Canadian retail sales rose 0.4 per cent to $66.9 billion in September from the previous month. Compared to the same time last year, retail sales are up by 0.8 per cent. Furthermore, core retail sales, which exclude gasoline and automobile items, rose by 1.4 per cent month-over-month. In volume terms, adjusted for rising prices, retail sales rose 0.8 per cent in September. For the third quarter of 2024, retail sales rose by 0.9 per cent overall and by 1.3 per cent in volume terms. 

Retail sales in British Columbia were up 0.6 per cent in September month-over-month, while down 0.5 per cent compared to the same time last year. In the CMA of Vancouver, retail sales were up 1.2 per cent from the prior month and 0.3 per cent higher than September 2023.

September's retail sales built upon the positive momentum generated in August with respect to Canadian consumption. Growth in both headline and core retail sales—which exclude volatile items—suggests a broad-based recovery in consumer spending, which we expect to strengthen into the winter with the newly announced GST holiday. Moving toward their next meeting, the Bank of Canada will monitor whether GDP growth strengthens in line with September's retail growth, as well as whether employment and CPI inflation stabilize at neutral levels. Positive trends in these areas would propel the Bank back onto its regular trajectory of 25 basis point cuts until reaching their neutral range. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.0 per cent on a year-over-year basis in October, up from a 1.6 per cent increase in September. Month-over-month, on a seasonally adjusted basis, CPI increased by 0.3 points in October. Excluding gasoline, the CPI rose 2.2 per cent in October, matching the levels of August and September. Shelter price growth continues to cool, as mortgage interest costs were up 14.7 per cent, and rent was up 7.3 per cent from last October, both decreasing from September's numbers of 16.7 and 8.2 per cent, respectively. Overall, shelter costs rose 4.8 per cent year-over-year in October, down from 5.0 per cent in September. Finally, goods costs rose 0.1 per cent, while services costs rose 3.6 per cent year-over-year. In BC, consumer prices rose 2.4 per cent year-over-year, up from 2.0 per cent in September. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, increased to 2.5 and 2.6 per cent year-over-year, respectively. 
 
Canada's CPI report for October marks a return towards the midpoint of the Bank of Canada's inflation target range. With CPI ex-gasoline remaining steady, headline growth is likely a function of increased consumer spending across various industries. This is demonstrated through monthly growth in each of the special aggregate CPIs published by Statistics Canada for October. However, current inflation remains slightly below the Bank of Canada's projection. Looking ahead to December's policy meeting, the Bank of Canada faces a delicate balancing act. Given the uncertainty surrounding economic conditions for 2025, particularly around growth prospects, the chance of a second consecutive "jumbo cut" remains on the table. A lot will depend on the upcoming GDP data, with the Bank hoping for signs of stronger economic activity in alignment with their current forecast.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian employment rose by 0.1 percent from the previous month, growing by 15,000 jobs to 20.597 million in October. The employment rate fell by 0.1 points to 60.6 per cent, while the unemployment rate was unchanged at 6.5 per cent. Average hourly wages rose 4.9 per cent year-over-year to $35.76 last month, while total hours worked were up 1.6  per cent from October of the previous year.

Employment in B.C. fell by 0.3 per cent to 2.829 million with a gain of 8,000 jobs in October, marking the first month of provincial job gain since April 2024. Employment in Metro Vancouver rose 1.2 per cent to 1.606 million in October. The unemployment rate in B.C. fell by 0.2 points to 5.8 per cent in October. On a similar trend, Vancouver's unemployment rate fell by 0.5 points from last month to 6.2 per cent.

October's employment statistics, while modestly positive, reflect a slow and steady economic recovery as interest rates continue to fall. Both public and private sector job growth remained relatively unchanged. Only three of sixteen major Canadian industries had a statistically significant change in employment from the previous month, suggesting that firms may continue waiting for friendlier financing/investment conditions before expanding their workforces.  A steady unemployment rate amid weak but still positive hiring activity doesn't necessarily point to another jumbo cut by the Bank of Canada, though the Bank's outlook likely got a little more volatile given the results of the US election.  How the Bank interprets the potential ramifications of a new Trump administration on the Canadian economy, along with incoming data on October inflation, may push the Bank toward more aggressive rate cuts. Current odds in financial markets are slightly tilted toward a 50-basis point cut in December. 

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 $1,172,200. This represents a 1.9 per cent decrease over October 2023 and a 0.6 per cent decrease compared to September 2024.

Specifically:

- The benchmark price for detached homes increased 0.3% from Oct 2023 and decreased 1.0% from Sep 2024.

- The benchmark price for townhouses/attached decreased 1.6% from Oct 2023 and decreased 0.6% from Sep 2024.

- The benchmark price for apartment/condos decreased 0.3% from Oct 2023 and decreased 0.7% from Sep2024.

*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 essentially unchanged in August, following a 0.1 per cent increase in July. Service-producing industries grew by 0.1 per cent, while goods-producing industries fell by 0.4 per cent, reaching their lowest level since December 2021. Manufacturing was the largest detractor from growth for August, driven by both durable (-1.0 per cent) and non-durable goods (-1.4 per cent). The public sector saw its eighth consecutive month of growth (0.2 per cent), while utilities contracted by 1.9 per cent after three consecutive months of growth. Retail trade rose for the second month in a row by 0.6 per cent, while mining, quarrying, and oil and gas extraction (+0.6 per cent), and finance and insurance (+0.5 per cent) also contributed to growth. Rail lockouts resulted in a 7.7 per cent decline in rail transportation, causing a 0.3 per cent decline in the overall transportation and warehousing sector for August. Finally, GDP for real-estate offices and agents was up 0.7 points month-over-month. Preliminary estimates suggest that real GDP grew by 0.3 per cent in September, contributing to a 0.2 per cent estimate for GDP growth in the third quarter of 2024.

Despite exhibiting growth in 12 of 20 overall industries, the Canadian economy remained at virtually the same level of output compared to July. These findings further justify the Bank of Canada's decision to cut the overnight rate by 50 basis points earlier this month. However, a strong preliminary estimate for September suggests a potentially stronger economy in the final quarter of 2024 amidst the Bank's cutting cycle. Steady, positive monthly growth, accompanied by headline CPI settling around its 2% target range, would suggest a return to a more gradual pace of rate cuts by the Bank of Canada, though the door remains open to more aggressive moves if October inflation and jobs data show continued weakness.

Copyright British Columbia Real Estate Association. Reprinted with permission.