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Unemployment Falls to 6.5% 
Consumer Prices Rise 1.6% The Consumer Price Index (CPI) rose 1.6% year over year in September after rising 2.0% year over year in August, according to Statistics Canada. On a monthly basis, the CPI dropped 0.4% in September after falling 0.2% in August. Falling fuel prices were once again the biggest contributor to the monthly slowdown in prices. Housing and Construction News Housing starts rebounded in September, rising 5% after plunging 22% in August. The seasonally adjusted annual rate of housing starts rose to 223,808 units in September, up from 213,012 in August. The increase came as the pace of starts in urban centres rose 6% to 210,002 units in September and were up 2% year to date, according to Canada Mortgage and Housing Corporation. There were 168,897 homes that began construction from January to September of this year, up from 165,559 for the same period in 2023. The Canadian Real Estate Association (CREA) downgraded their housing market forecast for the remainder of the year again, noting that interest rate cuts haven’t spurred the gradual improvement in sales they’d expected. They now believe the market will remain in more of a “holding pattern” until next spring, with 468,900 properties forecast to trade hands this year, a 5.2% increase from 2023, down from their July forecast of a 6.1% increase and their bullish outlook of a 10.5% jump made back in April. The average price of a home sold in September was up 2.1% year over year to $669,630. CREA is now forecasting just a 0.9% annual increase for 2024 to $683,200, down from their previous outlook of a 2.5% increase. Sales in September were up 6.9% year over year but only rose 1.9% from August despite the BoC’s third consecutive interest rate cut. GDP Unchanged GDP was essentially unchanged in August after increasing 0.1% in July. The services-producing industries edged up 0.1% in August, driven in large part by increases in the finance and insurance and the public administration sectors. Goods-producing industries fell 0.4%, reaching the lowest level since December 2021, with the manufacturing and utilities sectors causing the decline. Manufacturing dropped 1.2%, with both durable and non-durable goods contributing to the decline. Overall, 12 of 20 sectors expanded in August. GDP grew by 0.5% in Q2 following a 0.4% increase in the first quarter. Interest Rates Cut to 3.75% The Bank of Canada (BoC) cut interest rates by a half-point to 3.75% at the end of October after cutting them a quarter-point at the beginning of September. It was the fourth consecutive meeting that resulted in a rate cut. Rates were 5% in May. The decision to make a larger cut came after the consumer price index hit 1.6% in September, which was below the central bank's inflation target. The slow growth in prices was driven mainly by a drop in energy prices, but policymakers now expect inflation to remain close to its target over the projected horizon. The BoC’s move was widely expected by economists, who think the problem policymakers now face is a weakening economy and deflation. Retail Sales Rise 0.4% Retail sales increased 0.4% to $66.6 billion in August after rising to $66.4 billion in July. Sales were up in four of nine subsectors and were led by increases at motor vehicle and parts dealers. Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were down 0.4% in August. In volume terms, retail sales increased 0.7% in August. Retail Ecommerce Sales Fall 2.5% Seasonally adjusted retail ecommerce sales were down 2.5% to $3.9 billion in August, accounting for 5.9% of total retail trade, compared with 6.1% in July, according to Statistics Canada. © 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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