Unemployment Rises to 6.2%
Consumer Prices Rise 2.7% Consumer prices rose 2.7% year over year in April after rising 2.9% in March, in line with expectations, according to Statistics Canada. Inflation has now fallen for the past four consecutive months. Core inflation rose 2.7% in April after rising 3.1% in March. The slowing increases heightened hopes that Bank of Canada (BoC) may cut interest rates in June. Prices for services continued to rise, climbing 5.0% in April after rising 4.5% in March. The biggest driver of increases in prices continues to be housing costs, including mortgages and rents. The BoC continues to forecast that inflation will drop to 2.5% in the second half of the year and return to their target of 2.0% next year. Housing and Construction News Housing starts fell 1% in April to 240,229 adjusted annual units after falling 7% in March, according to Canada Mortgage and Housing Corp. (CMHC). Monthly numbers can be skewed by big swings in multi-unit starts. To smooth out those swings and give a clearer picture of the upcoming housing supply trend, CMHC also reported that the six-month moving average fell 2%. Canadian home sales fell 1.7% in April after rising 0.5% in March and were up 10.1% year over year, according to the Canadian Real Estate Association (CREA), which noted that the big year-over-year jump was most likely due to the early and long Easter holiday weekend. Average price year over year fell 1.8% to $703,846. New listings were up 2.8% from March. Affordability and rising rates are the biggest factors impacting Canadian mortgage consumers, according to CMHC’s 2024 survey of 4,000 recent mortgage consumers who renewed or refinanced a mortgage or purchased a home in the past 18 months. Historically high rates caused 22% to buy a home sooner than they’d planned, while 13% delayed a planned purchase. First-time buyers and newcomers were most likely to postpone. Funding home improvements and renovations was cited as the top reason for refinancing an existing mortgage by 33% of respondents, out-pacing debt consolidation at 23%. About 12% of refinancers added a suite to their home. Improving home energy efficiency was the third most popular reason for renovating, accounting for more than half of overall renovation costs. Of those homeowners who renovated to improve energy efficiency, 93% were satisfied with the results and 68% saw savings in their energy. A majority of mortgage consumers (79%) still believe a home is a good long-term financial investment. However, 63% of homebuyers continue to have concerns or uncertainty during the home buying process. Almost two-thirds (65%) of homeowners expected the value of their home to increase in the next 12 months, up from 55% in 2023. GDP Rises 0.4% in Q1 Real GDP increased 0.4% in the first quarter and GDP for the fourth quarter of 2023 was revised down to flat from the 0.2% growth first reported. Household spending increased by 0.7% in the first quarter, primarily due to a 1.1% rise in spending on services, while slower inventory accumulation depressed growth. Spending on goods edged up 0.3%, primarily due to increased sales of motor vehicles. New housing construction was relatively flat. The household savings rate reached 7.0% in the first quarter, the highest rate since the first quarter of 2022. Interest Rate Cut in Future? The Bank of Canada (BoC) is getting closer to cutting rates, according to the central bank’s governor, Tiff Macklem. They cited downward momentum in inflation and a stabilizing wage market. The BoC also expects a strong pick-up in housing over the course of the year and some uptick in housing prices. The BoC held interest rates steady at 5% for the sixth consecutive time at their meeting in early April. Their next meeting is in June. The BoC started raising rates in 2022, which forced many potential homebuyers to the sidelines and caused prices to fall. Retail Sales Fall 0.2% in March Retail sales dropped 0.2% in March to $66.4 billion after falling to $66.7 billion in February. Retail sales have now declined for three consecutive months. Sales were down in seven of nine subsectors, led by decreases at furniture, home furnishings, electronics and appliances retailers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were down 0.6% in March, the first decline in core sales in four months. In volume terms, retail sales decreased 0.4% in March. Retail sales were down 0.2% in the first quarter, while in volume terms, retail sales increased 0.3%. Retail Ecommerce Sales Rise 1.9% Retail ecommerce sales rose 3.0% to $4.0 billion in March, accounting for 6.0% of total retail trade, compared with 5.8% in February. Retail Notes Canadian Tire Q1 retail comp sales fell 0.6%; consolidated comp sales fell 1.6%. Consumer spending softened, but store traffic was only slightly lower than Q1 2023. Revenue dropped 4.9% to $3.53 billion compared to $3.7 billion for Q1 2023; revenue was down 5.2% excluding Petroleum. Retail gross margins and profits rose. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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