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Written By: Benjamin Pipicelli, Dorje Gyaltsen, & Gordon Huynh

Economics Newsletter – May 17, 2024

Canada’s Economy at a Glance

Author’s Commentary

Employment & Wages 

Despite maintaining positive growth, the Canadian economy continues to slow. In April, the national unemployment rate stood at 6.1%—the highest since the end of the pandemic. When the labour market eases, we normally expect wage growth to also slow, as bargaining power shifts to employers. However, we have yet to see a significant deceleration in wages, probably because of structural changes in the economy that will continue to influence the labour market.
The latest national employment report showed that the average hourly wage rose by 4.7% year-on-year in April. While it takes time for wages to return to normal levels after a bout of inflation, the process has likely been slower this cycle than many employers had hoped. Although companies generally expect salaries to increase at a slower pace than in the last two years, many firms continue to believe wage growth will remain high. The proportion of companies expecting abnormally high wage growth to persist until 2025 has risen from 14% at the end of 2023 to 23% in 2024. This is a sign that employers are still feeling pressure from workers for higher pay.

News and Noteworthy

TD Bank hopes to soon reach ‘global resolution’ of drug-money probes

Toronto-Dominion is facing probes by three different regulators as well as the U.S. Department of Justice, which is investigating the bank over its ties to a US$653 million drug money laundering case in New York, New Jersey and Pennsylvania, a person familiar with the matter told Bloomberg last week. That probe is focused on how Chinese crime groups used Toronto-Dominion and other banks to hide money from U.S. fentanyl sales, the Wall Street Journal reported last week. Read more.

Lightspeed Commerce stock surges as Dax Dasilva reappointed CEO

Lightspeed Commerce shares were up around 16 percent on Thursday afternoon, as the company reappointed its founder Dax Dasilva as permanent CEO and reported a 25 percent increase in sales. Dasilva, who stepped into the role of interim chief executive officer in February, now has dropped the interim part of the title and says he is focused on driving profitable growth at the payments technology company. Read more.

Slow sales in Canada’s housing market boon for affordability

Although the number of houses for sale in Canada jumped by near-record amounts in April, a “calmer housing market” has kept prices down and helps improve the chances of a Bank of Canada rate cut, says BMO’s chief economist. “When it comes to Canadian housing, calm is good,” Douglas Porter wrote in an analysis of the latest data from the Canadian Real Estate Association (CREA). Read more.

Some cities’ downtowns are finally seeing a post-pandemic turnaround

Some cities in Canada and the U.S. that have struggled to revive their downtowns after the crushing impact of the COVID-19 pandemic are seeing a turnaround, according to new data from the University of Toronto. Researchers with the Downtown Recovery project at the university’s School of Cities found that most of the cities showing the largest yearly increase in downtown visitors in their most recent data are the ones that scored lower in the project’s 2023 rankings, including Ottawa, Montreal and Toronto. Read more.

New or used? What you need to know before buying a car in today’s market

Buying a car can be an expensive process. Between inflation, gas prices, supply chain challenges and insurance premiums, it may seem harder than ever to get that dream car off the lot. In fact, car-sharing service Turo’s Car Ownership Index released in April found that 39 percent of Canadians are less likely to buy a car due to the rate of inflation, while 55 percent of respondents who currently own a car are planning to stop doing so in the future. Read more.

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