Canadian employment grew by 419,000 jobs in July (2.4%, m/m). Combined with gains in May of 290,000 and gains in June of 953,000, this brought national employment to within 1.3 million of the pre-COVID February level. The national unemployment rate fell by 1.4 percentage points to 10.9 per cent from the previous month. Most of the employment gains in July were in part-time work. Compared to the same month last year, Canadian employment was down by 6.3% (-1.2 million).
Regionally, all provinces reported an increase in employment except New Brunswick, where employment was little changed. The strongest gains were in Ontario which were almost all in part-time work, reflecting the later easing of COVID-related measures compared with other provinces. In July, employment continued to rise faster among women than men, but on a cumulative basis, men are closer to being back at pre-COVID levels than women.
To address gaps in the understanding of the impact of the pandemic on certain visible communities, Statistics Canada has enhanced their employment survey. Of note, Statistics Canada found that compared to the same time last year, South Asians and Chinese Canadians experienced the highest increases in unemployment related to the pandemic, in part attributable to their greater concentration in some of the industries hardest hit by COVID-19 restrictions. Meanwhile, unemployment rates were lower for Black Canadians and Filipino Canadians, where many work in health care and social assistance industries.
Employment in BC grew by 70,000 jobs (3%, m/m) in July, reaching almost 94% of the February employment level. This followed job gains of 118,100 in June and 43,000 in May. July's employment gain brought down the unemployment rate by 1.9 percentage points to 11 per cent. In Vancouver, employment increased by 48,000 jobs to reach almost 90% of the February level. Compared to one year ago, employment in BC was down by 7.5% (-192,000) jobs.
This was another good news report. However, gains in July were lower than in June, reflecting reopening measures that began in June where employment growth was coming back from very low levels. We can expect that recovery will be slower from here on, as many of the hardest hit industries have reopened and will continue to maintain physical distancing measures. Also important are consumers' demand for goods and services, which is expected to be hampered by the still 165,000 unemployed individuals in BC since February, and the winding down of government support programs.
Canadian Monthly Real GDP (May) - July 31, 2020
Canadian real GDP grew 4.5 per cent on a monthly basis in May. May's increase follows an 11.6 per cent contraction in April, the largest monthly decline in GDP since the series started to be recorded in 1961. Despite the rise in GDP in May the Canadian economy is still 15 per cent below its February, pre-COVID-19 level. Statistics Canada's preliminary estimate for second quarter GDP is a decline of 12 per cent from the first quarter, or an annualized decline of close to 50%.
With an increase in GDP in May and a preliminary estimate of 5 per cent growth in June, it would appear that the Canadian economy is recovering from the COVID-19 induced recession. That recovery is already well underway in BC housing markets, with home sales recovering pre-COVID-19 levels in early summer.
With an increase in GDP in May and a preliminary estimate of 5 per cent growth in June, it would appear that the Canadian economy is recovering from the COVID-19 induced recession. That recovery is already well underway in BC housing markets, with home sales recovering pre-COVID-19 levels in early summer.
Canadian Retail Sales (May) - July 21, 2020
A good news report. The easing of pandemic restrictions across the country led to an 18.7% surge in seasonally-adjusted Canadian retail sales in May to $42 billion. Leading the growth was motor vehicle and parts dealers, followed by an increase in sales in almost all other subsectors. Although sales increased in May, retail sales remain 20% below pre-pandemic levels.
Sales were up in all provinces in May, the most notable increases were in Quebec (33%), Manitoba (24%), New Brunswick (21%) and Nova Scotia (20%). In BC, seasonally-adjusted retail sales were up by 12% ($6.4 billion) and by 14% ($2.8 billion) in Vancouver. Retail sales were up in all subsectors as brick and mortar stores begin to reopen, with the largest comebacks reported in clothing, and sporting and hobby. Despite the growth, sales at clothing stores are 55% below pre-pandemic levels and -24% at sporting and hobby stores.
E-commerce sales were still strong in May, up by 113% year-over-year at $3.8 billion. E-commerce comprised 8% of total retail sales in May, down from 10% in the previous month. This excludes Canadians purchasing from foreign e-commerce retailers.
Advance estimates provided by Statistics Canada for June suggest that retail sales increased by 24.5%. This reflects the gradual reopening of the majority of provinces in the country with the exception of Ontario, which was still in the early stages of reopening in June. The magnitude and consistency of recovery in Canada's retail sector will continue to depend on consumers' willingness to venture out given that confirmed COVID-19 cases are back on the rise, including in BC. Also, on how quickly individuals can return to work, and for those unemployed, to find new employment.
Canadian Retail Sales (May) - July 21, 2020
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Bank of Canada Interest Rate Announcement - July 15, 2020
The Bank of Canada held its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. In addition, the Bank is continuing its quantitative easing program, committing to large-scale asset purchases of at least $5 billion per week of Government of Canada bonds along with continued purchases of provincial and corporate bonds. In the statement accompanying the decision, the Bank noted that the economic outlook remains extremely uncertain, but global economic activity is picking up. Financial conditions have improved, oil prices have rebounded, and pent-up demand in the Canadian economy has lead to a bounce in output and employment. The Bank expects that the Canadian economy will contract close to 8 per cent this year, but will build momentum into the second half of this year, leading to the economy growing 5.1 per cent in 2021. The Bank further noted that the economy will require extraordinary monetary policy support and the Bank will hold its policy rate at its effective lower bound until slack in the economy is absorbed and inflation has returned to its 2 per cent target.
Like the Bank, BCREA is projecting that the Canadian, and BC economy will start to recover in the third quarter. Positive signs of recovery are emerging in the housing market, with sales in BC recovering their pre-COVID-19 level in June. With the Bank committing to holding its policy rate at 25 basis points until slack in the economy is absorbed, and continuing its quantitative easing program of asset purchases, Canadian mortgage rates should remain at current historical lows for quite some time, providing a significant boost to the BC housing market.
Like the Bank, BCREA is projecting that the Canadian, and BC economy will start to recover in the third quarter. Positive signs of recovery are emerging in the housing market, with sales in BC recovering their pre-COVID-19 level in June. With the Bank committing to holding its policy rate at 25 basis points until slack in the economy is absorbed, and continuing its quantitative easing program of asset purchases, Canadian mortgage rates should remain at current historical lows for quite some time, providing a significant boost to the BC housing market.
BC Housing Markets Bounce Back in June
Vancouver, BC – July 14, 2020. The British Columbia Real Estate Association (BCREA) reports that a total of 8,166 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in June 2020, an increase of 16.9 per cent from June 2019. The average MLS® residential price in BC was $748,155, a 9.1 per cent increase from $685,968 recorded the previous year. Total sales dollar volume in June was $6.1 billion, a 27.5 per cent increase over 2019.
“Sales around the province surged back to pre-COVID-19 levels in June,” said BCREA Chief Economist Brendon Ogmundson. “While there are some temporary factors that may have pushed demand forward, we are cautiously optimistic that market activity will remain firm.”
Although listings activity has normalized along with sales, active listings are still down close to 20 per cent year-over-year and, as a result, many markets are seeing upward pressure on prices.
Year-to-date, BC residential sales dollar volume was up 0.6 per cent to $24.7 billion, compared with the same period in 2019. Residential unit sales were down 8 per cent to 32,875 units, while the average MLS® residential price was up 9.4 per cent to $751,722.
“Sales around the province surged back to pre-COVID-19 levels in June,” said BCREA Chief Economist Brendon Ogmundson. “While there are some temporary factors that may have pushed demand forward, we are cautiously optimistic that market activity will remain firm.”
Although listings activity has normalized along with sales, active listings are still down close to 20 per cent year-over-year and, as a result, many markets are seeing upward pressure on prices.
Year-to-date, BC residential sales dollar volume was up 0.6 per cent to $24.7 billion, compared with the same period in 2019. Residential unit sales were down 8 per cent to 32,875 units, while the average MLS® residential price was up 9.4 per cent to $751,722.
Canadian Monthly Real GDP (April) - June 30, 2020
Canadian real GDP decreased 11.6 per cent on a monthly basis in April, reflecting the first full month of measures put in place to halt the spread of COVID-19. April's decline follows a 7.5 per cent contraction in March. April's decline was the largest monthly decline in GDP since the series started to be recorded in 1961. The Canadian economy is now 18 per cent below its February, pre-COVID-19 level.
While the decline in April was unprecedented, there is some potential good news in this morning's GDP report. Statistics Canada indicates that its preliminary estimate for May shows real GDP rising 3 per cent, which could signal the start of an economic recovery. Signs of that recovery can already be seen in housing markets, with home sales rising sharply across many markets in May and June.
While the decline in April was unprecedented, there is some potential good news in this morning's GDP report. Statistics Canada indicates that its preliminary estimate for May shows real GDP rising 3 per cent, which could signal the start of an economic recovery. Signs of that recovery can already be seen in housing markets, with home sales rising sharply across many markets in May and June.
Canadian Retail Sales (April) - June 19, 2020
Seasonally-adjusted Canadian retail sales fell by a staggering 26% in April to $35 billion. The largest drop since the data became available in 1991. About one-third of retailers were closed in April, while in the clothing subsector it was 70%. Sales were down in all subsectors for the first time since 1993, led by auto dealers (-44%), gas stations (-32%), and food and beverage stores (-13%).
Sales were down in all provinces for the second consecutive month in April, leading the decline were Ontario (-33%) and Quebec (-28%). In BC, seasonally-adjusted retail sales were down by 21% at $5.6 billion, while Vancouver sales were down by 24%. All subsectors were hit hard with the largest monthly declines reported in clothing (-67%), sporting/hobby (-50%), furniture stores (-47%), and at gas stations (-35%). The only increase was at building material and garden equipment stores (4%).
The shutdown of physical stores caused many retailers to shift or expand their online presence. E-commerce sales were up by 120% in April year-over-year at $3.4 billion. On a non-seasonally adjusted basis, e-commerce in April went from accounting for 5% of total retail to almost 10%. This excludes Canadians purchasing from foreign e-commerce retailers.
Advance estimates provided by Statistics Canada for May indicates retail sales increased by 19%. This reflects the gradual reopening of some provinces and pent up demand. However, the magnitude and speed of what could possibly be the start of a retail recovery will depend on consumers' willingness to venture out, and on how quickly individuals can return to work/have their work hours increased.
Sales were down in all provinces for the second consecutive month in April, leading the decline were Ontario (-33%) and Quebec (-28%). In BC, seasonally-adjusted retail sales were down by 21% at $5.6 billion, while Vancouver sales were down by 24%. All subsectors were hit hard with the largest monthly declines reported in clothing (-67%), sporting/hobby (-50%), furniture stores (-47%), and at gas stations (-35%). The only increase was at building material and garden equipment stores (4%).
The shutdown of physical stores caused many retailers to shift or expand their online presence. E-commerce sales were up by 120% in April year-over-year at $3.4 billion. On a non-seasonally adjusted basis, e-commerce in April went from accounting for 5% of total retail to almost 10%. This excludes Canadians purchasing from foreign e-commerce retailers.
Advance estimates provided by Statistics Canada for May indicates retail sales increased by 19%. This reflects the gradual reopening of some provinces and pent up demand. However, the magnitude and speed of what could possibly be the start of a retail recovery will depend on consumers' willingness to venture out, and on how quickly individuals can return to work/have their work hours increased.
Canadian Inflation (May) - June 17, 2020
Canadian inflation, as measured by the Consumer Price Index (CPI) fell by 0.4 per cent in May year-over-year. This was the second consecutive month of decline in the CPI since the summer of 2009. Transportation prices were the main drag on inflation due to lower gas prices compared to the same time last year. Rents also declined for the second consecutive month, as physical distancing measures and high unemployment dampened demand, while the conversion of short-term rentals to long-term rentals increased supply. Mortgage interest costs also declined as banks lowered rates in tandem with falling bond yields and a lower Bank of Canada policy rate. In contrast, food prices continued to increase in May (3.1%) due to beef plant closures related to COVID-19 and higher import prices from a weaker Canadian dollar. Excluding gas prices, the CPI rose 0.7%, the smallest increase since January 2013. The Bank of Canada's three measures of trend inflation fell 0.1 percentage points, averaging 1.7 per cent in May.
Regionally, the CPI was negative in all provinces except for Alberta. In BC, CPI fell by 0.2 per cent in May year-over-year, following a flat showing in the previous month. Gas prices (-31%) were the main contributor to the year-over-year decline, while food prices (3.9%) saw the largest increase among the components.
The new Bank of Canada governor, Tiff Macklem, noted yesterday that the CPI uses a fixed-weight basket of goods, but spending patterns have drastically changed due to COVID-19. To adjust for this change, the Bank and Statistics Canada are developing a CPI measure that will better reflect present-day spending patterns, which will likely show stronger downward pressure on prices than what is currently being reported.
Regionally, the CPI was negative in all provinces except for Alberta. In BC, CPI fell by 0.2 per cent in May year-over-year, following a flat showing in the previous month. Gas prices (-31%) were the main contributor to the year-over-year decline, while food prices (3.9%) saw the largest increase among the components.
The new Bank of Canada governor, Tiff Macklem, noted yesterday that the CPI uses a fixed-weight basket of goods, but spending patterns have drastically changed due to COVID-19. To adjust for this change, the Bank and Statistics Canada are developing a CPI measure that will better reflect present-day spending patterns, which will likely show stronger downward pressure on prices than what is currently being reported.
Housing Market Activity Shows Signs of Recovery in May
Vancouver, BC – June 15, 2020. 
The British Columbia Real Estate Association (BCREA) reports that a total of 4,518 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May 2020, a decline of 45.2 per cent from May 2019. The average MLS® residential price in BC was $728,898, a 3.2 per cent increase from $706,394 recorded the previous year. Total sales dollar volume in May was $3.3 billion, a 43.5 per cent decrease over 2019.
“There were encouraging signs of recovery in May,” said BCREA Chief Economist Brendon Ogmundson. “While activity is still far below normal, both sales and listings are up significantly from April’s lows.”
New listings activity started to normalize around the first week of May, reversing a slide in total active listings. However, active listings are still down close to 24 per cent year-over-year and are more than 10,000 listings below where they would normally be in the spring months.
Year-to-date, BC residential sales dollar volume was down 6 per cent to $18.6 billion, compared with the same period in 2019. Residential unit sales were down 14.2 per cent to 24,695 units, while the average MLS® residential price was up 9.6 per cent to $753,155.
The British Columbia Real Estate Association (BCREA) reports that a total of 4,518 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May 2020, a decline of 45.2 per cent from May 2019. The average MLS® residential price in BC was $728,898, a 3.2 per cent increase from $706,394 recorded the previous year. Total sales dollar volume in May was $3.3 billion, a 43.5 per cent decrease over 2019. “There were encouraging signs of recovery in May,” said BCREA Chief Economist Brendon Ogmundson. “While activity is still far below normal, both sales and listings are up significantly from April’s lows.”
New listings activity started to normalize around the first week of May, reversing a slide in total active listings. However, active listings are still down close to 24 per cent year-over-year and are more than 10,000 listings below where they would normally be in the spring months.
Year-to-date, BC residential sales dollar volume was down 6 per cent to $18.6 billion, compared with the same period in 2019. Residential unit sales were down 14.2 per cent to 24,695 units, while the average MLS® residential price was up 9.6 per cent to $753,155.
BC Homes Sales to Post Strong Recovery in 2021
Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 21 per cent to approximately 61,000 units this year, after recording 77,347 residential sales in 2019. MLS® residential sales are forecast to increase 45.3 per cent to 88,500 units in 2021.
“The bright outlook for 2020 home sales has been upended by the COVID-19 pandemic and resulting recession,” said Brendon Ogmundson, BCREA Chief Economist. “However, as the economy “re-opens” and measures to mitigate the spread of COVID-19 are gradually eased, we expect home sales will start to rebound, aided by record-low mortgage rates and pent-up demand.”
The impact of the current pandemic and associated recession on prices is largely determined by the reaction of supply. Given the unusual nature of COVID-19, the supply of listings for sale has declined for at least the first few months of the pandemic. A muted rise in for-sale inventory may translate to home prices remaining relatively firm in 2020. We are forecasting the provincial MLS® average price to finish the year up 1.8 per cent and to increase a further 5.6 per cent in 2021.
Canadian Employment (May) - June 5, 2020
Canadian employment grew by 290,000 jobs in May (1.8%, m/m), representing about 10 per cent of the jobs lost since the pandemic was declared. The number of workers who had their hours reduced also decreased by almost 9 per cent. The national unemployment rate rose by 0.7 percentage points to 13.7 per cent from the previous month, as more individuals started looking for work in May. Three-quarters of the gains in May were in full-time work (219,000), while although the number of self-employed workers held steady, their hours worked continue to be reduced significantly.
Regionally, the distribution of gains was consistent with re-opening measures across the country, as Quebec represented almost 80 per cent of the gains with 230,900 jobs. With the exception of Ontario (-64.5k), all provinces reported employment gains. The goods-producing sub-sectors such as construction and manufacturing reported a stronger rebound in May than in the services-producing sector. This meant that men saw a faster increase in employment than women, as men account for a larger share of employment in goods-producing industries. Compared to the same month last year, Canadian employment was down by -13.5% (-2.6 million).
Meanwhile, employment in BC grew by 43,300 jobs (2%, m/m) in May. However, the provincial unemployment rate grew by 1.9 percentage points to 13.4, as more individuals started looking for work. Almost all of the employment increase was in the services-producing sector, led by accommodation and food services (12.4k), educational services (11.9k) and retail (11.8k). This is consistent with the province's first phase of reopening announced on May 6, which includes lifting the restrictions on non-essential services such as retail, restaurants, non-medical health services, and some schools. Compared to one year ago, employment in BC was down by 15.1% (-390k) jobs.
This was a good news report, as it appears we are on the path to a slow recovery. That being said, any continued employment gains will depend on consumers' demand for goods and services, which is expected to be hampered by the still 350,000 unemployed individuals in BC since February. Also, the rate of people returning to work will depend on their willingness to do so given ongoing health concerns.
Regionally, the distribution of gains was consistent with re-opening measures across the country, as Quebec represented almost 80 per cent of the gains with 230,900 jobs. With the exception of Ontario (-64.5k), all provinces reported employment gains. The goods-producing sub-sectors such as construction and manufacturing reported a stronger rebound in May than in the services-producing sector. This meant that men saw a faster increase in employment than women, as men account for a larger share of employment in goods-producing industries. Compared to the same month last year, Canadian employment was down by -13.5% (-2.6 million).
Meanwhile, employment in BC grew by 43,300 jobs (2%, m/m) in May. However, the provincial unemployment rate grew by 1.9 percentage points to 13.4, as more individuals started looking for work. Almost all of the employment increase was in the services-producing sector, led by accommodation and food services (12.4k), educational services (11.9k) and retail (11.8k). This is consistent with the province's first phase of reopening announced on May 6, which includes lifting the restrictions on non-essential services such as retail, restaurants, non-medical health services, and some schools. Compared to one year ago, employment in BC was down by 15.1% (-390k) jobs.
This was a good news report, as it appears we are on the path to a slow recovery. That being said, any continued employment gains will depend on consumers' demand for goods and services, which is expected to be hampered by the still 350,000 unemployed individuals in BC since February. Also, the rate of people returning to work will depend on their willingness to do so given ongoing health concerns.
Bank of Canada Interest Rate Announcement - June 3, 2020
The Bank of Canada held its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. In the statement accompanying the decision, the Bank noted that incoming data seems to signal that the impact of COVID-19 on the economy has peaked, though there remains significant uncertainty regarding the outlook. The Bank further commented that the Canadian economy appears to have avoided the most severe scenario the Bank had previously presented as a possible outcome of COVID-19, though it does expect a 10-20 per cent decline in the level of GDP in the second quarter. However, positive growth is expected to resume in the third quarter.
Like the Bank, BCREA is projecting that the Canadian, and BC economy will start to recover in the third quarter. Positive signs of recovery are emerging in the housing market, with sales and listings activity improving from April lows. Actions by the Bank of Canada have helped ease rising once risk premiums, leading to 5-year mortgage rates falling to near record lows. Those low rates, along with building pent-up demand should lead to a healthy recovery in home sales over the next 12 months.
Like the Bank, BCREA is projecting that the Canadian, and BC economy will start to recover in the third quarter. Positive signs of recovery are emerging in the housing market, with sales and listings activity improving from April lows. Actions by the Bank of Canada have helped ease rising once risk premiums, leading to 5-year mortgage rates falling to near record lows. Those low rates, along with building pent-up demand should lead to a healthy recovery in home sales over the next 12 months.
Commercial Activity Nosedives in 2020 Q1
The BCREA Commercial Leading Indicator (CLI) was down sharply in the first quarter of 2020 from 134.2 to 123.2, reflecting the slowdown prompted by the COVID-19 pandemic. Compared to the same time last year, the index was down by 4.8 per cent.
The pandemic-induced shutdown of the economy in the last two weeks of the first quarter of 2020 had a notable impact on the CLI, turning all components negative. On the economic activity component, manufacturing sales led the decline. On the employment component, a fall in key commercial real estate sector jobs was the primary driver. Meanwhile, the financial component had the largest negative impact on the CLI, as REIT prices tumbled and risk spreads widened in March. The underlying trend in the CLI was relatively flat in the previous six quarters, but has taken a sudden downward turn due to the pandemic. This suggests that going forward, the environment for commercial real estate activity in the province will be weak as the economy gradually re-opens, and temporarily unemployed individuals slowly return to work.
BC's economy was beginning to slow in the last quarter of 2019, but the rate of slowing was exacerbated by the pandemic in the first quarter of 2020. A fall in manufacturing sales of both durable and nondurable goods were the main drag on economic activity. Also contributing to the drag, but to a lesser extent, were lower wholesale trade sales in motor vehicles, and building material and supplies. Meanwhile, although growth in retail sales was positive in the first two months of 2020, it was not enough to offset the 10 per cent monthly decline in March, as retail stores across the province were shut down halfway through the month due to the pandemic.
Employment growth in key commercial real estate sectors such as finance, insurance, real estate and leasing was negative for the first time since the summer of 2018, down by about 13,500 jobs in the first quarter. Additionally, manufacturing employment fell by about 1,830 jobs from the previous quarter.
The CLI's financial component was negative in the first quarter of 2020 as growing fears of the potential impact of the pandemic resulted in a full market meltdown in late February, sending equity markets into free fall and government bond yields plummeting. However, private borrowing costs rose sharply due to elevated risk premiums, causing a tightening of credit conditions.
Canadian Real GDP Q1 2020 - May 29, 2020
The Canadian economy contracted 8.2 per cent at a quarterly annualized rate in the first quarter, including a 7.2 per cent decline in March following the paralysis of economic activity brought on by the COVID-19 pandemic. Household spending fell 2.3 per cent, the steepest drop ever recorded, while exports were down 3 per cent and government spending fell 1 per cent due to school closures and government curtailments. Total housing investment was down 0.1 per cent, with both renovation spending and ownership transfer costs falling. New home construction, however, rose 1.6 per cent.
As dramatic as the first quarter decline appears, it will almost certainly be overshadowed by the potential for a 30 per cent or more annualized decline in the second quarter, when the impact of COVID-19 on the economy is expected to be the most severe. Note that those are annualized estimates. The actual peak-to-trough decline in Canadian real GDP is estimated at 10-15 per cent before things begin to normalize and growth rebounds in the third and fourth quarter of this year.
As dramatic as the first quarter decline appears, it will almost certainly be overshadowed by the potential for a 30 per cent or more annualized decline in the second quarter, when the impact of COVID-19 on the economy is expected to be the most severe. Note that those are annualized estimates. The actual peak-to-trough decline in Canadian real GDP is estimated at 10-15 per cent before things begin to normalize and growth rebounds in the third and fourth quarter of this year.
Canadian Retail Sales (Mar) - May 22, 2020
Seasonally-adjusted Canadian retail sales fell by a whopping 10% in March to $47.1 billion. The largest drop since the data became available in 1991. About 40% of retailers closed their stores mid-month due to the pandemic, while in the clothing sub-sector 91% closed. Sales were down in 6 of 11 sub-sectors, representing 39% of retail sales. Leading the drop were clothing stores (-51%), auto dealers (-36%), and gas stations (-20%). In contrast, sales were up at grocery stores (23%), health and personal care stores (5%), and general merchandise stores (6%).
The shutdown of physical stores caused many retailers to shift or expand their online presence. E-commerce sales were up by 40% in March year-over-year at $2.2 billion, accounting for almost 5% of total retail sales. This excludes Canadians purchasing from foreign e-commerce retailers.
Sales were down in all provinces, leading the decline were Ontario (-9%), Quebec (-16%), and Alberta (-13%). In BC, seasonally-adjusted retail sales were down by 4.6% at $7 billion in March. Looking at the non-seasonally adjusted change shows a different picture. Retail sales in March were up by 5.3% from the previous month, notably at grocery stores (31%), building and garden material stores (26%), and at electronics and appliance stores (23%). Compared to the same time last year, BC retail sales were down by 3%.
Given that retailers were closed only starting mid-March, it is expected that the April decline will be higher. Advance estimates provided by Statistics Canada for April indicates retail sales declined by 15.6%. As some provinces begin to re-open, we can expect retail sales to gradually return, but the magnitude will largely depend on consumer demand, which has been cautious in other countries that have started to re-open. Moreover, unemployed individuals and individuals who have had their working hours reduced will likely not be making non-essential purchases in the near future.
The shutdown of physical stores caused many retailers to shift or expand their online presence. E-commerce sales were up by 40% in March year-over-year at $2.2 billion, accounting for almost 5% of total retail sales. This excludes Canadians purchasing from foreign e-commerce retailers.
Sales were down in all provinces, leading the decline were Ontario (-9%), Quebec (-16%), and Alberta (-13%). In BC, seasonally-adjusted retail sales were down by 4.6% at $7 billion in March. Looking at the non-seasonally adjusted change shows a different picture. Retail sales in March were up by 5.3% from the previous month, notably at grocery stores (31%), building and garden material stores (26%), and at electronics and appliance stores (23%). Compared to the same time last year, BC retail sales were down by 3%.
Given that retailers were closed only starting mid-March, it is expected that the April decline will be higher. Advance estimates provided by Statistics Canada for April indicates retail sales declined by 15.6%. As some provinces begin to re-open, we can expect retail sales to gradually return, but the magnitude will largely depend on consumer demand, which has been cautious in other countries that have started to re-open. Moreover, unemployed individuals and individuals who have had their working hours reduced will likely not be making non-essential purchases in the near future.
Housing Market Slows, but Resilient in Response to Pandemic
Vancouver, BC – May 13, 2020. 
The British Columbia Real Estate Association (BCREA) reports that a total of 3,284 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April 2020, a decline of 50.8 per cent from April 2019. The average MLS® residential price in BC was $737,834, a 7.8 per cent increase from $684,430 recorded the previous year. Total sales dollar volume in March was $2.4 billion, a 46.9 per cent decrease over 2019.
"We expected to see a sharp drop in sales for April as we confronted the COVID-19 pandemic,” said BCREA Chief Economist Brendon Ogmundson. “However, buyers and sellers are adapting to a new normal, and activity should pick up as the economy gradually re-opens.”
While home sales were down by more than half compared to this time last year, the supply of homes for sale, which normally rises through the spring, was down close to 10 per cent on a seasonally adjusted basis and down 23.7 per cent year-over-year. That slide in total active listings means that prices remained firm despite the sharp fall in sales.
Year-to-date, BC residential sales dollar volume was up 9.6 per cent to $15.3 billion, compared with the same period in 2019. Residential unit sales were down 1.7 per cent to 20,164 units, while the average MLS® residential price was up 11.6 per cent to $758,614.
The British Columbia Real Estate Association (BCREA) reports that a total of 3,284 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April 2020, a decline of 50.8 per cent from April 2019. The average MLS® residential price in BC was $737,834, a 7.8 per cent increase from $684,430 recorded the previous year. Total sales dollar volume in March was $2.4 billion, a 46.9 per cent decrease over 2019. "We expected to see a sharp drop in sales for April as we confronted the COVID-19 pandemic,” said BCREA Chief Economist Brendon Ogmundson. “However, buyers and sellers are adapting to a new normal, and activity should pick up as the economy gradually re-opens.”
While home sales were down by more than half compared to this time last year, the supply of homes for sale, which normally rises through the spring, was down close to 10 per cent on a seasonally adjusted basis and down 23.7 per cent year-over-year. That slide in total active listings means that prices remained firm despite the sharp fall in sales.
Year-to-date, BC residential sales dollar volume was up 9.6 per cent to $15.3 billion, compared with the same period in 2019. Residential unit sales were down 1.7 per cent to 20,164 units, while the average MLS® residential price was up 11.6 per cent to $758,614.
Canadian Monthly Real GDP (February) - April 30, 2020
After three months of growth, Canadian real GDP was essentially flat in February as disruptions to education services and the transportation and warehousing sector stalled the economy. Excluding those sectors, economic growth was 0.2 per cent with 13 of 20 sub-sectors recording increased output. Activity in the real estate sector rose 5.9 per cent in February, the largest increase since December 2017.
Statistics Canada has also made a flash estimate for March 2020 real GDP which it estimates declined a staggering 9 per cent on a monthly basis due to the COVID-19 pandemic and associated mitigation measures. If that estimate is accurate, first quarter real GDP will contract by close to 10 per cent on an annualized basis. As dramatic as the first quarter decline appears, it will almost certainly be quickly overshadowed by what most expect to be a 30 per cent or more annualized decline in the second quarter. Note that those are annualized estimates. The actual peak-to-trough decline in Canadian real GDP is estimated at 10-15 per cent before things begin to normalize and growth rebounds in the third and fourth quarter of this year.
Canadian Inflation (Mar) - April 22, 2020
Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 0.9 per cent in March year-over-year, down from a 2.2 per cent increase in February. This marked the largest decline in the CPI since the measure began in 1992. Energy prices were the main drag on inflation, excluding this category, national CPI rose by 1.7 per cent year-over-year. The downward pressure on gas prices began before the spread of COVID-19, but were exacerbated as global demand dropped (e.g., limitation on international travel), while supply continued to increase. The Bank of Canada's three measures of trend inflation fell 0.2 percentage points, averaging 1.8 per cent in March. Prices rose in six of the eight major components, led by shelter (+1.9%). In contrast, prices fell for transportation (-1.2%) and recreation, education and reading (-0.5%).
In B.C., CPI grew to 1.2 per cent year-over-year, following a 2.4 per cent increase in the previous month. The drag on price growth was primarily due to a fall in gas prices (-14.5%) and to a lesser extent, transportation (-3.2%). Meanwhile, price growth was reported in clothing (2.2%) and household furnishings (1.1%).
Statistics Canada notes that the March CPI was largely unaffected by COVID-19, as the majority of prices were collected prior to the implementation of domestic physical distancing measures. As such, we can expect to see steep drops in prices in next month's CPI report.
In B.C., CPI grew to 1.2 per cent year-over-year, following a 2.4 per cent increase in the previous month. The drag on price growth was primarily due to a fall in gas prices (-14.5%) and to a lesser extent, transportation (-3.2%). Meanwhile, price growth was reported in clothing (2.2%) and household furnishings (1.1%).
Statistics Canada notes that the March CPI was largely unaffected by COVID-19, as the majority of prices were collected prior to the implementation of domestic physical distancing measures. As such, we can expect to see steep drops in prices in next month's CPI report.
Canadian Retail Sales for February 2020
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BC employment figures
US Real GDP Growth (Q4'2016) - January 27, 2017
US real GDP growth registered a weaker than expected 1.9 per cent growth the final quarter of 2016, and 1.6 per cent growth for the year as a whole. Growth was pulled lower by a widening US trade deficit, while consumer demand and business investment were robust. Most economists expect US economic growth to accelerate to about 2.2 per cent in 2017.
The pace of economic growth in the United States could be a key determinant in the BC housing market this year. While faster US growth is generally positive for the BC economy, a stronger pace of growth along with a possibly significant shift in the fiscal outlook due to the large tax cuts and ramped-up spending plans of the Trump administration, is already translating to rising long-term interest rates as markets anticipate higher inflation and consequent monetary tightening by the US Federal Reserve. In turn, that uptrend in rates is putting pressure on Canadian mortgage rates, with many lenders increasing their best offered rates.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Canadian Retail Sales - January 20, 2017
Canadian retail sales inched 0.2 per cent higher in November. Sales were higher in just 5 of 11 sub-sectors, with motor vehicle and parts dealers and building materials supplies leading the way. E-commerce sales accounted for 3 per cent of total retail sales, the highest proportion to date in 2016. Given today's data, we are currently tracking fourth quarter Canadian real GDP growth at 1.5 per cent.
In BC, retail sales were down 0.7 per cent on a monthly basis, but were 5.5 per cent higher year-over-year. Year-to-date, retail sales in the province are up 6.5 per cent.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Canadian Manufacturing Sales - January 19, 2017
Canadian manufacturing sales rose 1.5 per cent in November after posting a moderate decline the previous month. Sales were higher in 14 of 21 manufacturing sub-sectors. After adjusting for inflation, the total volume of sales was 1.2 per cent higher.
In BC, where the manufacturing sector is a significant employer and a key driver of economic growth, sales were up 2.4 per cent on a monthly basis and 9.2 per cent year-over-year. The manufacturing sector has been on a significant upswing after a slow first half with sales posting nearly 8 per cent growth over the second half of the year. That growth is adding to already strong momentum in other sectors and supporting housing demand across BC communities where manufacturing, particularly of forestry products, is an important driver of local economic activity.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Bank of Canada Interest Rate Announcement - January 18, 2017
The Bank of Canada announced this morning that it is holding the target for its overnight rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that uncertainty in the global outlook, particularly with regard to policies in the United States, is undiminished. The Canadian economy is forecast to grow 2.1 per cent in both 2017 and 2018, implying the Canadian economy will return to full capacity in mid-2018. On inflation, the Bank noted that it continued to be lower than expected but should return to it 2 per cent target in coming months.
Political uncertainty in the United States will likely govern the direction of both policy rates and long-term bond yields over the next year. The interest rate on 5-year government of Canada bonds has risen to its highest point in a year, which is adding upward pressure to mortgage rates offered by Canadian lenders. While the Canadian economy is forecast to post steady growth in 2017, overall slack in the Canadian economy remains persistent. Without a significant uptick in economic growth, inflation will likely continue to trend at or below the Bank's 2 per cent target. That, along with lingering uncertainty, will keep the Bank sidelined through 2017 with a chance of lowering its target rate should current downside risks to the economy become realized.
Copyright British Columbia Real Estate Association. Reprinted with permission.
