Canadian seasonally-adjusted retail sales rose 0.7% to $58.1 billion in November. The rise was driven by sales at gasoline stations (+4.9%), building material and garden equipment and supplies dealers (+3.0%) and food and beverage stores (+1.0%). Core retail sales, which strips out gasoline and vehicle and parts sales, increased 0.5% in November. Part of this growth was due to price growth--retail sales rose 0.2% in volume terms. 

In BC, seasonally-adjusted sales rose 0.8% in November. Compared to the same month last year, retail sales were up 3.3% in the province. In the Greater Vancouver region, sales rose 0.7% month-over-month and were up 9.4% year-over-year. 

In November, Canadian e-commerce sales rose from $3.3 billion to $4.3 billion. As a result, e-commerce increased from 5.4% of total retail sales in October to 6.9% in November. This percentage remains elevated relative to pre-pandemic levels.
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Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.8% on a year-over-year basis in December, up from 4.7% in November. On a month-over-month basis, the CPI declined 0.1% in December, the first monthly decline since December 2020. The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 2.9% year-over-year in December. Higher prices for food (+5.2%), passenger vehicles (+7.2%) and homeowners' home and mortgage insurance (+9.3%) were major drivers of growth in the headline CPI. Supply-chain difficulties continued contributing to price gains, as well as the flooding and infrastructure damage in BC. In BC, consumer prices were essentially flat month-over-month, and up 3.9% on a year-over-year basis. 

Inflation continues to run ahead of the Bank of Canada's 2 per cent target. Although transportation costs appear to be trending down, food and shelter costs are on the rise. While the food prices may reflect temporary supply chain issues, a recovery in Canadian rents and rising mortgage costs mean the shelter component of CPI may continue to rise in 2022. As a result, we expect this elevated level of inflation to persist through 2022 before prices begin moderating. The Bank of Canada has signaled that it will begin raising its policy rate this year, and markets are now expecting those rate increases to happen much earlier than previously anticipated, perhaps as early as the Bank of Canada meeting next week.
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Vancouver, BC – January 12, 2022. The British Columbia Real Estate Association (BCREA) reports that a record 124,854 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2021, a 32.8 per cent increase from the 94,001 units sold in 2020. The annual average MLS® residential price in BC was $927,877, an 18.7 per cent increase from $781,572 recorded the previous year. Total sales dollar volume was $115.8 billion, a 57.7 per cent increase from 2020.

“Last year was a record year for BC homes sales with seven market areas setting new highs,” said BCREA Chief Economist Brendon Ogmundson. “Listings activity could not keep up with demand throughout the year. As a result, we start 2022 with the lowest level of active listings on record.” 

A total of 6,871 MLS® residential unit sales were recorded across the province in December down 17.6 per cent from a record-setting December 2020. The average MLS® residential price in BC passed the $1 million mark for the first time as the average price in three of the largest markets in the province were over $1 million in December. Total sales dollar volume was $7.1 billion, a 1.2 per cent increase year-over-year. 

Total active residential listings were down 41.2 per cent to a record low of 12,179 units. The supply situation is particularly concerning in the Fraser Valley, Chilliwack and Vancouver Island where there is one month or less of supply at the current pace of sales.
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Canadian employment grew for the seventh consecutive month in December according to Statistics Canada, rising by 55,000 to 19.371 million (0.3%, m/m). Canadian employment had recovered to its pre-pandemic level in September and is now roughly 1.3% above that level. Since the prior survey period, public health measures were largely unchanged. The survey occurred prior to the emergence of the Omicron variant and restrictions were very low across the country. 

December employment gains were most pronounced among males aged 25-54, Ontarians, and those within the construction and education sectors. Fulltime employment increased by 123,000 (+0.8%) in December, whereas employment among those working part-time declined by 68,000 (-1.9%). The Canadian unemployment rate declined for a seventh consecutive month to 5.9%, the lowest level since the onset of the pandemic. The unemployment rate is now within 0.2% of the rate in February of 2020 (5.7%). 

In BC, employment was essentially flat (+400, m/m), remaining at the highest level since the pandemic began. The unemployment rate, however, declined in December, reaching 5.3%, the lowest level since the pandemic began. Only Quebec and Manitoba currently have a lower unemployment rate in Canada.
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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. 

 

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. 


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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.


Copyright British Columbia Real Estate Association. Reprinted with permission.

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