Canada June 2022
The Consumer Price Index (CPI) rose 6.8% year over year in April after rising 6.7% in March, according to Statistics Canada. It was the fourth consecutive month the CPI has been over 5%; the last time the CPI was over 5% was in 1991. It was the 13th consecutive month that inflation has exceeded the Bank of Canada’s (BoC) target range of 1% to 3%. Price increases were broad-based in April. Excluding the volatile food and energy categories, the core CPI was up 4.2% year over year in April after rising an upwardly revised 3.8% in March. On a monthly basis the CPI was up 0.6% in April after being up 1.4% in March, which was the largest monthly increase since 1991. Inflation is surging for many reasons, including rising commodity prices, some of which are tied to the Russia-Ukraine war; the persistence of supply-chain disruptions, such as the recent idling of some Chinese factories because of CV19 policies; and very strong consumer demand for some products, particularly durable goods, many of which are produced overseas.
GDP Rises 0.7% in March
GDP rose 0.7% in March after rising a downwardly revised 0.9% in February. The increase was above economists’ expectations. Both services-producing (+0.6%) and goods-producing (+0.9%) industries were up as 14 of 20 industrial sectors expanded in February. The construction sector expanded 1.2% in March after growing 2.7% in February as all subsectors contributed to the growth. Residential building construction (+1.8%) led the growth for the
third month in a row, with home alterations and improvements and construction of single-detached homes contributing the most. All construction activities posted gains with commercial building construction contributing the most to the increase. Engineering and other construction activities increased 0.6% in March, continuing an upward trend that began at the end of 2020 but was still 1.9% below February 2020's pre-pandemic level of activity. Repair construction rose 1.2% in March 2022, up for the seventh time in eight months, as both the residential and non-residential segments expanded. Retail trade fell 0.6% in March after slipping 0.2% in February as a drop in motor vehicles offset gains in most other sectors. Excluding motor vehicle and parts dealers, retail trade rose 0.7%.
Housing and Construction News
Canadian housing starts rose 8% in April to 267,300 units after falling to 246,243 units in March, according to Canada Mortgage and Housing Corp. (CMHC). An increase in urban starts and multi-family starts was behind much of the increase. Despite concerns about rising mortgage rates and supply chain issues, the level of starts remains historically high.
Home sales fell 25.7% in April to 54,894 homes from 73,907 in April 2021, when the country set a sales record for the month, according to the Canada Real Estate Association (CREA). The national average home price was a little over $746,000 in April, up 7.4% from about $695,000 during the same month last year. Excluding the Greater Toronto and Vancouver areas reduces the national average price by $138,000.
Retail Sales Virtually Unchanged
Retail sales were virtually unchanged in March as lower sales at motor vehicle parts dealers canceled out gains in other subsectors. Retail sales were up 3.0% for the first quarter, the largest increase since the third quarter of 2020. Sales were up in 10 of 11 subsectors, representing 75.0% of retail trade, and in four provinces. Core retail sales, which exclude sales at gasoline stations and motor vehicle and parts dealers, increased 1.5%. In volume terms, retail sales were down 1.0% in March. Sales were up in four provinces but fell in British Columbia, Quebec, Saskatchewan and Newfoundland.
Retail Ecommerce Sales Fall 1.9%
On a seasonally adjusted basis, retail ecommerce sales were down 1.9% in March. On an unadjusted basis, retail ecommerce sales fell 24.6% year over year to $3.0 billion in March, accounting for 4.9% of total retail trade. The share of ecommerce sales out of total retail sales fell 1.9% compared with March 2021 when pandemic restrictions were still in place.
Canadian Tire reported strong first-quarter results, with revenue rising 15.5% to C$3.84 billion from a year ago, exceeding analysts’ expectations. Comparable sales at the Canadian Tire retail business grew 4.5%, while the Mark's banner saw comparable sales gain 17.1%. Comparable sales at SportChek stores gained 10.2%.
Canadian Tire is using the data gathered through their Triangle rewards loyalty program and credit cards to drive sales and try and counter the potential impact of rising prices. They are focused on attracting and engaging rewards members as a way to gain insight into shopping habits and shape sales through promotions. The Triangle credit card usage data gives them a lot of insight into their customers’ preferences and shopping behavior. Canadian Tire retail has created a new "offer widget" function that encourages customers to use rewards to earn bonus electronic Canadian Tire money if they purchase a particular product. CEO Greg Hicks said that two years ago they would have been running 20% off sales, but tests show that targeted customer promotions are much more effective. They are also using a “demand elasticity driver” to sweeten offers if demand flags in the face of rising inflation and other problems.
Lowe’s Canada wants to fill 500 jobs in their RONA and Reno-Depot stores for the busy summer season
Walmart is building a new state-of-the-art Walmart Canada store that will include a natural refrigerant for store refrigeration, LED lighting throughout, building materials that use recycled content and low volatile organic compound finishes. They’re implementing rain gardens within the parking area to manage water on site and revegetating the site to reduce the “heat island” effect. They will also be integrating many additional electric vehicle charging stations.
Walmart Canada has joined the Stingray Retail Media Network. Stingray will be responsible for exclusive sales representation, in partnership with the Walmart Connect ad platform, of all in-store digital audio advertising at all 400 Walmart Canada retail locations.
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