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Unemployment Rises to 6.4% 
Consumer Prices Rise 2.9% Consumer prices rose 2.9% year over year in May after rising 2.7% year over year in April. Acceleration in the headline CPI was largely due to higher prices for services, which rose 4.6% in May following a 4.2% increase in April, according to Statistics Canada. The increase came after four consecutive monthly declines in prices. Prices for goods rose 1.0%, the same increase as recorded in April. The BoC continues to forecast that inflation will drop to 2.5% in the second half of the year and return to their central bank’s 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 0.6% in May after falling 1.7% in April and were down 5.9% from May 2023, according to the Canadian Real Estate Association (CREA). 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 0.3% Real GDP grew 0.3% in April after being essentially unchanged in March. Both goods-producing (+0.3%) and services-producing (+0.3%) industries contributed to the growth, with 15 of 20 sectors increasing in April. Following two consecutive monthly decreases, retail trade was also among the top drivers of growth in April. The construction sector was down 0.4% in April, after recording its largest growth rate since October 2022 in March. Residential building construction was the main contributor to the decline, falling 2.3% in April, the largest decline for the sector since May 2023. The April slump reflected decreased activity in the construction of new single and multi-unit family homes and in-home alterations and improvements. Activity in April was almost 24% below the peak in April 2021. Bank of Canada Cuts Rates to 4.75% The Bank of Canada (BoC) cut interest rates 0.25% to 4.75% after holding them at 5% for the previous six meetings. Canada was the first G7 country to cut rates. The BoC indicated further rate cuts would be gradual and dependent on data and added that they’ve come a long way in the fight against inflation. Inflation in Canada has slowed this year and hit a three-year low of 2.7% in April. While inflation has stayed below 3% for four months in a row, it 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. Retail Sales Rise 0.7% Retail sales rose 0.7% in April to $66.8 billion after dropping to $66.4 billion in March. The increase came after three consecutive months of declines. Sales were up in seven of nine subsectors and were led by increases at gasoline stations, fuel vendors and food and beverage retailers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were up 1.4% in April. In volume terms, April retail sales increased 0.5%. Retail Ecommerce Retail ecommerce sales fell 0.1% to $4.0 billion in April, accounting for 6.0% of total retail trade. Retail ecommerce sales rose 3.0% to $4.0 billion in March. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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