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Unemployment Rises to 6.4% 
Consumer Prices Rise 2.7% Consumer prices rose 2.7% year over year in June after rising 2.9% in May, according to Statistics Canada. Lower gasoline prices were largely responsible for the larger than expected decrease. Shelter costs are also finally coming down as more inventory comes on the market, increasing the chances of another rate cut. The BoC continues to forecast that inflation will drop to 2.5% in the second half of the year and return to the central bank’s target of 2.0% next year. Housing and Construction News Housing starts fell 9% in May to 241,672 annual units after falling 1% in April, according to Canada Mortgage and Housing Corp. (CMHC). They attributed the decline to high interest rates that depressed muti-unit starts in major urban centers. 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 0.4%. The actual number of housing starts in urban centres across Canada was down 13% to 20,509 units in June compared with 23,518 units a year earlier. Canadian home sales rose 3.7% in June after falling 0.6% in May and were down 9.4% from June 2023, according to the Canadian Real Estate Association (CREA). Benchmark home prices rose 0.1% in June, the first increase in 11 months, to C$717,700, or the equivalent of $526,423. CREA said prices are "still generally sliding sideways" across much of Canada. On a one-year basis, benchmark prices fell 3.6%, although they remain nearly 40% above 2019 levels. Home prices surged during the pandemic as people looked for bigger properties and took advantage of rock-bottom borrowing costs. CREA lowered projections for sales and prices this year and next. CREA now expects existing-home sales to total about 472,000 this year, down 4.2% from second quarter projections. The national average home price is expected to climb to $694,393, slightly lower than previous forecasts. Average price year over year fell 2.4% to $714,300, leaving average home prices up about 38% from 2019. CREA reports that new listings were up 0.5% from April. Inventory stands at about a 4.4 months’ supply. GDP Grows 0.2% Real GDP grew 0.2% in May after growing 0.3% in April. The goods-producing industries grouping grew 0.4% and was the main contributor to the overall growth with four of five sectors increasing in May. Services-producing industries edged up 0.1%. Overall, 15 of 20 sectors expanded in May. The retail trade sector was the largest detractor to growth in May, contracting 0.9% and more than offsetting the increase recorded the month before. Bank of Canada Cuts Rates to 4.5% The Bank of Canada (BoC) cut interest rates 0.25% to 4.5% in late July after cutting them to 4.75% in June. The move was widely expected and came as the Canadian economy continues to show signs of cooling. Inflation in Canada has slowed this year and hit a three-year low of 2.7% in April. Inflation has stayed below 3% for five consecutive months but is still higher than the BoC’s 2% target. The BoC started raising rates in 2022, which forced many potential homebuyers to the sidelines and caused prices to fall. They stated that future cuts will depend on falling inflation for shelter and services prices. Retail Sales Drop 0.8% Retail sales fell 0.8% in May to $66.1 billion and sales for April were revised downward. Sales were down in eight of nine subsectors. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were down 1.4% in May. In volume terms, retail sales decreased 0.7% in May. Sales fell in many sectors, including a 2.7% drop at building material and garden equipment and supplies dealers and a 1.0% decline at general merchandise retailers. Sales decreased in nine provinces, rising only in Nova Scotia. Retail Ecommerce Sales Fall 3.6% Retail ecommerce sales were down 3.6% to $3.9 billion in May, accounting for 5.9% of total retail trade, compared with 6.1% in April. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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November 2024
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