Canada April 2023
Unemployment Holds at 5.0% in March
Consumer Prices Rise 5.2%
Consumer prices were up 5.2% year over year in February after being up 5.9% in January and 6.3% in December. Part of the slowdown was due to the fact that prices soared in February 2022. On a monthly basis, the CPI was up 0.4% in February after rising 0.5% in January. On a seasonally adjusted monthly basis, the CPI rose 0.1%. Statistics Canada noted that Inflation has slowed in recent months, rising 1.2% compared with six months ago, but prices remain elevated. Compared with 18 months ago, inflation has increased 8.3%. Shelter costs are rising more slowly now that home prices are falling, but mortgage costs are increasing.
Bank of Canada Holds Steady
The BoC held interest rates at 4.5% in early March, following a quarter-point increase in January, stating that the BoC would not necessarily follow the US Federal Reserve. Rates are currently at the highest level in fifteen years. The BoC noted that economic reports point to inflation decelerating and moving closer towards the goal of 2.0%.
Housing and Construction News
Housing starts climbed 13% in February to an annual rate of 243,959 units after falling to 216,514 units in January, according to Canada Mortgage and Housing Corp. (CMHC). Single-family starts rose 3% to 45,224 after falling in December.
Canadian home sales rose 2.3% in February after falling to a 14-year low in January but were down 40% from February 2022, according to the Canadian Real Estate Association (CREA). The median home price fell 18.9% to $662,447 in February after dropping to $714,700 in January and were down from $816,578 in February 2022. Sales were in line with 2018 and 2019, and analysts noted that the market has probably blown through some of the pandemic-induced market frenzy. New listings were down 26% from a year ago.
Retail Sales Rise 1.4%
Retail sales rose 1.4% in January to $66.4 billion after rising to $62.1 billion in December. Sales increased in 7 of 9 subsectors, representing 88.7% of retail trade. Core retail sales, which exclude gasoline stations and motor vehicle and parts dealers, increased 0.5% in January after rising 0.4% in December. In volume terms, retail sales increased 1.5% in January. Sales rose in all provinces.
Retail Ecommerce Sales
On a seasonally adjusted basis, retail ecommerce sales were down 0.1% to $3.3 billion in January, accounting for 5.0% of total retail trade compared with 5.1% in December.
Canadian Tire rolled out a new fee-based subscription tier as part of their Triangle Rewards loyalty program. The subscription, which will cost $89 a year plus taxes, is an upgrade to their existing rewards program. Members who pay for Triangle Select status will be able to earn CT Money faster through "stackable, bonus rewards" on eligible purchases at all stores. Subscribers will also receive a "welcome gift" valued at $50, online shopping perks and, for a limited time, a six-month subscription to the streaming service Crave. Canadian Tire reported that beta testing of Triangle Select showed the average member's annual incremental earnings through "select-specific bonuses" came to more than three times the subscription fee.
Canadian Tire announced they will spend at least half of their sports sponsorship dollars supporting women’s professional sports by 2026. Their multi-million dollar investment includes a dedicated media fund aimed at increasing the visibility of women's sports across top broadcast, digital and social platforms. The initiative will add five sports partnerships to Canadian Tire's roster, including coming in as a founding partner of Project 8, Canada's first women's professional soccer league set to launch in 2025.
GDP Rises 0.5% in January
Real GDP rose 0.5% in January, following a 0.1% contraction in December. Both goods-producing (+0.4%) and services-producing (+0.6%) industries were up in January, as 17 of 20 industrial sectors posted increases. In January, the construction sector posted a 0.7% gain, the largest increase since March 2022, reflecting increases in all construction subsectors. Engineering and other construction activities (+1.2%) continued on their long-term growth pattern and were the main driver of growth in the sector, along with residential construction, which grew 0.6% as home alterations and improvement drove gains. Nonresidential building construction (+0.3%) posted a second consecutive increase as industrial building construction and alterations and improvement expanded. Repair construction (+0.4%) expanded for the first time in four months due to gains in both residential and non-residential repairs. Advance information indicates that real GDP increased 0.3% in February.
Consumer Prices Rise 5.2%
The consumer price index (CPI) rose 5.2% year over year in February after being up 5.9% year over year in January. On a monthly basis, the CPI rose 0.4% in February after rising 0.5% in January. Core prices ex food and energy cooled off again, rising 4.8% year over year after being up 4.9% in January. Core inflation remained well above the Bank of Canada’s (BoC) target of 2% but is down significantly from 8.1% in June.
Shelter costs increased at a slower pace year over year for the third consecutive month, rising 6.1% in February, after an increase of 6.6% in January. The homeowners' replacement cost index, which is related to the price of new homes, slowed on a year-over-year basis in February (+3.3%) compared with January (+4.3%). These movements reflect a general cooling of the housing market.
The mortgage interest cost index increased at a the fastest year-over-year pace since July 1982 in February rising 23.9% compared to 21.2% in January. The increase occurred amid a higher interest rate environment.
© Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
Comments are closed.