Canadian Monthly GDP Growth - March 28, 2013

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The Canadian economy grew 0.2 per cent in January, building off of a similar increase in December. January's economic growth was lead by a 1.2 per cent rebound in manufacturing output from a 1.9 per cent decline the previous month as well as gains in mining and oil and gas extraction and wholesale and retail trade. A pick-up in housing market activity reversed a three month decline in the output of real estate agents and brokers which rose 0.4 per cent. 

Our first quarter GDP growth estimate is currently reading 1.6 per cent (at an annual rate), a significant improvement from the 0.6 per cent rate that prevailed in the second half of 2012. We anticipate that growth will continue to be modest through the first half of 2013 before accelerating in the second half of the year and into 2014.

Canadian Consumer Price Inflation - March 27, 2013

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Canadian Consumer Price Inflation -

Canadian consumer price inflation picked up marginally in February, registering 1.2 per cent year-over following a 0.5 per cent increase in January. The Bank of Canada's core inflation index, which excludes the eight most volatile components of the CPI like energy and food, rose 1.4 per cent year-over-year in February, a moderate acceleration from January's 1 per cent increase.  Inflation in BC registered only 0.9 per cent year-over-year in February.

Subdued by sluggish growth in the Canadian economy over the past six months, inflation continues to trend well under the Bank of Canada's two per cent target.  As economic growth improves in the latter half of 2013 and into 2014, inflation should gradually move back toward 2 per cent. Until then, we expect that the Bank of Canada will remain on hold and that longer term interest rates that impact mortgage pricing will hold near historic lows.  

Canadian Retail Sales - March 21, 2013

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Canadian Retail Sales - March 21, 2013

Canadian retail sales rose 1 per cent in January, with gains reported in 7 out of 11 retail subsectors. Adjusting for inflation, retail sales were roughly flat.

With today's retail sales release, we have a full month of data for our quarterly Canadian GDP tracking estimate. While there isn't much we can tell from just one month, there are signs that real GDP growth has picked up from the sub-1 per cent level that prevailed in the second half of last year. That said, growth is still likely to come in at modest 1 to 1.5 per cent in the first quarter.

Retail sales in BC rose 1 per cent over December but were unchanged year-over-year. We anticipate that, in spite of a stronger labour market, BC retail sales will continue to grow well below trend at between 3 and 4 per cent in 2013. This would mark the third consecutive year of weak sales growth.

Canadian Manufacturing Sales - March 19, 2013

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Canadian Manufacturing Sales:

Canadian manufacturing sales began the year on a down note, declining 0.2 per cent in January, the fourth decline in the last five months. However, weakness was not broad based with just 7 of 21 manufacturing sectors posting declining sales. Adjusting for inflation, Canadian manufacturing sales were 0.4 per cent lower. Sales in the BC manufacturing sector rose 2.1 per cent in January, and were 1.4 per cent higher year-over-year. BC manufacturing growth continues to be lead by a strong rebound in the forestry sector as evidenced by a 19 per cent year-over-year increase in wood products. We anticipate the rebound in wood product shipments to be an ongoing story through 2013 as the US housing sector gains strength. Today's US housing starts data showed that home builders down south broke ground on 917,000 homes at a seasonally adjusted annual rate while building permits advanced to their strongest level since June 2008.

Home Sales Continue at Modest Pace: Pent-Up Demand Growing

Vancouver, BC – March 14, 2013.  The British Columbia Real Estate Association (BCREA) reports that a total of 4,501 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during February, down 23.6 per cent compared to February 2012. Total sales dollar volume was down 29.9 per cent to $2.39 million. The average MLS® residential price in the province was $514,134, up 3.1 per cent from January, but down 8.1 per cent from a year ago.


"BC home sales continued at a modest pace in February,” said Cameron Muir, BCREA Chief Economist. “Despite improved affordability, many potential buyers and sellers remain in a holding pattern. With pent up demand now becoming latent in the market, it’s not a matter of if, but when home sales rise above their current pace."

“An unusual spike in the average MLS® residential price in February 2012 is largely responsible for the year-over-year percentage change,” added Muir. “Most BC markets have experienced relatively stable price levels during the first two months of the year.”

Year-to-date, BC residential sales dollar volume declined 24.6 per cent to $4.1 billion, compared to the same period last year. Residential unit sales dipped 19.6 per cent to 7,911 units, while the average MLS® residential price was down 6.2 per cent at $523,117.

Housing Market Update (March 2013)

Canadian Housing Starts and Employment - March 8, 2013

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Canadian Housing Starts and Employment - March 8, 2013

Housing Starts

Following a woefully low 158,000 units in January, Canadian housing starts registered 180,719 units at a seasonally adjusted annual rate (SAAR) in February. However, new home construction is trending lower. On a year-over-year basis, housing starts were down 10.5 per cent.

New home construction in BC urban centers rose 2.1 per cent month-over-month in February to a seasonally adjusted annual rate of 22,000 units.  However, on a year-over-year basis, total starts were 29 per cent lower than February 2012. Single-detached starts were 29 per cent higher over last year, while multiples fell 40 per cent compared to February 2012.

Looking at census metropolitan areas (CMA) in BC, Vancouver CMA starts fell 41 per cent year-over-year in February. Single-detached starts were 43 per cent higher than last year, while multiples were almost 50 per cent lower.  New home construction in the Abbotsford CMA was up 86 per cent compared to February  2012 due to a burst of activity in multiples starts. Similarly, housing starts in the Kelowna CMA shot up 89 per cent over last year. In the Victoria CMA, total starts dipped 1 per cent.

Employment

After a slight decline in January, hiring in the Canadian economy picked up in February adding 51,000 new jobs. The National unemployment rate remains at 7 per cent.

After sputtering to start the year, employment growth in BC jumped in February. Employment in BC expanded by 19,800 jobs in February, including 13,500 full-time jobs. The BC unemployment rate remained constant at 6.3 per cent.

February 2013 Housing Market Update - Real Estate Board of Greater Vanco

Canadian Building Permits - March 7, 2013

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Canadian Building Permits - March 7, 2013

Canadian building permits rose 1.7 per cent in January, following an 11 per cent decline in December. Higher building permits in the residential sector offset a decline in non-residential permits.

BC posted a 10.9 per cent increase in construction intentions compared with December 2012, and a 4.5 per cent increase over January 2012. Residential permits rose nearly 16 per cent over December while non-residential permits dipped 2 per cent lower.

Permit activity in BC's four major metropolitan areas was varied in January. Construction intentions in the Kelowna CMA fell by nearly half from a relatively high level in December but were up 63 per cent over January 2012.  Permit values were 14 per cent lower month-over-month in the Abbotsford CMA but rose nearly 25 per cent in the Vancouver CMA and 44 per cent in the Victoria CMA.

Bank of Canada Interest Rate Decision

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Bank of Canada Interest Rate Decision - March 6, 2013

The Bank of Canada announced this morning that it is holding its target for the overnight rate at 1 per cent.  The Bank sees economic growth in Canada picking-up through 2013, as growth in exports and business investment offset a slowdown in household spending and residential construction.  On inflation, the Bank noted that low core and total CPI inflation have been more subdued than the Bank projected, owing to significant excess capacity in the economy. Given low inflation and what the Bank terms a "constructive evolution of imbalances" in the household sector (meaning a lower pace of debt accumulation), the Bank has walked back its previous rate tightening bias stating that, "current levels of monetary stimulus will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required."


Weak economic growth through the second half of last year will likely bleed into the first half of 2013, which means a continuation of subdued inflation of just over 1 per cent. In fact, the outlook for growth and inflation is weak enough that, if the Bank had not spent the last year voicing concern over the perilous state of household finances, a 25 basis point cut in the Bank’s overnight target would be increasingly likely.  Instead, the Bank will put a future rate hike on hold for the foreseeable future, with rates gradually increasing in 2014.