Canadian real GDP rose 0.3 per cent from the prior month in May, following a 0.1 per cent increase in April. Goods-producing sectors of the economy declined 0.3 per cent while services-producing sectors rose 0.5 per cent. Effected by forest fires, Canada's energy sector declined 2.1 per cent in May. Construction activity contracted 0.8 per cent, driven primarily by lower residential building construction. Offices of real estate agents and brokers rose 7.6 per cent, led by higher home reselling activity in Canada's major cities. Canadian real GDP is now roughly 4 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy declined 0.2 percent in June.

The headline GDP figure was solid in May as the ending of the federal worker's strike boosted growth, despite rising interest rates and wildfires dragging on the economy. While growth in May came in at 0.3 per cent, the preliminary estimate of a slowdown in June suggests an easing of growth in the second quarter of 2023, estimated at 1 per cent on an annualized basis. So far in 2023, the Canadian economy has managed to avoid a significant slowdown or recession, but a further slowing of GDP and labour markets is widely expected in the second half of the year. The softening in GDP and inflation in recent months may provide support for a slowing or pause in rate hikes going forward, but the Bank will be watching closely to ensure inflation continues easing into the fall. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian retail sales increased 0.2 per cent in May to $66 billion, led by sales of motor vehicles and parts as well as food and beverage. However, excluding volatile items like car sales, retail sales were essentially unchanged month-over-month. In BC, retail sales jumped 2.7 per cent, rising for a third consecutive month and were up 1.9 per compared to 1-year ago. 

Although BC retail spending has ticked higher in recent months, overall Canadian retail sales were up just 0.5 per cent compared to this time last year and preliminary estimates for June show flat sales. This could signal that consumer spending is finally slowing down following a year of aggressive tightening by the Bank of Canada. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.8 per cent on a year-over-year basis in June, down from 3.4 per cent in May. While declines occurred in several categories, the largest contribution was from lower gasoline prices compared to the same month last year (-21.6 per cent). Ignoring gasoline, year-over-year inflation would have been 4 per cent in June. Shelter costs were up 4.8 per cent year over year, driven by much higher mortgage interest costs (up 30.1 per cent from last year) along with higher rents (up 5.8 per cent from June 2022). The homeowner's replacement cost, which tracks home prices, was down 0.7 per cent year over year. Grocery prices were up 9.1 per cent year over year. Month over month, CPI rose 0.1 per cent. In BC, consumer prices rose 3.5 per cent year-over-year.

The CPI continued to cool in June, with year-over-year prices rising at the slowest rate since March 2021, and now within the Bank of Canada's target of 1 to 3 per cent. Much lower gasoline prices compared to the same time last year are doing much of this work, but recovering supply chains also contributed, with furniture and household appliances both on average cheaper than the same time last year. The Bank of Canada's measures of core inflation, which strip out volatile components, are trending downwards and are now mostly below 4 per cent year-over-year. CPI is being pulled down by energy costs, household operations and furnishings, and clothing costs. In the other direction, food, shelter, and mortgage costs are dragging the CPI upwards. Taken together, that this month's headline inflation figure is within the Bank's 1 to 3 per cent target is excellent news and provides support for the Bank to ease off rate tightening going forward. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

The British Columbia Real Estate Association (BCREA) reports that a total of 8,740 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) systems in June 2023, an increase of 21.9 per cent from June 2022. The average MLS^® residential price in BC was $991,648, up 4.7 per cent compared to June 2022. The total sales dollar volume was $8.7 billion, representing a 27.6 per cent increase from the same time last year.

“June home sales continued to outperform expectations, following a very strong rebound in May,” said BCREA Chief Economist Brendon Ogmundson. “However, rising interest rates will likely dampen home sales activity in coming months.”

Active listings in the province were above 30,000 units for the first time since September 2022, but were still down 1.2 per cent compared to this time last year, and essentially flat month-over-month on a seasonally adjusted basis.
 
Year-to-date BC residential sales dollar volume was down 26.1 per cent to $39.4 billion, compared with the same period in 2022. Residential unit sales were down 21.1 per cent to 40,381 units, while the average MLS^® residential price was down 6.4 per cent to $976,885.

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Canadian employment rose by 0.3 per cent to 20.17 million in June. The Canadian unemployment rate rose to 5.4 per cent after rising to 5.2 per cent in May. Total hours worked were up 2 per cent year over year, while average hourly wages were up 4.2 per cent from June of last year.

Employment in BC was little changed in June, falling 0.1 per cent to 2.778 million, while falling by 0.3 per cent in Metro Vancouver to 1.570 million. The unemployment rate jumped to 5.6 per cent in BC, up from 5 per cent in May, while rising to 5.7 per cent in Metro Vancouver.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,203,000. This represents a 1.3% increase from May 2023 and a 2.4% decrease from June 2022.

Specifically:

- The benchmark price for detached homes increased 1.9% from May 2023 and decreased 3.2% from June 2022.

- The benchmark price for townhouses increased 1.5% from May 2023 and decreased 1.0% from June 2022.

- The benchmark price for apartment/condos increased 0.8% from May 2023 and increased 0.5% from June 2022.

*Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

Canadian real GDP was flat from the prior month in April, following a 0.1 per cent increase in March. Goods-producing sectors of the economy grew 0.1 per cent while services-producing sectors were flat. Construction activity rose 0.4 per cent as lower residential construction activity was offset by other subsectors, including engineering construction (+1.1 per cent). The real estate and rental leasing sector expanded 0.5 per cent in April as home sales rebounded. Canadian real GDP is now roughly 3.7 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy expanded 0.4 percent in May.

April's GDP read extends a trend of weak but positive growth since February. The strike of federal workers caused public sector GDP to decline 0.3 per cent in April and contributed to a solid rebound in May, estimated preliminarily at 0.4 per cent. Despite low growth, the economy remains relatively resilient given the headwinds of rising interest rates. Furthermore, given the widespread expectation of an imminent recession for at least the prior two quarters, that growth has been positive in all months of 2023 so far is an unexpectedly cheerful development. But monetary policy works with a long lag, and further slowing of GDP and labour markets are widely expected in the second half of the year. The Bank of Canada's goal is to guide inflation back down to 2 per cent without causing a prolonged contraction in GDP. So far, they have had considerable success, but the Bank will be watching closely to maintain this balance into the fall.

Copyright British Columbia Real Estate Association. Reprinted with permission.