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Written By: Benjamin Pipicelli, Dorje Gyaltsen, & Gordon Huynh
Economics Newsletter – July 26, 2024
Canada’s Economy at a Glance
Author’s Commentary
The 0.4% increase in real GDP for the first quarter of 2024 marks a modest but notable improvement from the stagnant growth of the previous quarter, which was revised down to zero. This uptick is primarily driven by a robust rise in household spending on services, notably telecommunications, rent, and air transport. This suggests a rebound in consumer confidence and discretionary spending. However, the slower inventory accumulations serve as a reminder of ongoing supply chain challenges and cautious business sentiment. The slight 0.3% increase in household spending on goods, led by new vehicle purchases, contrasts sharply with the persistent decline in per capita spending on goods, now in its tenth consecutive quarter. This divergence highlights the ongoing strain on individual purchasing power despite overall economic growth
News and Noteworthy
Canadian ETFs set a sales record in June
Canadian exchange-traded fund (ETF) sales reached an all-time high in June with investors showing unprecedented enthusiasm for bond funds, according to the latest data from the Investment Funds Institute of Canada (IFIC). Sales of ETFs were just under $10.1 billion in June with net sales gains in every category, and bond funds collecting just over half the total. Read more.
Hybrid work era amplifying need for easy commutes, office privacy
Canada’s office vacancy level should peak in the second quarter of 2025, a new report says, with the hybrid work era’s impact on the sector still a key factor. Colliers Canada’s report, which surveyed office tenants across the country, highlights the importance of commuting convenience and thoughtful office design for a workforce largely familiar with working at least occasionally from home. Read more.
What a Bank of Canada rate cut on Wednesday could mean for your mortgage
The Bank of Canada (BoC) will make an interest rate decision on Wednesday, and all signs are pointing towards another rate cut after a cool inflation reading for June. Yahoo Finance Canada spoke to three mortgage experts about what this could mean for mortgage rates, payments, and the housing market. Banks are likely to drop the prime rate to 6.7 percent. The BoC’s benchmark interest rate sits at 4.75 percent following a 25-basis-point (0.25 percent) cut on June 5 – the first reduction in more than four years. Read more.
Gas prices fall, with drops across B.C. and Atlantic Canada
Gas prices fell over the past week, with drops in cities across British Columbia and Atlantic Canada. The average cost per litre of regular fuel in cities nationwide fell 1.3 cents between July 11 and July 18, according to data from Kalibrate. The biggest price breaks came in Abbotsford, B.C., followed by Drummondville, Que. and Vancouver. Read more.
Canada real estate: Home sales edge up in June, but market remains subdued
Canada’s housing market saw a slight increase in sales in June, according to the Canadian Real Estate Association (CREA). Still, activity remains subdued, with the Bank of Canada’s 25 basis point cut doing little so far to spur sig nificant demand. CREA said in a news release on Friday that home sales rose 3.7 percent from May to June. On an annual basis, home sales were down 9.4 percent last month. CREA says the not-seasonally adjusted national average home price in June was $696,179, down 0.4 percent compared to May and 1.6 percent compared to the same time last year. Read more.
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