CITB’s Q2/Q3 economic check-in

The Bank of Canada raised interest rates, as was being widely predicted

The Bank of Canada (BoC) has gone ahead and raised the overnight interest rate to 0.75% from 0.5%. It is the first time in seven year that this interest rate has increased.

“Recent data have bolstered the Bank’s confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy,” the BoC says through a statement. “The Bank acknowledges recent softness in inflation but judges this to be temporary.”

Full details on the predicted increase can be found on the BoC’s website.

Higher interest rates signal a strengthening economy, which is demonstrated through various economic indicators produced in the last two quarters:

Labour force

Overall employment grew by 103,000 jobs or 0.6%. This is the fourth consecutive quarter of strong employment growth and the largest quarterly increase since 2010. Further details can be found on Statistics Canada’s website.

Canadian international merchandise trade

Imports rose 2.4% to $49.8 billion and exports went up 1.3% to $48.7 billion in May. Check out StatsCan’s brief on the topic for more information.

Wholesale sales

Wholesale sales increased 1% to $61 billion in April, a seventh consecutive monthly advance. Gains were recorded in three of seven subsectors and were led by the machinery, equipment and supplies subsector. More data is available on Stats Canada’s website.

Manufacturing sales

Sales in manufacturing saw an increase of 1.1% to produce a record high of $54.4 billion in April. This is mainly due to higher sales in the petroleum and coal product, and primary metal industries. Further information is available through StatsCan.

Retail sales

Retail sales rose 0.8% to $48.6 billion in April. Sales were up in nine of 11 subsectors, representing 71% of the total retail trade. StatsCan has more data available on its website.

Building permits

Canadian municipalities in May issued $7.7 billion worth of building permits, which is an increase of 8.9% from April’s numbers. The national increase was mainly due to higher construction intentions for residential buildings especially in Ontario. For more details, view StatsCan’s briefing on the data.

Real estate

National home sales dropped 6.2% in May from April. Actual activity was down 1.6% year-over-year (y-o-y) thanks to a sharp y-o-y drop of 20.8% in the Greater Toronto Area. Cities such as Calgary, Edmonton, Ottawa and Montreal saw an increase in sales between May 2016 and May 2017. More information is available on the Canadian Real Estate Association’s website.

Auto sales

Strengthening economic growth led to a sharp rebound in vehicle purchases in the Prairie provinces especially Alberta. Car and light truck sales were up 11% y-o-y in May, which is the largest increase in almost three years. This data can be found in a report published by Scotiabank.

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