Canada’s inflation rate accelerates
For Print Only Logo
Insights and Market Perspectives

Canada’s inflation rate accelerates

Author: Portfolio Specialist Group

July 23, 2018

AGF Weekly Perspectives

A recap of last week’s top economic news and what’s to come.

Canada inflation & retail sales

  • Consumer prices were up 2.5% year-on-year in Canada in June, up from 2.2% in May and above the consensus forecast for 2.3%.
  • Energy prices climbed 12.4% (from 11.6%) during the months and the only category to see inflation slow was household operations, down 0.1% (y/y) from +0.3% in May.
  • Canadian retail sales climbed 2% in May led by motor vehicles and parts sales (+3.7%) and gasoline stations (+4.3%). E-commerce sales, reported on a year-on-year basis, were up 16.9%, more than tripling the 5.5% yearly pace marked by overall sales.

U.S. housing starts disappoint

  • U.S. housing starts suffered the largest monthly decline since 2011, falling 12.3% in June. Multi-family starts fared worst, declining nearly 20%, while single-family starts also contracted.
  • Some pullback was expected following a spike in the prior month, however June’s result was significantly worse than forecasted.
  • Also reported, building permits slide 2.2% in June to record a third-straight month of losses, suggesting the effects of higher interest rates and input costs may be appearing within the U.S. housing market.

Canadian existing home sales move higher

  • Canadian existing home sales rose 4.1% in June to record the strongest monthly gain thus far in 2018. While sales are still down 10.7% from a year ago, the results are much improved from the 22% decline set in March.
  • Regionally, Toronto sales jumped nearly 17% in June, the strongest monthly increase in over 14 years, while Vancouver continued to slump with sales down 1.3%, as tighter provincial rules impacted activity.
  • Montreal and Ottawa are currently the strongest markets in Canada, up 5.1% and 2.7% year to date, respectively.

Other economic news

  • China’s economy decelerated slightly in the second quarter, as GDP growth measured 6.7% annualized, down from 6.8% in the prior period. While still elevated as compared to other global markets, this marks China’s slowest pace of growth since September 2016.
  • U.K. inflation held at 2.4% annualized for a third-straight month in June. Core inflation, however, fell to a 15-month low of 1.9%, which may hinder expectations of a Bank of England rate hike in August. Positively, the U.K. unemployment rate held at 4.2% and a record number of people were employed in the three-months to May period.

What’s to come

U.S. home sales

New and existing U.S. home sales for June will be announced during the first half of next week with GDP figures delivered on Friday. In Canada, a quiet week will be highlighted by wholesale trade data for May.

Download the Summary

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

© 2018 AGF Management Limited. All rights reserved.

More articles like this.

Time to bet on genomics?

Time to bet on genomics?

Advancements in biotechnology, genome sequencing and gene editing have given rise to whole new areas…

Read More
Welcome to Gridlock: Markets sigh with relief

Welcome to Gridlock: Markets sigh with relief

U.S. midterm elections delivered on a much-anticipated outcome: the Democrats wrested control of the House of Representatives, while the GOP tightened its grip on the Senate.

Read More
After the midterms: Who wins, who loses, and gearing up for gridlock

After the midterms: Who wins, who loses, and gearing up for gridlock

Investors love certainty and Tuesday’s U.S. midterm elections delivered on a much-anticipated outcome: Congressional gridlock,…

Read More