Canada November 2021

Unemployment Falls to 6.7%

• The unemployment rate fell to 6.7% in October after falling to 6.9% in September, marking the fifth consecutive month the unemployment rate declined. Unemployment peaked at 9.4% in January.
• Employment rose by 31,000 jobs, or 0.2%, in October, the fifth consecutive monthly gain in jobs.
• Average hourly wages were 5.1% higher than in October 2019.
• The number of people working in retail trade increased by 72,000 (+3.3%) in October, pushing retail employment back to its pre-COVID level for the first time since March. 
• Employment increased in Ontario and New Brunswick, decreased in Manitoba and Saskatchewan and was unchanged in the other provinces.

 
Consumer Prices Rise 4.4%  
The Consumer Price Index (CPI) rose 4.4% year over year in September, the fastest pace since February 2003 and up from a 4.1% gain in August. Excluding gasoline, the CPI rose 3.5% year over year in September. The monthly CPI rose 0.2% in September, the same growth rate as in August. It was the ninth consecutive month the CPI increased. On a seasonally adjusted monthly basis, the CPI rose 0.4%. Prices rose year over year in every major component in September. The homeowners' replacement cost index, which is related to the price of new homes, continued to increase slightly year over year, rising 14.4% in September after increasing 14.3% in August.
 
GDP Grows 0.4% in August
Real GDP grew 0.4% in August after dropping 0.1% in July. Growth was below expectations. There were significant gains in the service-producing sectors but spending on goods dropped.
 
Retail trade rose 1.8% in August, more than offsetting the 0.6% contraction in July, with 9 of 12 subsectors posting gains.
 
Construction was essentially unchanged in August, as a 0.8% contraction in residential building construction offset growth in repair construction (+0.9%), engineering and other construction activities (+0.2%) and non-residential building construction (+0.4%).
 
Interest Rates
The Bank of Canada (BoC) held interest rates steady at 0.25% at their meeting the end of October. The Bank of Canada now believes Canada's economy will grow by 5% this year before moderating to 4.25% in 2022 and 3.75% in 2023. The BoC expects demand to be supported by strong consumer spending, business investment and a rebound in exports as the US economy continues to recover. The bank now expects CPI inflation to be elevated into next year before easing back to around the 2% target by late 2022.
 
Housing and Construction News
Canada housing starts fell 4.4% in September to 251,151 units from 262,754 in August, according to Canada Mortgage and Housing Corporation (CMHC). Demand for housing remains strong but labor and supply constraints have been slowing down permits. The six-month moving average of the monthly seasonally adjusted annual rate of housing starts was 271,068 in September, down from 284,757 in August.
 
The Canadian Real Estate Association reported September home sales edged up on a month-over-month basis for the first time since March. Home sales for the month reached 48,949, their second-highest ever for September and a 0.9% increase from 48,498 in August. However, sales were down 17.5% from record-breaking sales in September 2020. Eighteen of 31 markets reported increasing sales.
 
Canadians are once again buying homes in cities, according to  a recent survey fielded by Sotheby’s International Realty Canada. The report noted that Calgary’s luxury segment, which includes homes starting at $1 million, saw sales rise 50% in July and August compared to the same period in 2020. Activity in the city’s luxury condo market is also picking up, doubling from the same period in 2020. The report noted that luxury market sales in rural areas are also rising, and are up two to three times from 2020, driven by single-family detached home sales. 
 
Retail Sales Rise 2.1%
Retail sales were up 2.1% to $57.2 billion in August, led by higher sales at food and beverage stores (+4.8%), gasoline stations (+3.8%), and clothing and clothing accessories stores (+3.9%). Sales increased in 9 of 11 subsectors, representing 94.6% of retail trade. Core retail sales, which exclude gasoline stations and motor vehicle and parts dealers, were up 2.7%, on par with the increase in August. In volume terms, retail sales increased 1.4% in August. Higher sales at building material and garden equipment and supplies dealers (+2.8%) also contributed to the growth in core retail. The increase in this subsector was the first since record-breaking growth in March 2021 and came after four consecutive months of declines.
 
Retail Ecommerce Sales Rise
On a seasonally adjusted basis, retail ecommerce sales rose 3.2% in August. On an unadjusted basis, retail ecommerce sales were down 2.9% year over year to $3.0 billion in August, accounting for 4.9% of total retail trade. The share of ecommerce sales out of total retail sales increased 0.3% in August compared with July.

Retail Notes
Two of Lowe’s corporate Rona stores won 2021 Outstanding Retailer Awards from the home improvement retail industry association Hardlines. The winning stores were the RONA Kelowna, which won Best Large Surface Retailer and RONA
Cowansville, Best Contractor Specialist.
 
Canadian Tire joined forces with 70 other businesses and organizations to launch an ambitious plan to reduce plastic waste and encourage recycling throughout the supply chain. Currently more than 80% of packaging produced in Canada ends up in a landfill or polluting the environment. The Canada Plastics Pact aims to create measurable change by 2025 and a “circular economy” for plastic packaging by 2035.

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