Canadian retail sales fell 0.3 per cent to $67 billion in January. Excluding volatile items, sales were up 0.4 per cent month-over-month. In volume terms, retail sales rose 0.2 per cent in January. Retail e-commerce trade rose by 3.5 per cent to $3.8 billion in January, amounting to 5.7 per cent of total retail sales. 

Sales in BC fell 2.2 per cent in January. BC retail sales were down 2 per cent from the same time last year. In the CMA of Vancouver, retail sales were down 1.6 per cent from the prior month and were unchanged from January of 2022.

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 February, down from a 2.9% increase in January. Month-over-month, on a seasonally adjusted basis, CPI rose by 0.1 per cent in February. Excluding energy costs, CPI rose 2.9 per cent year-over-year in February, down from 3.2 per cent in January. Decelerating food costs also contributed to the slowing in the CPI, with prices of food purchased from stores rising by 2.4 per cent in February compared to 3.4 per cent in January. Shelter costs, however, continue to be a major driver of inflation, with mortgage interest costs up 26.3 per cent and rent up 8.2 per cent from the same time last year in February. Excluding shelter, consumer prices rose just 1.3 per cent, year over year. In BC, consumer prices rose 2.6 per cent year-over-year. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, fell to between 3.1 and 3.2 per cent per cent year-over-year in February. 

January's CPI report contained a second month unexpectedly good news. Canada's annual change in prices has now remained for two consecutive months within the Bank of Canada's 1 to 3 per cent target range. The last time this occurred was in early 2021. Despite a 4 per cent jump in gas prices, the CPI eased due to slowing price appreciation in other areas of the economy. Food price appreciation has been easing over the past 12 months and is now not far above historical norms, while other CPI components including cellular services have declined in price from last year. The category that remains the most challenging is shelter. Although the appreciation in mortgage costs looks to have peaked, rents in particular so far showing little sign of slowing. Overall, February was another encouraging report, and markets shifted their expectations of rate cuts forward slightly, with the odds of a cut in June increasing. However, the change in CPI will need to continue demonstrating a sustained trend towards 2 per cent over the spring before the Bank of Canada is comfortable cutting rates.

Copyright British Columbia Real Estate Association. Reprinted with permission.

The British Columbia Real Estate Association (BCREA) reports that a total of 5,497 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) systems in February 2024, an increase of 15.3 per cent from February 2023. The average MLS^® residential price in BC in February 2024 was up 4.7 per cent at $987,798 compared to an average price of $943,574 in February 2023. The total sales dollar volume was $5.4 billion, an increase of 20.7 per cent from the same time in the previous year.

"The BC housing market is in a period of relative calm entering the spring," said BCREA Chief Economist Brendon Ogmundson. "While activity is picking up, home sales remain below normal, and home prices have been essentially flat since last summer."

Active listings are up 20.3 per cent over last year as a result of slower sales but also a recovery in new listings in January and February following a very slow year for listings activity in 2023. Last year was the slowest pace of new listing activity since 2005.

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 $1,183,300. This represents a 1.9% increase from January 2024 and a 4.5% increase from February 2023.

Specifically:

- The benchmark price for detached homes increased  1.5% from Jan 2024 and increased 7.2% from Feb 2023.

- The benchmark price for townhouses increased 2.6% from Jan 2024 and increased 4.2% from Feb 2023.

- The benchmark price for apartment/condos increased 2.5% from Jan 2024 and increased 5.6% from Feb 2023.

*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 rose by 41,000, or 0.2 per cent, to 20.403 million in February. The unemployment rate rose 0.1 percentage points to 5.8 per cent. Average hourly wages rose 5 per cent year-over-year to $34.82 last month, while total hours worked were up 1.3 per cent from February of last year.

Employment in BC rose 0.2 per cent to 2.841 million, while employment in Metro Vancouver rose 0.2 per cent to 1.615 million in February. The unemployment rate fell 0.2 points in BC to 5.2 per cent while falling in Metro Vancouver by 0.5 points to 5 per cent last month.

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Canadian real GDP was largely unchanged in December, declining by 0.02 per cent, following two months of growth. Goods-producing sectors contracted by 0.2 per cent, while services were essentially unchanged. Construction activity fell 0.6 per cent in December, with residential building declining by 1.6 per cent. Offices of real estate agents and brokers rose 9 per cent, following five consecutive monthly declines amid soft home sales. Preliminary estimates suggest that output in the Canadian economy rose 0.4 per cent in January, helped by the conclusion of strikes in Quebec. 

Real GDP rose 0.2 per cent in the fourth quarter, close to 1 per cent on an annualized basis, erasing a 0.1 per cent decline in the third quarter. Improved net exports, driven by the strong US economy and Albertan crude oil, pushed GDP upwards. However, business investment declined for the sixth time over the most recent seven quarters. Household spending rose 0.2 per cent in the fourth quarter, driven by vehicle imports, but strong population growth meant that per capita consumption declined for the third consecutive quarter. At 6.2 per cent, the household savings rate was down slightly from the third quarter, but remains higher than pre-pandemic levels. Housing investment was down for the year, with residential construction down 10.2 per cent and ownership transfer costs down 7.7 per cent. At 1.2 per cent growth, 2023 was the slowest year for real GDP growth since 2016, excluding 2020. 

Economic growth in Canada was soft in 2023, and although it flirted with recession it has so far managed to avoid one. The central bank has raised rates by 475 basis points over two years and, as of the most recent data, managed to bring inflation down to 2.9 per cent without causing a major increase in unemployment or a contraction in GDP. The "soft landing" that seemed unlikely two years ago is now visible. However, while aggregate real GDP has not contracted, per capita GDP has contracted for six consecutive quarters as economic growth has failed to keep pace with rapid population growth. Per capita, real GDP is comparable to the level of 2017. Financial markets continue to expect that rate cuts will begin in the late spring and accumulate into the summer. The next rate announcement is on next Wednesday, March 6th.

Copyright British Columbia Real Estate Association. Reprinted with permission.