Canada April 2024

Unemployment Rises to 6.1% 

• The unemployment rate rose to 6.1% in March after rising to 5.8% in February and was up 1.0% year over year.
• Unemployment reached a record low of 4.9% in June and July 2022. In January 2021 unemployment peaked at 9.4%.
• The economy added 41,000 jobs in February following a similar gain in January.
• Retail lost 23,000 jobs; construction added 15,000 but was little changed year over year.
• Average hourly wages rose 5.1% to $34.81 in March after rising to $34.82 in February. (not seasonally adjusted).
• Wage growth will need to cool down in order to bring down inflation. The BoC will not start lowering rates until inflation cools off.
• Employment decreased in most provinces but was up in Ontario.

 
Consumer Prices Rise 2.8%
Consumer prices rose 2.8% year over year in February, down from a 2.9% year-over-year increase in January. Analysts had expected prices to be up 3.1%. It was the second month in a row price dropped after four consecutive monthly increases. The biggest single contributor to inflation was mortgage interest, which rose by 26.3% from February 2023. Core CPI continued to slow, falling to 3.2% in January from 3.5% in December, according to Statistics Canada. On a monthly basis, consumer prices were unchanged in January after falling 0.3% in December.
 
Housing and Construction News
Housing starts jumped 14% in February to 253,468 annual units after falling to a downwardly revised 223,176 in January, according to Canada Mortgage and Housing Corp. (CMHC). The results were significantly higher than expectations. However, the increase was due to a 20% rise in multi-unit urban starts. Single-detached urban starts fell 2% to 42,241 units and were down 9% on a year-to-date basis compared to January and February 2023. 
 
Canadian home sales fell 3.1% in February from January, according to the Canadian Real Estate Association. After five months of declines, prices held steady at C$719,000 ($531,300).
 
The Bank of Canada started raising rates in 2022, which forced many potential homebuyers to the sidelines and caused prices to fall. But recent indications that the central bank is poised to cut rates in the future have spurred more shoppers to get into the market before competition heats up and drives prices up.
 
GDP grew 0.6% in January. Services-producing industries increased 0.7% and goods-producing industries were up 0.2%.  Overall, there was broad-based growth with 18 of 20 sectors increasing in January. GDP grew 0.1% in Q4 2023. Analysts noted that economic conditions are frail in Canada, and that overall numbers are being propped up by a resilient US economy.
 
Interest Rates Steady
The Bank of Canada (BoC) held interest rates steady at 5% for the fifth consecutive time at their meeting in early March. The decision was widely expected because core inflation has remained stubbornly above the Bank’s 2% target rate.
 
Retail Sales
Retail sales decreased 0.3% to $67.0 billion in January after rising 0.9% in December. Sales were down in three of nine subsectors, with the biggest decrease coming from a 2.4% drop at  motor vehicle and parts dealers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were up 0.4% in January. In volume terms, retail sales increased 0.2% in January.
 
Retail Ecommerce Sales
Retail ecommerce sales were up 3.5% to $3.8 billion in January, accounting for 5.7% of total retail trade, compared with 5.5% in December. Retail ecommerce sales fell 3.6% to $3.7 billion in December. 

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