Canadian Monthly Real GDP Growth (May 2019) – July, 2019

The Canadian economy expanded for a third consecutive month in May, growing 0.2 per cent on a monthly basis. The rise in GDP was the result of higher output in 13 of 20 industrial sectors, led by manufacturing, construction and transportation. Activity at offices of real estate agents and brokers jumped 4.8 per cent in May due to increased home sales in the Greater Toronto and Greater Vancouver.

With today’s GDP report, we are tracking second quarter growth in the Canadian economy at 3 per cent, a major improvement from the sub-1 per cent growth of the first quarter.  Stronger growth and inflation at or near its 2 per cent target should keep the Bank of Canada sidelined in 2019. However, with the US Federal Reserve expected to lower its key policy rate this week, it is possible the Bank will follow suit. Either way, Canadian mortgage rates will likely remain near their current low levels for the foreseeable future.

For more information, please contact: Gino Pezzani.

Canadian Retail Sales – July, 2019

Canadian retail sales declined in May by 0.1% to $51.5 billion, following a 0.2% gain in the previous month. This marks the third consecutive quarter of no growth. Retail sales were down in 4 of 11 subsectors in May, represening 39% of retail sales. The main contributor to the decline was sales at food and beverage stores. Retail sales were down in eight provinces with monthly gains only reported in Quebec (0.9%) and Ontario (0.5%).

In B.C., retail sales declined 0.2% from the previous month to $7.2 billion. Meanwhile, a gain of 0.9% was reported in Vancouver. Provincial sales were down in health and personal care, electronics and appliance stores, and at funiture stores. In contrast, sales were up at gas stations. On a year-over-year basis, B.C. retail sales were flat in May.

Although retail sales were down in May, we can expect modest growth going forward, supported by a solid labour market, wage gains and reduced borrowing costs.

For more information, please contact: Gino Pezzani.

Canadian Inflation – July, 2019

Canadian inflation, as measured by the Consumer Price Index (CPI), rose by 2 per cent compared to the same time last year, a deceleration from 2.4 per cent in the prior month. Excluding the impact of lower energy prices, the CPI was up 2.6 per cent year-over-year. The Bank of Canada’s three measures of trend inflation were also up in June, averaging a little over 2 per cent. In B.C., CPI increased by 2.6 per cent in June compared to a year ago, marking the second highest provincial gain behind Manitoba.

With inflation sustaining above 2 per cent, the Bank of Canada will almost certainty remain on hold at its next meeting in September, particularly given a strong second quarter of real GDP growth.  The Banks decision will be complicated by a possible easing of interest rates by the US Federal Reserve, though a period of diverging monetary policy between the US and Canada remains likely.
For more information, please contact: Gino Pezzani.

BC Home Sales Trend Lower in June

Vancouver, BC – July 15, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 6,960 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in June, a decline of 11.8 per cent from the same month last year. The average MLS® residential price in the province was $687,584, a decline of 4 per cent from June 2018. Total sales dollar volume was $4.8 billion, a 15.3 per cent decline from the same month last year.

“BC home sales moderated lower in June after a stronger showing in May,” said BCREA Deputy Chief Economist Brendon Ogmundson. “While mortgage rates offered by lenders have moved below 3 per cent, a static qualifying rate has limited the impact of the lower cost of borrowing.”

Total MLS® residential active listings were up 18.6 per cent to 42,625 units compared to the same month last year and were essentially flat on a seasonally adjusted basis compared to May.

Year-to-date, BC residential sales dollar volume was down 23.4 per cent to $24.5 billion, compared with the same period in 2018. Residential unit sales decreased 18.7 per cent to 35,679 units, while the average MLS® residential price was down 5.8 per cent to $688,080..

For more information, please contact: Gino Pezzani.

The Seeds of Friendship

Ava was newly married. She and her husband had just moved into their first home and she had decided to plant a garden like the one her Grandma had planted years ago in the house where she grew up. All her life, she’d been the one to help take care of that garden and she was excited to keep the tradition alive in memory of her Grandma.

As part of the garden, Ava planted a little tree at the base of a stone wall in the corner of her garden, and spent the entire summer coaxing the seedling into growth. Finally, the baby tree began sprouting green leafy vines that climbed the wall, but to her disappointment, no flowers bloomed.

One morning Ava stood in her garden and wondered whether she should just dig up the tree and start over with something new to bring some life to the dark corner.

Then, she heard a voice from over the wall. “Yoohoo! I just wanted to thank you for the beautiful flowers!”

Confused, Ava went next door. Her neighbor, an elderly woman, opened the garden gate and showed her into the backyard.

To her surprise, the young woman saw that her tree had not only bloomed, but had also sprouted flowers all along the vines that had crept over the wall into her neighbor’s yard.

Her work gave her neighbor so much pleasure that Ava decided never to cut the tree down. She realized that what she had really planted were the seeds of friendship.