Canada January 2022

Unemployment Drops to 5.9%

• „The unemployment rate fell to 5.9% in December after falling to 6.0% in November, marking the seventh consecutive month the unemployment rate declined.
  
• Unemployment peaked at 9.4% in January and is now within 0.2% of it’s pre-pandemic level.
  
• Full-time employment rose by 123,000 jobs, or 0.8% in December, the seventh consecutive monthly gain in jobs.
  
• Gains were driven by job growth in the goods-producing sector, with construction adding 27,000 new jobs, the first increase since August 2021.
  
• Employment was up in Ontario and Saskatchewan, dropped in Newfoundland and Labrador and was unchanged in the remaining provinces.
  
• The labour force participation rate was 65.3% in December, and virtually the same as in February 2020 before the pandemic. 
  

Consumer Prices Jump 4.7%
The Consumer Price Index (CPI) rose 4.7% year over year in November, matching the increase in October. Excluding gasoline, the CPI rose 3.6% year over year, also matching the gain in October. The prices for goods rose more rapidly than the prices for services in November. Prices rose in most provinces with the exception of British Columbia. The decrease in prices there was not tied to the province’s flooding problems, as data was collected before the floods. Statistics Canada is monitoring the impact of the floods on the economy and Canada’s CPI.
 
GDP Grows 0.8%
GDP grew 0.8% in October, according to Statistics Canada. Gains for the month were seen across most sectors, including manufacturing, which rebounded 1.8% in October, more than offsetting a September contraction. Also contributing to GDP growth were gains in retail trade, construction and home resale activity. Statistics Canada says total economic activity in October was 0.4% below pre-pandemic levels recorded in February 2020. Statistics Canada noted that preliminary data for November suggests a rise in GDP of 0.3% for the month.
 
Interest Rates Remain Unchanged
The BoC left the key overnight interest rate unchanged at 0.25% at its meeting in early December. The BoC acknowledged that inflation was broadening but said that the Omicron CV19 variant had created renewed uncertainty. The BoC also dropped a reference to price pressures being “temporary,” while noting that employment had returned to pre-pandemic levels. The BoC is concerned that Omicron could weigh on growth by reducing demand for some services, impacting the labour force and compounding supply chain disruptions. The BoC said they would assess the situation again in January. They also agreed to renew their target 2% annual inflation. As is occurring globally, Canada is dealing with accelerated price increases that are fueling concerns about inflation.
 
Housing and Construction News
Canada housing starts jumped 26% from October to November, reaching 301,279 units, according to Canada Mortgage and Housing Corporation (CMHC). The six-month moving average of the monthly seasonally adjusted annual rate of housing starts was 267,365 in November, up from 264,583 in October. Demand for housing remains strong but labor and supply constraints have been slowing down permits.
 
The Canadian Real Estate Association reported that home sales rose 0.6% in November after jumping 9% in October. On a non-seasonally adjusted basis sales fell 0.7% from November 2020. Economists noted that the year-over-year decline was due to low inventory and rising prices which are both discouraging buyers. Sales were up month over month in about three-quarters of all markets. The actual national average home price was $720,850 in November, up 19.6% from a year ago.
 
Retail Sales
Retail sales rose 1.6% in October to $57.6 billion after falling to $56.6 billion in September. Sales increased in 7 of 11 subsectors, representing 59.9% of retail trade. Core retail sales, which exclude gasoline stations and motor vehicle and parts dealers, increased 1.5%. In volume terms, retail sales were up 0.9% in October. The increase was led by higher sales at general merchandise stores (+2.8%) as sales rose for a fifth consecutive month. Sales at building material and garden equipment and supplies dealers rose 3.2%, contributing to the increase. It was the third consecutive monthly increase in sales for this segment, following four months of declines from April to July 2021. Sales were up in all provinces with the exception of Quebec.
 
Retail Ecommerce Sales
On a seasonally adjusted basis, retail ecommerce sales fell 0.9% in October. On an unadjusted basis, retail ecommerce sales were up 4.2% year over year to $3.3 billion in
October, accounting for 5.5% of total retail trade. The share of ecommerce sales out of total retail sales increased 0.1% compared with October 2020.
 
Retail Notes
Canadian Tire struck a multi-year agreement with Canadian Pacific to continue moving goods by rail, alleviating the need for CT to shift more volume to trucks. CT has been working with Canadian Pacific for more than 90 years.

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