Canadian real GDP was nearly unchanged for the third consecutive month in October. Manufacturing contracted 0.6 per cent in October, led by declines in durable goods. Construction activity fell by 0.1 per cent, but residential construction continued to grow strongly, rising by 1.2 per cent from the prior month. Offices of real estate agents and brokers fell for the fourth consecutive month, dropping 6.8 per cent as home resales continues to soften amid elevated borrowing costs. Preliminary estimates suggest that output in the Canadian economy rose 0.1 per cent in November.

In October, Canadian inflation-adjusted GDP extended its streak of almost exactly zero growth or contraction in economic activity. Canadian real GDP is little changed from where it was in March, despite a large increase in the national population due to immigration. The economy continues to avoid a technical recession, but with per capita real GDP declining, Canadian GDP growth remains very soft. In addition, labour markets are gradually softening across Canada, and the inflation rate has shown signs of cooling, with 3-month moving averages of core inflation well below 3 per cent. Given this data, markets now broadly anticipate that the Bank of Canada will not raise its benchmark rate further. The question is, instead, how quickly the Bank will cut rates in 2024, with the balance of probabilities on cuts beginning in the spring and accumulating by the summer and towards the end of the year. The next rate announcement is on next Wednesday, January 24th. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian retail sales increased 0.7 per cent in October to $66.9 billion. Excluding volatile items, sales were up 1.2 per cent month-over-month. In volume terms, retail sales increased 1.4 per cent in October. Retail e-commerce trade rose by 1.8 per cent to $3.9 billion in October, amounting to 5.9 per cent of total retail sales. 

Sales in BC rose 0.5 per cent in October. BC retail sales are up 0.7 per cent from the same time last year. In the CMA of Vancouver, retail sales were up 0.7 per cent from last month and 2.3 per cent from October of 2022.

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 3.1 per cent on a year-over-year basis in November, unchanged from the rate in October. Excluding energy costs, CPI rose 3.8 per cent year-over-year in November. Shelter costs continue to be a major driver of inflation, with mortgage interest costs up 29.8 per cent and rent up 7.4 per cent. Grocery price inflation continued to moderate, but nevertheless increased 4.7 per cent year-over-year last month. Month over month, seasonally adjusted CPI rose 0.25 per cent. In BC, consumer prices rose 3.2 per cent year-over-year. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, remained around 3.5 per cent year-over-year in November. 

After considerable progress in taming inflation, the rate of change in the CPI has stubbornly remained close to the 3-4 per cent range since the late spring. Alongside softening labour markets and weak GDP growth, inflation in this territory has been sufficient to keep the Bank of Canada from raising rates since the summer. Although softer gasoline prices have done some of the work to pull down the inflation rate, large increases in mortgage interest costs, which are a direct consequence of Bank tightening, have pulled inflation upwards. Indeed, inflation excluding mortgage interest costs was unchanged from last month at just 2.2 per cent. Taken together, markets expect that the Bank of Canada is unlikely to raise rates further. Rather, markets expect the Bank to cut rates substantially by the summer of 2024, but this will of course depend on the rate of economic growth and price appreciation in the first half of the year.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian housing starts fell sharply by 22 per cent to 212,624 units in November at a seasonally adjusted annual rate (SAAR). Starts were down 19 per cent from the same month last year. Single-detached housing starts fell 6 per cent from last month to 56,268 units, while multi-family and others fell 26 per cent to 156,356 units (SAAR). 

In British Columbia, starts dropped 35 per cent from last month to 39,051 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 7 per cent to 5,181 units while multi-family starts dived by 40 per cent to 31,288 units. Starts in the province were 19 per cent below the levels from November 2022. Starts fell from last month by 13.6k units in Vancouver, 3.2k in Victoria, and 4.4k in Kelowna while rising by 2.1k in Abbotsford. The 6-month moving average trend in BC fell by 0.6 per cent to 50,543 SAAR.

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 $1,185,100. This represents a 1.0% decrease from October 2023 and a 4.9% increase from November 2022.

Specifically:

- The benchmark price for detached homes decreased 0.9% from Oct 2023 and increased 6.8% from Nov 2022.

- The benchmark price for townhouses decreased 0.7% from Oct 2023 and increased 6.9% from Nov 2022.

- The benchmark price for apartment/condos decreased 1.0% from Oct 2023 and increased 6.2% from Nov 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 employment ticked up by 24,900 (0.1 per cent) in November. The Canadian unemployment rate also rose to 5.8 per cent, following an increase to 5.7 per cent last month. Average hourly wages rose 4.8 per cent year-over-year to $34.28 in November, while total hours worked were up 1.3 per cent from November of last year.

Employment in BC rose 0.3 per cent to 2.82 million, while employment in Metro Vancouver fell 0.1 per cent to 1.61 million. The unemployment rate fell 0.1 points in BC to 5.3 per cent while remaining unchanged in Metro Vancouver at 5.8 per cent.

Copyright British Columbia Real Estate Association. Reprinted with permission.