Geoff Cowling

Canadian inflation, as measured by the Consumer Price Index (CPI), registered just 1.3 per cent in the 12 months to May. That is down from 1.6 per cent in April.   The Bank of Canada's new core measure of inflation, called CPI-common,  was also up 1.3 per cent for the fourth consecutive month.   In BC, provincial consumer price inflation was 1.9 per cent in the 12 months to May.

Given the Bank of Canada's recent hawkish turn on monetary policy, the trend in inflation will be even more important in coming months. So far, there is little in the inflation numbers to justify an interest rate increase, though the very strong economic growth over the past year could put some upward pressure on prices soon.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian manufacturing sales increased 1.1 per cent in April, with the largest contribution coming from higher sales in the petroleum, coal and metals sectors. Overall, sales were higher in 13 of 21 manufacturing sub-sectors, reflecting broad-based strength in the Canadian economy. 
 
In BC,  manufacturing sales increased 1.2 per cent on a monthly basis and were up 8.8 per cent year-over-year.  The manufacturing and export sector continues to be a significant driver of economic growth for the province this year. Through the first five months of the year, we are tracking growth in the BC economy at 3.8 per cent.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The US Federal Reserve's Open Market Committee (the Fed) raised its target overnight rate this morning, the third such increase  in the past six months. This morning's increase brings its the federal funds rate into a range of 1 to 1.25 per cent. The Fed's statement accompanying the decision noted a continuation of a strong US labour market conditions despite a recent slowing of job growth. Household spending has picked up and the Fed expects the economy to expand at a moderate pace. While inflation remains below the Fed's 2 per cent target, it is expected to stabilize at 2 per cent over the medium term.

The Fed once again stated that it expects the US economy to evolve in a way that necessitates further but gradual increases to its overnight rate, which means there will likely be at least one more rate increase this year.  A tightening cycle in the United States, combined with a shift in bias toward tightening at the Bank of Canada could put some upward pressure on Canadian interest rates in coming months, reversing the downtrend observed recently.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Vancouver, BC – June 13, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 12,402 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May, down 7.9 per cent from the same period last year. Total sales dollar volume was $9.33 billion, down 4.0 per cent from May 2017. The average MLS® residential price in the province was $752,536, a 4.2 per cent increase from the same period last year.

“Market conditions have tightened considerably this spring as an upturn in consumer demand has not been accompanied by a rise in homes listed for sale," said Cameron Muir, BCREA Chief Economist. "The supply of homes for sale in the province has fallen 50 per cent over the past five years."

"The entire southern portion of the province is experiencing a shortage of housing supply, which makes continuing upward pressure on home prices inevitable, at least in the near term," added Muir. Total active listings in the province were down 11.1 per cent to 28,404 units from May 2016. The ratio of home sales to active listings was well over 20 per cent in nine of the province's 11 real estate boards, and over 50 per cent in Vancouver, the Fraser Valley, Chilliwack and Victoria.

Year-to-date, BC residential sales dollar volume was down 25.2 per cent to $30.6 billion, when compared with the same period in 2016. Residential unit sales declined 20.1 per cent to 43,158 units, while the average MLS® residential price was down 5.7 per cent to $709,541.

Canada added 54,000 jobs in May following flat employment gains in April.  However,  the national unemployment rate edged up 0.1 points to 6.6 per cent as the number of people joining the workforce in search of a job outpaced hiring. 

The BC economy continues to add jobs at a torrid pace. The province added 12,300 new jobs in May, a more than 4 per cent increase over the past 12 months. The provincial unemployment rate inched up 0.1 points to 5.6 per cent as the strong BC economy draws job searchers into the provincial workforce.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The total value of Canadian building permits declined 0.2 per cent to 7.1billion in April, the third consecutive monthly decline. Lower construction intentions for single-family homes, primarily in the Toronto CMA, was a main contributor to April's decline.

Permit activity bounced back in BC following a large decline in March, led by strong construction intentions for multi-family dwellings.  The total value of permits increased 22.9 per cent on a monthly basis and were essentially flat year-over-year. Residential permits rose 19 per cent on both a monthly basis but were 7.4 per cent lower year-over year while non-residential permits were up 34 per cent on a monthly basis and 24 per cent year-over-year.

Construction intentions were higher in three of BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA  more than tripled on a monthly basis while the Victoria CMA saw permit values increase 25 per cent on a monthly basis and 28 per cent year-over-year. In the Kelowna CMA, permits were 8.9 per cent lower on a monthly basis but were 50 per cent higher than permit values in April 2016. In the Vancouver CMA, permit activity bounce back from a decline in April, posting a 25 per cent monthly increase but were 18 per cent lower compared to April 2016.

Copyright British Columbia Real Estate Association. Reprinted with permission.