent from April. Sales were unchanged from a year ago. Weak employment growth in the first half of 2013, along with a slowing of consumer credit will likely keep retail sales growth well below long-term averages this year. We do, however, expect sales to pick-up modestly in the second half of the year.

For more information, please contact: Gino Pezzani

Canadian Consumer Price Inflation – July 19, 2013

Canadian inflation rose in June from May’s muted 0.7 per cent but remained tame at just 1.2 per cent. The rise in consumer prices was mostly the result of higher transportation costs due to higher gasoline and and motor vehicle prices. Core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.3 per cent in June. Consumer prices in BC actually fell 0.5 per cent in the 12 months to June largely as a result of the elimination of the HST. 

Inflation continues to run well below the Bank of Canada’s 2 per cent target and we anticipate it will do so for most of this year. That, along with modest growth in the Canadian economy, will keep the Bank of Canada sidelined until 2014.

For more information, please contact: Gino Pezzani

Bank of Canada Interest Rate Decision – July 17, 2013


New Bank of Canada Governor Stephen Poloz stuck to the status quo this morning in his first interest rate decision, leaving the Bank’s overnight target rate at 1 per cent.  The Bank expects growth in the Canadian economy to be “choppy” in the near term owing to unusual temporary factors such as flooding in Alberta, but overall its outlook for economic growth remains largely unchanged from April’s projection of 1.8 per cent real GDP growth in 2013 and 2.7 per cent growth next year. The Bank expects inflation to remain subdued in the near term due to persistent excess capacity in the Canadian economy, but still expects inflation will return to its 2 per cent target in mid-2015 as previously forecast. Notably, the Bank’s previous recurring statement regarding withdrawal of monetary stimulus has been altered and perhaps softened to “Over time, as the normalization of these [economic] conditions unfolds, a gradual normalization of policy interest rates can be expected.”

All in all, not much has changed since the previous Bank of Canada announcement in May. Economic growth, though still not robust, has been marginally better than expected. Inflation continues to trend below 2 per cent and the labour market is adding jobs at a modest pace. Canadian household are still carrying too much debt, but are adding to that debt at a slower rate. Long-term interest rates have risen substantially in recent months, which may have some negative impact on growth, but remain very low in historical terms. Therefore, we continue to forecast no change in the Bank of Canada’s target rate until next year.

For more information, please contact: Gino Pezzani

Canadian Manufacturing Sales – July 16, 2013

Canadian manufacturing sales rose 0.7 per cent in May, only the second  increase in sales in the past five months. Sales rose in 11 of 21 manufacturing subsectors, with gains driven by higher sales in the chemical manufacturing sector.

In BC, manufacturing sales grew 1.6 per cent on a monthly basis and were 2.9 per cent higher year-over-year.  May’s manufacturing sales were led higher by a 16 per cent increase in the primary metal sector while the recovery in the wood products sector took a bit of a break following several consecutive months of large increases. Wood product sales fell 6 per cent from April but remained 34 per cent higher than May 2012. Stronger manufacturing sales in May continues a string of stronger economic data in BC in recent months that hopefully will mark an inflection point for the provincial economy following a year of relative weakness.

For more information, please contact: Gino Pezzani  

BC Home Sales Continue on Upward Trend

Vancouver, BC – July 16, 2013.  The British Columbia Real Estate Association (BCREA) reports that a total of 7,196 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC in the month of June, up 5.6 per cent from June of 2012. Total sales dollar volume was 11.9 per cent higher at $3.84 billion. The average MLS® residential price in the province was $533,219, up 6 per cent from a year ago.

“BC home sales rose 6.7 per cent from May, on a seasonally adjusted basis, with June being the fourth consecutive month of increasing sales activity,” said Cameron Muir, BCREA Chief Economist. “Since February, home sales across the province have climbed by 23 per cent, on a seasonally adjusted basis,” added Muir.

On a quarterly basis, MLS® residential sales climbed 15 per cent in the second quarter, while the inventory of homes for sale has moved down 5 per cent over the last two quarters, creating improved market conditions in many regions of the province.

Year-to-date, BC residential sales dollar volume was down 8.2 per cent to $18.8 billion, compared to the same period last year. Residential unit sales were down 7.8 per cent to 35,336 units, while the average MLS® residential price was down 0.4 per cent at $531,401