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Canadian real GDP jumped 0.5 per cent in January, falling a 0.1 per cent contraction in December. The rise in GDP was spread across both goods-producing industries (+0.4 per cent) and services-producing industries (+0.6 per cent). Growth was led by a rebound in oil sands extraction after unplanned maintenance in December, coal exports to China, durable goods manufacturing, and construction activity. Canadian real GDP is now roughly 3.2 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy rose 0.3 per cent in February.

The large jump in GDP in January bucked expectations of continued slowing as tighter monetary policy worked its way through the Canadian economy. Growth was softer than expected in the fourth quarter of 2022, supporting the Bank of Canada's 'conditional pause' on further rate hikes. In contrast, this month's strong number would normally bias the Bank of Canada toward additional monetary tightening, but progress on bringing down inflation, alongside the lingering uncertainty stemming from bank failures in the United States, will likely keep the Bank on hold. With employment markets remaining tight but inflation appearing to soften, the Bank will be weighing the evidence before its next rate announcement on April 12th.


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Canadian seasonally-adjusted retail sales rose 1.4 per cent in January to $66.4 billion. Sales rose in 7 of 9 subsectors, but were led by higher sales at motor vehicle and parts dealers (+3 per cent) and gasoline and fuel vendors (+2.9 per cent). Core retail sales, which strips out gasoline and motor vehicle and parts dealers, rose 0.5 per cent. In volume terms, sales rose 1.5 per cent in January. As of January 2023, Statistics Canada broadened and modified its definition of Retail Trade, making the current series not precisely comparable with the previous series. 

In BC, seasonally-adjusted sales rose 1.8 per cent in January. Compared to the same month last year, retail sales were up 3.3 per cent in the province. In the Greater Vancouver region, sales rose 3.4 per cent month-over-month and were up 3.2 per cent year-over-year. 


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Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.2 per cent on a year-over-year basis in February, a decrease from the 5.9 per cent rate in January. This large drop was mostly due to base year effects, as inflation increased strongly this month last year. Grocery prices continue to rise too-quickly, up 10.6 per cent from last year, the seventh consecutive month of double-digit annual price growth. Mortgage interest costs were up 23.9 per cent year-over-year, the fastest pace since 1982, as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, increasing 3.3 per cent year-over-year in February, down from 4.3 per cent in January. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent in February. In BC, consumer prices rose 6.2 per cent year-over-year.

There continue to be encouraging signs that the bout of rapid price appreciation that began in February of last year is waning. Although food prices continue to rise quickly, most other categories in the index are trending back toward normal price trends. The Bank of Canada's measures of core inflation, which strip out volatile components, each ticked downwards for a third month in a row. The three-month annualized change in seasonally-adjusted CPI is now well within the bank's 1-3 per cent target range, hitting 1.6 per cent in February. Although price appreciation may be moderating, it is still well above the Bank of Canada's 2 per cent target, and while the Bank has announced a conditional pause on further rate hikes, they could change course if inflation does not continue to cool. 



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A weekend getaway at Harrison Lake
Spent the past weedend with family and friends at the lakehouse, weather was nice and the view was spectacular! If you are looking for a lakehouse with view like this, contact me!
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Canadian housing starts rose 13 per cent to 243,959 units in February at a seasonally-adjusted annual rate (SAAR). Starts were down 2 per cent from February of 2022. Single-detached housing starts rose 2 per cent to 64,281 units, while multi-family and others rose 17 per cent to 179,677 (SAAR). 

In British Columbia, starts fell by 25 per cent in February to 37,389 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 9 per cent m/m to 5,308 units while multi-family starts fell 30 per cent to 28,367 units. Starts in the province were 8 per cent above the levels from February 2022. Starts were up by 1.1k in Kelowna and 1k in Abbotsford, while falling 2k in Victoria and 14k in Vancouver from last month. The 6-month moving average trend fell 3.8 per cent to 48.8k in BC in November. 




Link: https://mailchi.mp/bcrea/canadian-housing-starts-february-2023
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The British Columbia Real Estate Association (BCREA) reports that a total of 4,775 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in February 2023, a decrease of 46.5 per cent from February 2022. The average MLS® residential price in BC in 2023 was 941,575, down 14.7 per cent compared to the average price of over $1.1 million in February 2022, recorded at the market's peak. The total sales dollar volume was $4.5 billion, representing a 54.4 per cent decrease from the same time in the previous year.
“While activity across provincial housing markets remains well below normal,” said BCREA Chief Economist Brendon Ogmundson. “There are encouraging signs that the market is balancing out. Home sales rose month-over-month in most markets, and prices appear to be firming up in the face of low supply.”

Worth mentioning, the provincial MLS® average price was up 8.5 per cent month-over-month to its highest level since July 2022, partially due to a more stable market but also because of the composition of sales reverting to a more normal mix following low sales of single detached homes through the Lower Mainland in January.
 
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Canadian employment rose slightly to 20.05 million in February, up by 22,000 (0.1 per cent). The Canadian unemployment rate held steady at 5 per cent, hovering just above all-time lows. Employment gains were concentrated in health care and social assistance (+15,000), public administration (+10,000), and utilities (+7,500), while employment fell in business, building and other support services (-11,000). Employment among those aged 55 to 64 rose by 25,000 (+0.7 per cent) as older workers returned to the labour force. Average hourly wages were up 5.4 per cent from February of last year, while total hours worked were up 1.4 per cent year-over-year. 

Employment in BC rose by 6,700 (0.2 per cent) to 2.777 million in February, while Metro Vancouver's employment rose by 0.6 per cent month over month. Both BC and Metro Vancouver's unemployment rates jumped to 5.1 per cent, however. This was driven by an increase in workers entering the labour force, particularly middle-aged females, rather than a decrease in employment. BC's unemployment rate now matches Ontario, while Manitoba, Saskatchewan, and Quebec have a lower rate. 





Link: https://mailchi.mp/bcrea/canadian-employment-february-2023-march-10-2023
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