Canadian manufacturing sales rose for a second consecutive month, increasing 0.5 per cent in September.  Sales were up in 7 of 21 manufacturing sub-sectors, with the majority of growth arising due to higher sales in the energy sector.
 
In BC, manufacturing sales increased 0.4 per cent on a monthly basis and were up 7.2 per cent year-over-year. Although the manufacturing and trade sector faced significant headwinds in recent months due to a stronger Canadian dollar and punitive tariffs on softwood lumber, the sector continues to be a substantial driver of BC's robust economic growth in 2017. 

 

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Vancouver, BC – November 14, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 8,677 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in October, an increase of 19.3 per cent from the same period last year. Total sales dollar volume was $6.25 billion, up 41.6 per cent from October 2016. The average MLS® residential price in the province was $720,129, up 18.7 per cent from October 2016.

“BC home sales trended higher in October, up 23 per cent from January on a seasonally adjusted basis," said Cameron Muir, BCREA Chief Economist."A lack of supply in the resale market continues to put upward pressure on home prices in most BC regions."

Total active listings were down 5.1 per cent to 27,987 units in October compared to the same month last year, and have declined 49 per cent over the last five years. The ratio of home sales to active listings was up from 24.7 per cent in October 2016 to 31 per cent last month. The BC housing market is considered to be in relative balance when the ratio of home sales to active listings is between 12 and 20 per cent.

Year to date, BC residential sales dollar volume was down 9.4 per cent to $63.8 billion, when compared with the same period in 2016. Residential unit sales declined 10.7 per cent to 90,290 units, while the average MLS® residential price increased 1.4 per cent to $706,881.

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Canadian housing starts increased 2 per cent in September to 222,771 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts also increased to 216,770  units SAAR.

New home construction in BC jumped 44 per cent on a monthly basis to 53,751 units SAAR  and more than doubled on  a year-over-year basis.  Single detached starts were down 6 per cent from one year ago while multiple unit starts nearly tripled year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA reached a 12-month high in October, rising 92 per cent from September and 186 per cent compared to September 2016. A surge in multiple unit starts to 2,532 units in October accounted for the large increase in new home construction with large condominium projects getting underway in Burnaby, Coquitlam and Surrey.
  • In the Victoria CMA market, housing starts continue to record significant gains, rising 267 per cent year-over-year. Multiple unit starts continue to drive new home construction, with starts more than 5 times the levels seen in October 2016.
  • New home construction in the Kelowna CMA was down 16 per cent year-over-year and down 61 per cent from a strong September of new home construction.
  • Housing starts in the Abbotsford-Mission CMA also fell in October, with both single and multiple units starts down more than 30 per cent year-over-year.

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Canadian employment increased by 35,000 jobs in October while the the national unemployment rate increased 0.1 points to 6.3 per cent. In the twelve months to August, employment in Canada is up 1.7 per cent, or 308,000 jobs.

In BC, employment declined for a fourth consecutive month, falling by 6,100 jobs in October. Full-time employment continued to rise, with firms adding 11,000 full-time positions, but total employment was dragged lower by a 17,200 drop in part-time work.   Over the past twelve months, the level of employment in BC is up 2.7 per cent. The provincial unemployment rate held steady in October at 4.9 per cent.

 

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A slightly frightening Halloween release of Canadian GDP data showed that the Canadian economy edged down 0.1 per cent in August. Declines in the manufacturing, mining and oil and gas sectors offset increases in the other 12 of 20 industrial sub-sectors that posted positive growth. Given today's release,  growth in the Canadian economy is tracking at about 2 per cent for the third quarter.
     
Today's disappointing GDP data should be the final nail in the coffin for further Bank of Canada rate increases this year.  The economy is showing real signs of slowing with no inflation in sight. We expect the Bank will hold its key policy rate at 1 per cent until mid-2018.

 

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The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In the press release accompanying the decision, the Bank noted that inflation has edged up slightly and is expected to return to its target of 2 per cent in the second half of 2018 while economic growth is forecast to slow in the final six months of this year following a very strong first half.  The Bank emphasized that it will be cautious in making future adjustments to its policy rate as it assesses the sensitivity of the economy to higher interest rates.

There are several factors influencing the Bank's decision to move to the sidelines. Recent economic data points to a slowing of growth from the soaring heights of the first half of 2017. Moreover, inflation remains muted and newly announced tightening of mortgage regulations will have a significant impact on households, particularly in a rising mortgage rate environment. We expect that the Bank will take a wait and see approach over the next few months as the impact of its previous rate tightening takes hold.

 

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Canadian inflation, as measured by the Consumer Price Index (CPI), registered 1.6 per cent in the 12 months to September, up from 1.4 per cent in August.  The Bank of Canada's three measures of trend inflation were largely unchanged, averaging 1.6 per cent.   In BC, provincial consumer price inflation was 2.0 per cent in the 12 months to September. 

Canadian retail sales declined 0.3 per cent on a monthly basis in August but were 6.9 per cent higher year-over-year. Sales were down in 8 of 11 retail sub-sectors and excluding the impact of higher gas prices and rising motor vehicle sales, the retail sector was down 1.3 per cent. In BC, after five straight monthly increases, sales fell 1 per cent on a monthly basis, but were up more than 10 per cent compared to September last year.

Given that incoming economic data has been signalling a slowing of the economy and inflation is still essentially treading water below the Bank's 2 per cent target, not to mention the tightening of mortgage regulations by OSFI, we expect that the Bank of Canada will stay on the sidelines at its upcoming October 25th meeting.

 

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Canadian manufacturing sales rebounded 1.6 per cent in August following two consecutive months of falling output.  Sales were up in only 8 of 21 manufacturing sub-sectors, with the majority of growth arising due to higher sales in the transportation equipment and energy sectors.
 
In BC, manufacturing sales increased 0.8 per cent on a monthly basis and were up 5.2 per cent year-over-year. Strong gains continued in the wood products sector, along with very strong growth in machinery, and transportation equipment manufacturing. A growing manufacturing base has helped push employment higher across the province, supporting housing demand making strong contributions to BC's economy in 2017.

 

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Canadian housing starts decreased by 4 per cent in September to 217,118 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts also declined to 214,821 units SAAR.

New home construction in BC rose 6 per cent on a monthly basis to 37,470 units SAAR but was down 18 per cent on a year-over-year basis.  Single detached starts were flat compared to one year ago while multiple unit starts declined 24 per cent year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA fell 13 per cent from August and were down about half compared to September 2016. Multiple unit starts were down 58 per cent from one year ago as record levels of units under construction weigh on new projects.
  • In the Victoria CMA market, housing starts continue to surge, rising 127 per cent year-over-year. Multiple unit starts continue to drive new home construction, with starts more than triple levels seen last September.
  • New home construction in the Kelowna CMA jumped more than 200 per cent year-over-year as close to 350 new multiple unit starts were recorded.
  • Housing starts in the Abbotsford-Mission CMA also more than doubled year-over-year due to strong growth in both single and multiple starts.

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Growth in the Canadian economy was essentially flat in July following 8 consecutive months of growth.  Only 11 of 20 industrial sub-sectors posted positive growth with output in key industries like mining, oil and gas and manufacturing declining.   Given today's release, third quarter growth in the Canadian economy is tracking at about 2.5 per cent - a deceleration from the nearly 4 per cent growth in the first half of 2017. 

The Bank of Canada has been emphatic that future rate adjustments will be highly data dependent. Slower growth in the third quarter likely means the Bank will hold off on increasing rates at its October meeting. However, beyond that meeting, as long as the Canadian economy is growing well above trend, which the Bank sees as a signal of rising future inflation, we expect further rate increases to come either by the end of this year or in early 2018.

 

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Canadian inflation, as measured by the Consumer Price Index (CPI), registered 1.4 per cent in the 12 months to August. That is a slight uptick from 1.2 per cent in July.   The Bank of Canada's three measures of trend inflation were also up slightly, averaging 1.5 per cent.   In BC, provincial consumer price inflation was 2.0 per cent in the 12 months to August. 

Canadian retail sales increased 0.4 per cent on a monthly basis in July and were 7.8 per cent higher year-over-year. Sales were higher in 6 of 11 retail sub-sectors with the main contribution coming from motor vehicle dealers and food and beverage stores. In BC, vigorous consumer spending continues to set the pace for the BC economy. Retail sales in the province climbed 0.7 per cent on a monthly basis and were up 12.3 per cent year-over-year.
 
Despite rapid economic growth in Canada, there is still very little sign of inflation. With inflation reading well below the Bank of Canada's 2 per cent target once again in August, the case for a further rate increase in October is lessened though not completely closed.

 

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Canadian manufacturing sales declined for a second consecutive month, falling 2.6 per cent in July. The dip in sales was largely due the motor vehicle and parts sector while sales were up in 12 of 21 manufacturing sub-sectors.
 
In BC, manufacturing sales decreased 1.6 per cent on a monthly basis but were up 7 per cent year-over-year. Year-to-date, BC manufacturing sales are up close to 8 per cent over 2016, led by strong contributions from a diverse range of industries from wood and paper products to food manufacturing to machinery and equipment. A strong trade and manufacturing sector is helping to propel employment and economic growth around the province, which further supports robust housing demand in BC.

 

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Vancouver, BC – September 14, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 9,162 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in August, an increase of 2.4 per cent from the same period last year. Total sales dollar volume was $6.2 billion, up 22 per cent from August 2016. The average MLS® residential price in the province was $678,186, a 19.1 per cent increase from August 2016.

“BC home sales in August remained unchanged from July, on a seasonally adjusted basis," said Cameron Muir, BCREA Chief Economist. "Strong economic conditions are underpinning demand. However, rising home prices combined with upward pressure on mortgage interest rates is expected to temper demand over the balance of the year."

Year-to-date, BC residential sales dollar volume was down 15.9 per cent to $51.8 billion, when compared with the same period in 2016. Residential unit sales declined 15.0 per cent to 73,267 units, while the average MLS® residential price was down 1.1 per cent to $706,839.

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Canadian housing starts increased 1 per cent in August to 223,232 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts was also higher at 219,447 units SAAR.

New home construction in BC fell 21 per cent on a monthly basis to a still robust 35,773 units SAAR but were up 4 per cent on a year-over-year basis.  Single detached starts fell 7 per cent month-over-month and were 3 per cent lower year-over-year. Multiple unit starts declined 26 per cent on a monthly basis but were up 7 per cent year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA fell 13 per cent year-over-year in August. Both single and multiple unit starts declined, falling by 2 and 16 per cent respectively on a year-over-year basis.
  • In the Victoria CMA market, housing starts followed up a surge in new units in July with a further 22 per cent year-over-year increase in August. Multiple unit starts were once again the main source of growth, rising 46 per cent year-over-year.
  • New home construction in the Kelowna CMA more than doubled compared to August 2016 due to a number of multiple unit projects breaking ground. Many of those units are new rental units, which year to date have totaled 1,366 starts. That is the highest 8 month total for construction of rental units in Kelowna's history.
     
  • Housing starts in the Abbotsford-Mission CMA continued a torrid pace of growth in August, rising 93 per cent year-over-year, boosted by strong growth in both single and multiple unit starts.

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Canadian employment increased by 22,000 jobs in August while the the national unemployment rate declined 0.1 points to 6.2 per cent, the lowest rate since October 2008. In the twelve months to August, employment in Canada is up 2.1 per cent, or 378,000 jobs.
 
In BC, employment declined for a second straight month, falling by 8,400 jobs.  In spite of those losses, the provincial unemployment rate moved 0.2 points lower to 5.1 per cent as the number of people looking for work also fell.  Over the past twelve months, the level of employment in BC is up 3.9 per cent.

 

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The total value of Canadian building permits fell 3.5 per cent on a monthly basis in July, the first decrease since March 2017.  The decrease was largely the result of lower construction intentions in Ontario, though several provinces saw declines. 

The total value of permits issued in BC increased 4.6 per cent on a monthly basis and were up 35.4 per cent year-over-year, exceeding $1.3 billion for a second consecutive month. Residential permits rose 7.8 per cent on a monthly basis and were 52.6 per cent higher year-over year. That growth was led by a record $771.8 million in permits for multi-family dwellings. Non-residential permits declined 6.1 per cent on a monthly basis and were 5.6 per cent lower year-over-year.

Construction intentions were higher in three of BC's four census metropolitan areas (CMA):

  • Permits in the Abbotsford-Mission CMA  fell 17.4 per cent on a monthly basis to just over $30 million. Year-over-year, permit values were more than double the value of July 2016.
  • In the Victoria CMA, total construction intentions totaled $138.9 million, an 8.2 per cent monthly increase and a 48 per cent increase in permit values from one year ago.
  • In the Kelowna CMA, permits were 1.8 per cent higher a monthly basis and close to 5 per cent higher compared to July 2016 at $71 million.
  • In the Vancouver CMA, a record value of multi-family dwelling permits pushed the total value of all permit activity to $858.6 million, an increase of 8.2 per cent on a monthly basis and a 48 per cent increase year-over-year.

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The Bank of Canada announced this morning that it is raising its target for the overnight rate by 25 basis points to 1 per cent. In the press release accompanying the decision, the Bank noted that recent economic data have been stronger than expected but growth is forecast to moderate in the second half of the year.  On inflation, the Bank cited some excess capacity and temporary price shocks as factors keeping inflation below its 2 per cent target. Importantly, the Bank mentioned it will be paying particular attention to the evolution of the economy's potential growth rate (meaning the economy's estimated long-run growth rate) as well as to labour market conditions and the economy's sensitivity to higher interest rates.

The Bank has now removed the stimulus it injected into the Canadian economy in 2015 to offset the impact of falling oil prices. With the economy expanding at a 3.5 per cent rate over the past year, that stimulus is clearly no longer required. The Bank seems to be more concerned about the potential for higher future inflation due to an over-heated economy than on the actual very low inflation observed in recent months. That leaves the door open for further rate increases should economic growth remain robust. 

 

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The Canadian economy posted a second consecutive quarter of stellar economic growth, with real GDP expanding by  an annualized 4.5 per cent in the second quarter of 2017.  That is the strongest rate of economic growth since the third quarter of 2011.  Quarterly real GDP growth has averaged a remarkable 3.7 per cent over the past four quarters.  Growth  in the second quarter was was led by strong household consumption, which grew 4.6 per cent, as well as a nearly 10 per cent rise in exports and and and a 7 per cent increase in non-residential business investment.

Today's strong economic data solidifies the Bank of Canada's case for raising interest rates at least one more time this year, likely at its meeting in October rather than at its September meeting next week. While the Bank's primary motivation for increasing rates seems to be withdrawing the stimulus introduced following the 2015 oil shock,  growth in the Canadian economy has been well above the Bank of Canada's estimate for long-run or potential economic growth for the past year which means existing slack in the economy is being eliminated quickly. That should, in turn, lead to inflation rising at or above the Bank's 2 per cent target in coming months. Interest rate increases by the Bank beyond the this year will depend crucially on how the outlook for inflation develops.

 

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Vancouver, BC – August 31, 2017. The British Columbia Real Estate Association (BCREA) released its 2017 Third Quarter Housing Forecast update today.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 10 per cent to 100,900 units this year, after reaching a record 112,209 units in 2016. Strong economic fundamentals are underpinning consumer demand and are expected to keep home sales at elevated levels through 2018. The ten-year average for MLS® residential sales in the province is 84,700 units. “British Columbia’s postion as the best performing economy in the country is bolstering consumer confidence and housing demand,” said Cameron Muir, BCREA Chief Economist. “Strong employment growth, a marked increase in migrants from other provinces, and the ageing of the millennial generation is supporting a heightened level of housing transactions. However, a limited supply of homes for sale is causing home prices to rise significantly in many regions, particularly in the Lower Mainland condominium market”.

Continue reading here: http://www.bcrea.bc.ca/docs/news-2017/2017-08-31forecast.pdf?sfvrsn=2

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Mt Baldy is back! The hill had great success operating in 2016-2017 and is now better than ever. 1994 chalet on 3 levels. Main floor living with open great room combining living room, dining area and kitchen. Cozy fireplace, plus a bedroom, bathroom and laundry all on this level. Up has two large bedrooms and full bathroom. Bunk beds ready to accommodate large families. Lower level walk out features entrance foyer/mud room, games room with fireplace, storage and utility area - flex rooms could be bedrooms too. Mount Baldy is only 20 minutes from Oliver, and a great alternative to city living! Whether you are here for winter fun or year round living, this is a great package! Please call Geoff Cowling 250.490.7272 or TF at 1.800. 734.0457  or visit GeoffCowling.com

 

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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. 

 

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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. 


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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. 


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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.


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