Canadian Economic Dashboard and COVID‑19

This dashboard presents selected data that are relevant for monitoring the impacts of COVID‑19 on economic activity in Canada. It includes data on a range of monthly indicators – real GDP, consumer prices, employment, merchandise exports and imports, retail sales, hours worked and manufacturing sales - as well as monthly data on aircraft movements, railway carloadings, and travel between Canada and other countries.

Estimates are presented from January 2019 to the current reference month for each data series. The information will be updated continuously as new data becomes available, and additional series may be added to the dashboard as circumstances warrant.

Monthly update – October 12, 2023

Economy-wide output unchanged in July

Real gross domestic product (GDP) was essentially unchanged in July after edging down 0.2% in June. Lower factory output was the largest drag on activity, contracting for the second consecutive month. Meanwhile, both mining and accommodation and food services rose in July after activity was impacted by wildfires in June.

Housing market activity contracted in July following the resumption in interest rate hikes, ending five consecutive months of growth for real estate agents and brokers. Activity at agents and brokers was down 1.3% after advancing 2.8% in June. Despite the recent momentum, activity at agents and brokers remained 5.1% below COVID‑19 pre-pandemic levels.

Construction output was unchanged in July following two consecutive declines. Residential building construction was flat following eight consecutive monthly decreases and was 10% below pre-pandemic levels. Non-residential building construction was up 1.1% but remained 11% below its pre-pandemic benchmark. Engineering construction edged downward after advancing steadily for eleven months.

Retail volumes fell 0.2% in July, the fifth decline in six months. Lower volumes at motor vehicle and parts dealers and building material and garden equipment dealers contributed to the decrease. Volumes in July were 3% above their pre-pandemic benchmark.

Accommodation and food services rose the first time in three months as both subsectors posted gains. Output in this sector was 5% below pre-pandemic levels.

Air transportation fell for the second month in a row as activity remained more than one quarter below pre-pandemic levels.

Statistics Canada's advance estimate of real GDP points to a 0.1% increase in August.

Headline inflation accelerates as food inflation begins to ease

Headline consumer inflation rose to 4.0% in August, up from 3.3% in July. August's acceleration marked the twenty-eighth time in twenty-nine months that the headline rate has been above three percent. Annual price growth excluding gasoline held steady at 4.1%.

While food price inflation showed signs of easing in August, prices remained elevated. Grocery prices were up 6.9% in the twelve months to August, edging below the 7% mark for the first time in nineteen months. Meat prices were 6.5% higher than in August of last year, while yearly price increases for fresh vegetables remained below the double-digit mark for the fifth consecutive month. Fresh fruit prices were essentially unchanged on a year-over-year basis, down from 4.1% in July, while prices for pasta products remained in double-digit territory for the seventeenth time in eighteen months. Yearly price increases at restaurants stood at 6.1% in August, unchanged from July.

Shelter costs, measured year-over-year, rose 6.0% in August, their second consecutive month above the five percent mark. Both mortgage interest costs and higher rental prices continued to put upward pressure on inflation. Mortgage interest costs were up 30.9%, the largest yearly increase on record. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 6.5% in August, up from 5.4% in July. Yearly price changes for homeowners' replacement costs remained in negative territory for the fourth consecutive month.

Employment rises as the unemployment rate holds steady

After advancing by 40,000 in August, headline employment rose 64,000 in September with gains concentrated in part-time work. Employment increased in educational services and transportation and warehousing, and declined in finance, insurance, and real estate. The pace of employment growth has averaged 30,000 per month between February and September. Employment in construction has declined by 55,000 since the start of the year.

The unemployment rate held steady at 5.5% in September for the third consecutive month. The unemployment rate among core-age workers increased to 4.7%, while the rate among youth declined to 10.5%.

The overall employment rate—the percentage of working-age persons who are employed—edged up 0.1 percentage points to 62.0% in September as the working-age population continued to expand at a brisk pace (+82,000). Given the pace of population growth in recent months, employment gains of approximately 50,000 per month are needed for the employment rate to remain constant. The employment rate among 25-to-54 year-olds edged up to 84.8% in September.

Average hourly wages rose 5.0% in the twelve months to September, up from 4.9% in August. Total hours worked were unchanged.

Monthly update – September 14, 2023

Real gross domestic product unchanged as household spending slows

Real gross domestic product (GDP) was essentially unchanged in the second quarter after advancing 0.6% in the first. Smaller inventory buildups and continued declines in housing investment weighed on economic activity, while increases in non-residential business investment and government spending supported growth.

The flat read on headline GDP followed gains in six out of the last eight quarters. Overall activity in the quarter was 1.1% higher than in the second quarter of last year, and 3.5% above pre-pandemic levels observed in late 2019. Final domestic demand, supported by higher business outlays on non-residential structures, rose 0.3% in the second quarter, matching the increase in the first.

A slower pace of inventory accumulation weighed on economic activity in the second quarter, reflecting slowdowns in manufacturing and wholesale trade. The economy-wide stock-to-sales ratio reached its highest level since the COVID-19 lockdowns in the spring of 2020.

Investment in housing also detracted from growth as borrowers continue to adjust to higher financing costs. Outlays on housing fell for the fifth consecutive quarter (-2.1%) reflecting declines in new construction and renovation activity. Ownership transfer costs, which measure activity in resale markets, rose for the first time in six quarters. Total residential investment in the second quarter was 9% below pre-COVID levels.

Non-residential business investment rose for the eighth time in the last nine quarters. Combined business outlays on non-residential structures and machinery and equipment (M&E) increased 2.5%, supported by higher spending on engineering structures. Investment in M&E rose 2.7%, led by higher spending on aircraft and other transportation equipment. Business outlays on intellectual property products rose for the fifth time in the past six quarters.

Export volumes edged up 0.1% in the second quarter, after advancing 2.5% in the first. Higher exports of intermediate metal products and commercial services were offset by lower shipments of crude oil and bitumen, wheat, and canola. Total export volumes in the quarter were at pre-pandemic levels.

Import volumes were up 0.5% in the quarter, led by higher shipments of metals, passenger cars and light trucks, and aircrafts. Total volumes were about 6% above pre-COVID levels.

Household expenditures edged up 0.1% in the second quarter, after advancing 1.2% in the first. Higher spending on new trucks, vans and sport utility vehicles supported the increase as supply chain disruptions eased. Spending on other durables contracted, reflecting lower outlays on new passenger cars, furniture and furnishings, and recreation equipment. Total household outlays were over 4% above pre-COVID levels. While household spending edged higher, per capita spending fell 0.7%, the third decline in the last four quarters.

Household disposable income rose 2.6% as wages and salaries increased at their fastest pace in five quarters. Current dollar household spending increased by 1.0% in the second quarter, pushing the household savings rate up to 5.1%. Disposable income in the quarter was 21% above pre-COVID levels, while the savings rate was 2.3 percentage points higher than the rate observed in late 2019.

Business labour productivity, a measure of the volume of goods and services produced per hour worked, posted its eleventh decline in the past twelve quarters. Labour productivity in the fourth quarter was 2.1% below its pre-COVID baseline, while unit labour costs, which measure the payments to labour required to produce a unit of output, were 21% above levels observed in late 2019.

Economy-wide output declines at mid-year

Real GDP fell 0.2% in June, offsetting gains in May. Output declined in both goods and service industries, with 12 out of 20 major industrial sectors posting declines. Lower wholesaling and retail activity and declines in construction contributed to the headline decrease, while increases in real estate activity and public sector output moderated declines.

Economic activity has slowed in recent months. Measured on trend, there has been little change in economy-wide output since February.

Oil and gas extraction partly rebounded from disruptions due to wildfires in May, while wildfires impacted mining activity in Quebec and Newfoundland and Labrador in June.

Housing market activity continued to rebound in June as real estate agents and brokers posted their fifth consecutive monthly increase. Activity at agents and brokers was up 3.0% following stronger gains in April and May. Despite the recent momentum, activity at agents and brokers remained almost 4% below pre-pandemic levels.

Construction output fell 0.6% in June as residential activity continued to decline. Impacted by higher financing costs, residential building construction was down for the fourteenth time in the past fifteen months and, in June, was 10% below pre-COVID levels. Non-residential building construction was down for the second consecutive month and was 12% below its pre-pandemic baseline. Engineering construction rose for the eleventh consecutive month.

Retail volumes fell 0.6% in June, the fourth decline in the past five months. Declines were broad-based across store types and were partly offset by higher activity at motor vehicle and parts dealers. Retail volumes at the mid-year mark remained over 3% above their pre-COVID benchmark.

Accommodation and food services also declined for the fourth time in five months as activity fell at both accommodation services and food service establishments. Output in this sector was over 6% below pre-COVID levels.

Air transportation declined after three consecutive increases as activity remained one quarter below pre-COVID levels.

Statistics Canada's advance estimate indicates that real GDP was essentially unchanged in July.

Headline inflation accelerates as food prices remain elevated

Headline consumer inflation rose to 3.3% in July, up from 2.8% in June. July's acceleration marked the twenty-seventh time in the past twenty-eight months that the headline rate has been above three percent. Annual price growth excluding gasoline edged up to 4.1%.

Higher mortgage interest costs remained a key contributor to the overall pace of consumer inflation. Excluding mortgage interest costs, annual price growth was 2.4% in July, up from 2.0% in June.

While food price inflation has eased slightly, prices remain elevated. Grocery prices were up 8.5% in the twelve months to July after fifteenth consecutive months at or above the nine percent mark. Meat prices were 7.7% higher than in July of last year, while yearly price increases for fresh vegetables remained below the double-digit mark for the fourth consecutive month. Fresh fruit prices rose 4.1% on a year-over-year basis, down from 10.4% in June, while prices for pasta products rose back into double-digit territory for the sixteenth time in the past seventeen months. Yearly price increases at restaurants stood at 6.1% in July, down from 6.6% in June.

Shelter costs, measured year-over-year, rose 5.1% in July after three consecutive months below the five percent mark. Yearly price changes for homeowners' replacement costs remained in negative territory for the third consecutive month, while mortgage interest costs were up 30.6%, the largest yearly increase on record.

Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was above the five percent mark for the ninth consecutive month.

Data from the Canadian Survey on Business Conditions for the third quarter underscore the challenges that many businesses continue to face from high inflation and elevated input costs. Over one-half of businesses (+56.6%) expect rising inflation to be an obstacle in the coming months, while over two-fifths (+44.7%) reported rising input costs to be a challenge. Over forty percent of businesses also anticipate rising interest rates and debt costs to be an obstacle. One quarter of businesses expect to raise their selling prices over the next three months, down slightly from earlier in the year.

Population growth continues to outpace employment growth

Headline employment increased by 40,000 in August as the working-age population expanded by 103,000. As a result, the overall employment rate—the percentage of working-age persons who are employed—declined 0.1 percentage points to 61.9%. The labour force expanded by 54,000 in June, as the labour force participation rate edged down to 65.5%.

The pace of population growth has outpaced employment gains in recent months. Monthly increases in the working-age population have averaged 78,000 over the first eight months of 2023, while monthly employment growth has averaged 41,000.

Employment gains in August reflected higher employment in professional, scientific, and technical services and construction, partly offset by declines in educational services and manufacturing. Self employment rose while the number of public and private sector workers was little changed.

The unemployment rate held steady at 5.5%, following three consecutive monthly increases.

Average hourly wages rose 4.9% in the twelve months to August, edging down from 5.0% in July. Total hours worked, measured month-over-month, rose 0.5% in August, after remaining little changed in June and July.

Monthly update – August 10, 2023

Economy-wide output expanded at the fastest pace from January to May

Real gross domestic product rose 0.3% in May after edging up 0.1% in April. Higher factory output and wholesaling activity, bolstered by improvements in supply chains, supported the headline increase, along with a rebound in public sector activity following the strike by federal workers. Output in the mining and oil and gas sector declined for the first time in five months as wildfires in Western Canada impacted energy production.

May's headline increase marked the fifth consecutive month that economy-wide output has expanded, and the tenth increase in the past twelve months.

Housing market activity continued to rebound in May amid the pause in interest rate hikes, as real estate agents and brokers posted their fourth consecutive month of growth. Activity at agents and brokers was up 7.6% after advancing 8.9% in April. Despite the recent momentum, activity at agents and brokers remained 6% below pre-pandemic levels.

Construction output fell 0.8% in May on lower residential and non-residential activity. Residential building construction declined for the seventh consecutive month and was 4% below pre-COVID levels. Non-residential building construction was down for the first time in six months but remained 8% below its pre-pandemic benchmark. Engineering construction has advanced steadily for the past ten months.

Retail volumes rose 0.3% in May, matching the increase in April. Higher volumes at motor vehicle and parts dealers and electronics and appliance stores supported the increase. Average retail volumes during the first five months of 2023 were slightly higher than during the last five months of 2022 and, in May, were 5% above their pre-pandemic benchmark.

Accommodation and food services declined for the third time in four months as lower activity in accommodation services offset higher activity at food service establishments. Output in this sector was 6% below pre-COVID levels.

Air transportation rose for the third month in a row as activity remained one quarter below pre-COVID levels.

Statistics Canada's advance estimate of real GDP points to a 0.2% decrease in June.

Headline inflation eases while food prices remain elevated

Headline consumer inflation eased to 2.8% in June, down from 3.4% in May. June's deceleration marked the first time in twenty-seven months that the headline rate has been below three percent. Annual price growth excluding gasoline eased to 4.0% in June.

Higher mortgage interest costs remained a key contributor to the overall pace of consumer inflation. Excluding mortgage interest costs, annual price growth was 2.0% in June, down from 2.5% in May.

Food price inflation shows little sign of easing. Grocery prices were up 9.1% in the twelve months to June, their fifteenth consecutive month at or above the nine percent mark. Meat prices were 6.9% higher than in June of last year, while yearly price increases for fresh vegetables remained below the double-digit mark for the third consecutive month. Fresh fruit prices rose 10.4% on a year-over-year basis, up from 5.7% in May, while prices for pasta products fell out of double-digit territory for the first time in sixteen months. Yearly price increases at restaurants stood at 6.6% in June, down from 6.8% in May.

Shelter costs, measured year-over-year, rose 4.8% in June, their third consecutive month under the five percent mark. Yearly price changes for homeowners' replacement costs remained in negative territory for the second consecutive month, while mortgage interest costs were up 30.1%, the largest yearly increase on record.

Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 5.7% in June, matching in the increase in May.

Employment holds steady as the unemployment rate edges higher

After advancing in June, headline employment was little changed in July (-6,000) as both full-time and part-time work held steady. Employment rose in health care and social assistance and education and declined in construction and public administration. The pace of employment growth has slowed since early in the year, with monthly gains averaging 22,000 from February to July. Employment in construction has declined by 71,000 over this six-month period.

The unemployment rate edged up to 5.5% in July, the third consecutive monthly increase. The rate among core-age workers rose from 4.4% to 4.8%, while the unemployment rate among youth declined to 10.2%.

The overall employment rate edged down 0.2 percentage points to 62.0% as the working-age population continued to expand at a brisk pace (+82,000). The employment rate among 25-to-54 year-olds declined to 84.5%.

Average hourly wages rose 5.0% in the twelve months to July, up from 4.2% in June. Total hours worked were unchanged in July for the second consecutive month.

Monthly update – July 13, 2023

Economy-wide output unchanged as resources and real estate advance

Real gross domestic product (GDP) was essentially unchanged in April after edging higher in March. Output in the oil and gas sector rose for the fourth consecutive month, led by higher oil production off the North Atlantic coast. Real estate activity and construction increased while factory output and wholesaling declined.

Economy-wide output held steady in April despite lower public sector activity due to the strike by federal government workers. Business sector output edged up 0.1%, the first increase since the sizable expansion to begin the year.

Housing market activity continued to rebound amid the pause in interest rate hikes, as real estate agents and brokers posted their third consecutive month of growth. Activity at agents and brokers was up 8.6% in April, the largest monthly increase since July 2020. Despite the gain, activity at agents and brokers was 13% below pre-pandemic levels.

Construction output rose 0.4% in April, buoyed by increases in non-residential buildings and engineering activity. Non-residential building construction posted its fifth gain in a row, while engineering construction has advanced steadily for the past nine months. In contrast, residential building construction declined for the sixth consecutive month and, in April, was 3% below its pre-COVID benchmark.

Retail volumes rose 0.2%, supported by higher activity at general merchandise stores and clothing stores. Average retail volumes during the first four months of 2023 were higher than during the last four months of 2022 and, in April, were 4% above their pre-pandemic benchmark.

Accommodation and food services rose 0.6% in April after contracting by 2.0% in March. Increases in both accommodation services and food services contributed to the increase. Total output in this sector was 5% below pre-COVID levels.

Air transportation rose for the second month in a row as activity remained more than one quarter below pre-COVID levels.

Statistics Canada’s advance estimate of real GDP points to a 0.4% increase in May.

Headline inflation slows while food prices remain elevated

Headline consumer inflation eased to 3.4% in May, down from 4.4% in April. May’s headline, the slowest pace of annual price growth in nearly two years, marked the twenty-sixth consecutive month that headline inflation has been above three percent. Annual price growth excluding gasoline was 4.4% in May.

Higher mortgage interest costs remained a key contributor to the overall pace of consumer inflation. Excluding these interest costs, annual price growth was 2.5% in May, down from 3.7% in April.

Food price inflation has eased slightly in recent months but remains elevated. Grocery prices were up 9.0% in the twelve months to May, down from 9.1% in April. Meat prices were 6.3% higher than in May of last year, while yearly price increases for fresh vegetables remained below the double-digit mark for the second consecutive month. Fresh fruit prices rose 5.7% on a year-over-year basis, down from 8.3% in April, while prices for pasta products were up 18.5%. Yearly price increases at restaurants stood at 6.8% in May, up from 6.4% in April.

Shelter costs, measured year-over-year, continued to ease despite upward pressure from mortgage interest costs. Shelter costs rose 4.7% in the twelve months to May, down from 4.9% in April. Yearly price changes for homeowners' replacement costs edged into negative territory amid the pullback in housing market activity. At the same time, mortgage interest costs continued to rise at a faster pace, reflecting the higher interest rate environment. Mortgage interest costs were up 29.9% in the twelve months to May, the largest yearly increase on record.

Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 5.7% in April, the seventh consecutive month above the five percent mark.

New research by Statistics Canada, released in Economic and Social Reports, examines how different factors have contributed to the elevated pace of price growth that has occurred broadly across the economy. This research includes (1) an article that sheds light on the extent to which domestic or external factors have been contributing to the growth in economy-wide prices, (2) a study that estimates the contribution of unit labour costs to the rising costs of goods and services produced domestically, and (3) an article that examines the extent to which markups may have contributed to high inflation.

Employment strengthens as the labour force expands

Headline employment rose by 60,000 in June, bolstered by gains in full-time work (+110,000) and among private sector employees (+83,000). Two thirds of the headline increase reflected higher employment among core-age workers. Nearly all of the net gains were concentrated in Ontario.

June’s headline increase followed the more moderate pace of employment growth in recent months as monthly gains, from February to May, have averaged 20,000. The overall employment rate in June was 62.2% while the rate among core-age workers, at 85.0%, was down slightly from record levels posted at the start of the year.

The unemployment rate rose 0.2 percentage points to 5.4% as more people searched for work. The labour force grew by 114,000 in June, the largest monthly increase since the start of the year, while the participation rate rose to 65.7%, up 0.2 percentage points from May.

Average hourly wages were up 4.2% in the twelve months to June, down from 5.1% in May. Total hours worked held steady in June after declining 0.4% in May.

Income and wealth gaps widen over the past year

New data for the first quarter of 2023 from the Distributions of household economic accounts show that lower- and middle-income households have reduced their net saving more than other groups in response to cost-of-living increases over the past year. Income inequality has also risen over the past year as the gap in the share of disposable income between higher income households (the top 40%) and lower income households (the bottom 40%) reached 44.7%, up 0.2 percentage points from the first quarter of 2022. Despite the increasing gap, income inequality remains lower than before the COVID-19 pandemic.

The distributions data also show that the gap between high and lower wealth households increased at the fastest pace on record over the past year (data are available back to 2010). Lower wealth households (the bottom 40%) have been affected more by recent economic pressures, and their net worth in the first quarter of 2023 was 13.8% below levels reported in early 2022. In comparison, high wealth households (the top 20%) saw their net worth decline, on average, by 3.8%. Despite the increasing gap, wealth inequality in early 2023 remained lower than during the first quarter of 2020.

Monthly update — June 15, 2023

Economic activity strengthens in the first quarter

Real gross domestic product (GDP) rose 0.8% in the first quarter after remaining basically unchanged in the fourth quarter of 2022. Increases in household spending and higher export volumes supported the headline gain, while slower inventory accumulation and a pullback in housing market activity detracted from growth.

Real GDP has expanded in six of the past seven quarters, and, in early 2023, was 3.7% above pre-pandemic levels.

Final domestic demand, supported by higher household spending on goods and services, rose 0.7% in the first quarter, after remaining flat in late 2022.

Household expenditures ramped up in early 2023 as spending on goods and services strengthened. Expenditures rose 1.4% in the first quarter, supported by purchases of new and used vehicles, food and beverage services, and clothing. Total expenditure volumes in the quarter were 4.6% above pre-pandemic levels.

Merchandise exports rose 3.0%, bolstered by higher shipments of motor vehicles, metal products and wheat and other crops. Service exports edged down 0.2% after increasing for three consecutive quarters. Total export volumes in the first quarter were essentially at pre-pandemic levels for the first time since late 2019.

Goods imports edged down 0.2%, as higher shipments of crude oil and pharmaceuticals were offset by declines in passenger cars and metals. Service imports rose 2.2% after declining in late 2022. Total import volumes in the first quarter were 5.3% above their pre-pandemic baseline.

Non-residential business investment edged higher, the seventh increase in the past eight quarters. Combined outlays on non-residential structures and machinery and equipment (M&E) increased 0.5% as higher spending on engineering structures offset lower investment in M&E. Outlays on M&E fell 2.5% on declines in medium and heavy trucks, buses and other motor vehicles, and aircraft and other transportation equipment. Business outlays on intellectual property products advanced for the fourth time in five quarters. Total non-residential business investment in early 2023 was 0.6% above pre-pandemic levels.

Lower inventory accumulation weighed on economic activity in the first quarter. Declines in farm inventories and smaller buildups of motor vehicles and other durable goods led to the smallest change in inventories since the fourth quarter of 2021.

Investment in housing detracted from growth as borrowers continue to adjust to higher financing costs. Outlays on housing fell for the fourth consecutive quarter (-3.9%) as renovations, resale activity, and new construction all declined. Total residential investment in the first quarter was 5.7% below pre-COVID levels.

Household disposable income declined 1.0% in the first quarter, the first decrease in two years, as lower government transfers and net property income offset higher wages and salaries. The household saving rate fell to 2.9%, its lowest level since the onset of the pandemic.

Business labour productivity, a measure of the volume of goods and services produced per hour worked, posted its tenth decrease in the last eleven quarters. Labour productivity in the first quarter was 1.4% below its pre-COVID benchmark, while unit labour costs, which measure the payments to labour required to produce a unit of output, were 18% above levels observed in late 2019.

Economy-wide output unchanged in March

Real gross domestic product was essentially unchanged in March, after edging higher in February. Output in mining and oil and gas extraction rose for the third consecutive month as activity in the oil sands expanded. Factory output contracted for the first time in three months, reflecting declines in machinery and metals, and chemicals, plastics and rubber products.

Housing market activity increased amid the pause in interest rate hikes, as real estate agents and brokers posted two consecutive months of growth for the first time since early 2022. Activity at real estate agents and brokers in March was about 20% below pre-pandemic levels. Residential building construction contracted for the fifth month in a row and was 2% below its pre-COVID benchmark.

Air transportation rose for the first time since November 2022 as activity remained more than one quarter below pre-COVID levels.

Retail volumes were down 0.8%, reflecting lower sales at motor vehicle and parts dealers and clothing stores. Overall retail volumes were about 4% above their pre-pandemic benchmark.

Accommodation and food services fell 2.2% in March, the largest monthly decrease since the start of 2022. Lower activity at food services and drinking places accounted for the decline. Total activity in accommodation and foods services was about 6% below pre-COVID levels.

Statistics Canada’s advance estimate of real GDP points to a 0.2% increase in April.

Headline inflation edges higher in April

Consumer price inflation edged up to 4.4% in April, the first acceleration in the headline rate since the recent peak in June 2022. April also marked the twenty-fifth consecutive month that headline inflation has been above three percent. Higher rent prices and mortgage interest costs contributed the most to the year-over-year acceleration in April.

Food price inflation eased slightly but remained elevated. Grocery prices were up 9.1% in the twelve months to April, down from 9.7% in March. Meat prices were 6.7% higher than in April of last year, while yearly price increases for fresh vegetables dipped below the double-digit mark for the first time in eight months. Fresh fruit prices rose 8.3% on a year-over-year basis, while prices for pasta products were up 17.7%. Yearly price increases at restaurants stood at 6.4% in April, edging below the seven percent mark for the first time since May of last year.

Shelter costs, measured year-over-year, continued to ease despite upward pressure from mortgage interest costs. Shelter costs rose 4.9% in the twelve months to April, down from 5.4% in March. Yearly price increases for homeowners' replacement costs and other owned accommodation expenses continued to ease amid the pullback in housing market activity. At the same time, mortgage interest costs continued to increase at a faster pace, reflecting the higher interest rate environment. Mortgage interest costs were up 28.5% in the twelve months to April, the largest yearly increase on record.

Annual price increases for rented accommodation were 6.1% in April, their sixth consecutive month above the five percent mark.

Data from the Canadian Survey on Business Conditions for the second quarter underscore the challenges that many businesses continue to face from high inflation and elevated input costs. Over one half of businesses (+56.0%) expect rising inflation to be an obstacle in the coming months, while two in five businesses reported rising input costs to be a challenge. Almost three in ten businesses (+28.3%) expect to raise their selling prices over the next three months, down slightly from 32.9% early in the year.

Employment little changed as the unemployment rate increases

Headline employment was basically unchanged (-17,000) in May as gains among core-age workers were offset by lower employment among 15 to 24 year-olds. The pace of employment growth has moderated in recent months with monthly increases averaging 33,000 from February to April.

The unemployment rate increased to 5.2% in May after holding steady at 5.0% for five consecutive months. The unemployment rate among 15 to 24 year-olds rose above the ten percent mark for the first time since November of last year, while the rate among core-age workers held steady at 4.3%.

The labour force participation rate—the proportion of the working-age population that is employed or unemployed—edged down to 65.5%, reflecting lower participation among younger workers.

Average hourly wages, measured on a year-over-year basis, rose 5.1% in May, down from 5.2% in April. Total hours hours worked declined 0.4% from April to May.

One in ten workers had a hybrid work arrangement in May, working partly from home and partly from other locations. An additional 14.4% of workers worked exclusively from home.

Monthly update — May 11, 2023

Economy-wide output edged up, as pace of growth across indicators moderated

Following slower economic growth during the second half of 2022 as businesses and households adjusted to higher borrowing costs, major indicators continue to be positive into 2023, though the pace of growth has moderated.

After a 0.6% rise in January, real gross domestic product (GDP) edged upward by 0.1% in February as 12 out of 20 major industries posted gains. Activity in business sector industries was flat following January’s rebound, while public sector activity expanded for the thirteenth consecutive month. Economy-wide output has expanded in seventeen of the last twenty months and, in February, was 3.4% above pre-pandemic levels.

Activity at many client-facing industries contracted in February following a strong to start the year. Food services and drinking places, edged down after posting its largest increase in eight months, while arts, entertainment, and recreation services, declined by 1.4%.

Retail volumes contracted by 0.5% in February following consecutive gains of 1.3% in January and 1.4% at year end. Weaker activity at gasoline stations led the downward trend, falling 5.3% for a second consecutive month, as the volume of sales declined.

Residential building construction rose for the third time in the last ten months and was 4.2% above pre-pandemic levels. Non-residential building construction rose for the fifth time in the past six months but was still 8.9% below is pre-COVID benchmark. Rising interest costs continued to weigh on activity at real estate agents and brokers, which fell for the twelfth consecutive month.

Statistics Canada’s advanced estimate of real GDP points to a 0.1% decrease in March.

Headline inflation continues to ease

Consumer price inflation slowed from 5.2% in February to 4.3% in March, marking the smallest increase in the headline rate since August 2021. March was also the twenty-fourth consecutive month that headline inflation has been above three percent.

Base-year effects have put substantial downward pressure on headline inflation in early 2023.These base-year effects reflect the impact of large price increases in early 2022, which are falling out of the headline year-over-year price movement. Measured on a month-over-month basis, consumer prices have continued to rise in early 2023, advancing 0.4% in February and 0.5% in March. Rising mortgage interest costs have supported price growth in these months.

Gasoline prices dropped year-over-year for the second consecutive month by 13.8%, the largest yearly decline since July 2020. The fall in gasoline prices was mainly driven by steep price increases in March 2022, when gasoline rose 11.8% month over month as a result of supply uncertainty following Russia's invasion of Ukraine.

Food price inflation eased slightly in March but remained elevated. Grocery prices were up 9.7% in the twelve months to March, down from 10.6% in February. Meat prices increased 6.6%, while yearly price increases fresh vegetables remained above the ten percent mark. Fresh fruit prices dipped below ten percent for the first time since October 2022. Prices for pasta products, measured year-over-year, were up 14.2%, while dairy prices slowed to 7.3%. Prices at restaurants were 7.2% higher in the twelve months to March.

Shelter prices continued to decelerate despite continued upward pressure from mortgage interest costs. Shelter costs, measured year-over-year, were up 5.4% in March after rising 6.1% in February. Growth in other owned accommodation expenses and homeowners' replacement costs continued to ease amid the pullback in housing market activity. At the same time, mortgage interest costs continue to rise at a faster pace, reflecting the higher interest rate environment. Mortgage interest costs have risen 26.4% in the twelve months to March, the largest yearly increase on record.

Annual price increases for rented accommodation were 5.3% in March, their fifth consecutive month above the five percent mark.

Employment edges higher as the unemployment rate holds steady

Headline employment rose 41,000 in April on gains among part-time employees. This was the first notable increase in part-time work since October 2022. Employment has trended higher since September 2022, rising by 412,000 during the past eight months, with the vast majority of these gains being in full time work.

The unemployment rate held steady at 5.0% in April for the fifth consecutive month. Among 25 to 54 year-olds, the unemployment rate remained at 4.3% and has been below the five percent mark since the Omicron variant impacted the labour market in January 2022. The proportion of core-age persons who were employed in April edged down to 84.7%,1.3 percentage points above its pre-COVID baseline.

Average hourly wages, measured on a year-over-year basis, rose 5.2% in April, after advancing 5.3% in March. On a monthly basis, total hours worked rose 0.3% after a flat month in March.

Monthly update – April 12, 2023

Economy-wide output strengthens on broad-based gains

After edging lower in December, real gross domestic product rose 0.5% in January as 17 out of 20 major industries posted gains. Activity in business sector industries rebounded swiftly after slowing in recent months. January’s headline marked the largest monthly increase since public health measures were being lifted or eased in early 2022. Economy-wide output has expanded in seventeen of the last twenty months and, in January, was 3.2% above pre-pandemic levels.

Activity at many client-facing industries rose to start the year. Buoyed by higher sales at full- and limited-service restaurants, food services and drinking places posted its largest increase in eight months, while accommodation services, and arts, entertainment, and recreation services, rebounded from moderate declines at the end of 2022.

Retail volumes were up 1.0% in January after rising 1.3% at year end. Activity at motor vehicle and parts dealers posted its fourth consecutive increase as supply disruptions in the auto sector continued to ease. Higher production at automakers also bolstered factory output and export volumes in January.

Residential building construction rose for only the second time in the last ten months and was 4% above pre-pandemic levels. Non-residential building construction rose for the fourth time in the past six months but was still 9% below is pre-COVID benchmark. Rising interest costs continued to weigh on activity at real estate agents and brokers, which fell for the eleventh consecutive month and was over one quarter below pre-COVID levels.

Statistics Canada’s advance estimate of real GDP points to a 0.3% increase in February.

Headline inflation continues to ease

Consumer price inflation slowed from 5.9% in January to 5.2% in February, marking the largest deceleration in the headline rate since the onset of pandemic. February was also the twenty-third consecutive month that headline inflation has been above three percent.

Base-year effects have put substantial downward pressure on headline inflation in early 2023.These base-year effects reflect the impact of large price increases in early 2022, which are falling out of the headline year-over-year price movement. Measured on a month-over-month basis, consumer prices have continued to rise in early 2023, advancing 0.5% in January and 0.4% in February. Rising mortgage interest costs have supported price growth in these months.

Food price inflation eased slightly in February but remained elevated. Grocery prices were up 10.6% in the twelve months to February, down from 11.4% in January. Meat prices increased 6.2%, while yearly price increases for fresh fruit and fresh vegetables both remained above the ten percent mark. Prices for pasta products, measured year-over-year, were up 23.1%, while dairy prices slowed to 9.1% after four consecutive months in double-digit territory. Prices at restaurants were 7.7% higher in the twelve months to February.

Shelter prices continued to decelerate despite continued upward pressure from mortgage interest costs. Shelter costs, measured year-over-year, were up 6.1% in February after rising 6.6% in January. Growth in other owned accommodation expenses and homeowners' replacement costs continued to ease amid the pullback in housing market activity. At the same time, mortgage interest costs continue to rise at a faster pace, reflecting the higher interest rate environment. Mortgage interest costs have risen 23.9% in the twelve months to February, the fastest pace in over four decades.

Annual price increases for rented accommodation were 5.4% in February, their fourth consecutive month above the five percent mark.

Overall, yearly price increases for services held steady at 5.3%, remaining above the five percent mark for the tenth consecutive month.

Employment edges higher as the unemployment rate holds steady

Headline employment rose 35,000 in March on gains among private sector employees. Employment has trended higher since September 2022, rising by 383,000 during the past seven months. Virtually all of the net gains during this period have been in full-time work.

The unemployment rate held steady at 5.0% in March for the fourth consecutive month. Among 25 to 54 year-olds, the unemployment rate remained at 4.3% and has been below the five percent mark since the Omicron variant impacted the labour market in January 2022. The proportion of core-age persons who were employed in March edged down to 84.9%,1.6 percentage points above its pre-COVID baseline.

Average hourly wages, measured on a year-over-year basis, rose 5.3% in March, after advancing 5.4% in February. On a monthly basis, total hours worked rose 0.4% after rising 0.6% in February.

Income inequality narrows in 2022 while wealth inequality rises

New data from the Distributions of Household Economic Accounts highlight the extent to which higher living costs and falling asset values have impacted household net saving and wealth, particularly among those with lower incomes, lower wealth and in younger age groups.

The average net saving of households in the second lowest income quintile fell by 50% in 2022, while middle income households (third quintile) recorded negative net savings for the first time since before the start of the pandemic. Households in all income groups posted declines in their net saving over the last year, as spending on food and accommodation services, clothing and footwear, and transportation rose.

At the same time, income inequality decreased in 2022 as the gap in the share of disposable income between households in the two highest and two lowest income quintiles narrowed. Strong increases in employment income among lower income households contributed to lower income equality.

In contrast, wealth inequality rose as lower wealth households were impacted more by recent economic pressures. In late 2022, the net worth of low wealth households was down 16.3% from levels a year earlier, while the wealthiest households experienced a decline of 5.2%. Despite the widening gap, wealth inequality remains lower than before the pandemic.

Monthly update — March 17, 2023

Output unchanged as domestic demand edges higher

Real gross domestic product was basically unchanged in the fourth quarter after rising 0.6% in the third. Slower inventory buildups and lower business outlays on machinery and equipment (M&E) and housing offset higher household and government spending and improved net trade.

The flat read on headline GDP followed five consecutive quarters of growth. Overall activity in late 2022 was 2.1% higher than in the fourth quarter of last year, and 2.9% above pre-pandemic levels observed in late 2019.

Final domestic demand, supported by higher spending on consumer durables, rose 0.3% in the fourth quarter, offsetting a 0.2% decline in the third.

Following record stockpiling earlier in the year, lower inventory accumulation weighed on economic activity in the fourth quarter, reflecting smaller buildups of manufacturing goods and retail and wholesale durables.

Investment in housing also detracted from growth as borrowers continue to adjust to higher financing costs. Outlays on housing fell for the third consecutive quarter (-2.3%) as renovations, resale activity, and new construction all declined. Total residential investment in the fourth quarter was about 2% below pre-COVID levels.

Non-residential business investment also edged down after six consecutive quarterly increases. Combined business outlays on non-residential structures and machinery and equipment (M&E) declined 1.4% as lower spending on M&E offset higher outlays on structures. Investment in M&E fell 7.8%, reflecting lower outlays on industrial machinery and equipment, computer equipment, and aircraft and other transportation equipment, while spending on engineering structures rose for the ninth consecutive quarter. Business outlays on intellectual property products continue to increase, advancing for the fourth consecutive quarter.

Merchandise exports edged down 0.3%, reflecting lower shipments of metal products, energy products, and motor vehicles and parts. Service exports rose 2.9%, bolstered by higher travel volumes. Total export volumes in the fourth quarter were 3% below pre-pandemic levels.

Goods imports were down 3.4% in the quarter, led by lower shipments of pharmaceuticals, computer equipment and electronics. Service imports fell 2.1%. Despite the pullback, total import volumes remained nearly 5% above pre-COVID levels.

Household expenditures strengthened late in the year as spending on consumer durables rebounded. Expenditures rose 0.5% in the fourth quarter, supported by purchases of new and used vehicles as easing supply disruptions improved the ability of automakers to meet consumer demand. Household spending on food products fell for the seventh consecutive quarter but remained slightly above pre-pandemic levels. Total household expenditure volumes in the quarter were 3.3% above pre-pandemic levels.

Household disposable income rose 3.0% in late 2022, buoyed in part by enhancements in government benefits, including a one-time Goods and Services Tax credit top-up and a 10.0% increase in Old Age Security payments for seniors aged 75 years and over. Current dollar household spending grew by 1.6%, pushing the savings rate up to 6.0%. Both household disposable income and saving remain well above their pre-pandemic benchmarks. Disposable income in the fourth quarter was almost 20% above pre-COVID levels, while the savings rate was over twice the rate observed in late 2019.

Business labour productivity, a measure of the volume of goods and services produced per hour worked, posted its ninth decrease in the last ten quarters. Labour productivity in the fourth quarter was slightly below its pre-COVID baseline, while unit labour costs, which measure the payments to labour required to produce a unit of output, were almost 17% above levels observed in late 2019.

Economy-wide output edges lower at year end

Real gross domestic product edged down 0.1% in December, the first monthly decrease since the Omicron variant weighed on economic activity at the beginning of the year. Lower output in mining and oil and gas extraction contributed to the headline decrease as activity in the oil sands declined for the third consecutive month.

Higher financing costs continued to dampen housing market activity. Real estate agents and brokers posted their tenth consecutive monthly decrease as activity in December was almost one quarter below pre-pandemic levels. Residential building construction declined for the eighth time in nine months but remained about 3% above its pre-COVID benchmark.

Air transportation decreased for the first time since January 2022 as winter storms severely impacted holiday travel plans. Activity in December was 30% below pre-COVID levels.

Retail volumes were up 0.8% in December, bolstered by higher sales at motor vehicle and parts dealers and higher volumes at gas stations. Overall retail volumes were about 4% above their pre-pandemic benchmark.

Accommodation and food services edged higher in December, the third gain in the last six months. Activity in this industry remained about 7% below pre-COVID levels.

Statistics Canada’s advance estimate of real GDP points to a 0.3% increase in January 2023.

Headline inflation eases while food prices continue to rise

Consumer inflation slowed to 5.9% in January 2023 as base-year effects put downward pressure on the headline rate. January marked the twenty-second consecutive month that headline inflation has been above three percent and the first time since February 2022 that the headline rate has fallen below six percent. Annual price growth excluding gasoline was 5.9% in January as inflationary pressures remain widespread.

On a monthly basis, the Consumer Price Index rose 0.5% in January before adjusting for seasonality. Higher prices for gasoline and rising mortgage interest costs led the increase.

Food price inflation edged higher to start the year, remaining in double-digit territory for the fifth consecutive month. Grocery prices rose 11.4% in the twelve months to January, up from 11.0% in December. Meat prices increased 7.3%, while yearly price increases for fresh fruit and fresh vegetables both remained above the ten percent mark. Prices for pasta products, measured year-over-year, were up 19.5%, while dairy prices rose 12.4%, their fourth consecutive month in double-digit territory. Prices at restaurants were 8.2% higher in the twelve months to January.

Shelter prices decelerated despite continued upward pressure from mortgage interest costs. Shelter costs, measured year-over-year, were up 6.6% in January after rising 7.0% in December. Growth in other owned accommodation expenses and homeowners' replacement costs continued to ease amid the pullback in housing market activity. At the same time, mortgage interest costs continue to rise at a faster pace, reflecting the higher interest rate environment. Mortgage interest costs have risen 21.2% in the twelve months to January.

Annual price increases for rented accommodation were 5.8% in January, their third consecutive month above the five percent mark.

Overall, yearly price increases for services slowed to 5.3% but remained above the five percent mark for the ninth consecutive month.

Employment and unemployment rate hold steady

Headline employment was little changed in February after rising sharply to start the year. Employment has trended higher since September 2022, rising by nearly 350,000 during the past six months. All of the net gains during this period have been in full-time work. Total employment in February was about 830,000 above its pre-pandemic level, with gains among core-age workers accounting for three-quarters of the increase. All of the net gains since the onset of the pandemic have been in full-time work.

The unemployment rate held steady at 5.0% in February for the third consecutive month. Among 25 to 54 year-olds, the unemployment rate edged up to 4.3% and has remained below the five percent mark since the Omicron variant impacted the labour market in January 2022. The proportion of core-age persons who were employed in February edged down to 85.1%,1.8 percentage points above its pre-COVID baseline.

Average hourly wages, measured on a year-over-year basis, rose 5.4% in February, up from 4.5% in January. On a monthly basis, total hours worked rose 0.6% after advancing 0.8% to start the year.

Monthly update — February 15, 2023

Economy-wide output continues to edge higher

Real gross domestic product edged up 0.1% in November, the tenth consecutive monthly increase. Higher activity in public sector industries, air transportation, and financial services supported the headline gain, while construction and retail activity declined. Economy-wide output has expanded in seventeen of the last eighteen months and, in November, was 3.1% above pre-pandemic levels.

Air transportation continued to strengthen in November, reaching its highest level since before the pandemic. Despite ten months of uninterrupted gains, air transportation remained 28% below pre-pandemic levels. COVID-19 border restrictions on travellers entering Canada—including vaccination, mandatory use of the ArriveCAN app as well as any testing and quarantine requirements – were lifted at the beginning of October. Accommodation services, bolstered by higher travel volumes, also rose in November, but remained about 2% below pre-COVID levels.

Public sector activity, led by increases in public administration and health care, expanded for the seventh consecutive month.

Finance and insurance services rose for the first time in four months as increases in household mortgage and non-mortgage debt bolstered activity. Credit card debt in November surpassed pre-COVID peak levels reported in February 2020.

Activity at food services and drinking places fell 2.9% in November, the third decline in the past six months. Sales fell at both full-service and limited-service restaurants, as well as at specialty food service providers and drinking places. Activity in this sector was almost 9% below its pre-pandemic baseline.

Higher financing costs continued to dampen activity in the real estate sector. Activity at real estate agents and brokers contracted for the ninth month in a row in November and was 21% below pre-pandemic levels. Legal services, which are strongly impacted by real estate activity, also continued to decline. Residential building construction fell for the seventh time in eight months but remained almost 5% above its pre-pandemic baseline.

Retail volumes fell 0.6% in November, the third decline in six months, reflecting lower activity at food and beverage stores, building material and garden equipment and supplies dealers, and general merchandise stores. Total retail volumes remained 4% above pre-COVID levels.

Statistics Canada’s advance estimate indicates that real GDP was unchanged in December, pointing to a 0.4% increase in economy-wide output in the fourth quarter of 2022.

Headline inflation eases on lower gas prices

Consumer inflation slowed to 6.3% in December as lower gasoline prices continued to put downward pressure on the headline rate. December marked the twenty-first consecutive month that headline inflation has been above three percent, and the tenth consecutive month above six percent. Annual price growth excluding gasoline was also 6.3% as inflationary pressures remain widespread.

On a monthly basis, the Consumer Price Index fell 0.6% in December before adjusting for seasonality. December’s monthly decline was the largest since April 2020, and was mostly driven by lower gasoline prices, which also posted their largest monthly decrease since the initial COVID-19 lockdowns.

Food price inflation eased slightly in December but remained in double-digit territory for the fourth consecutive month. Grocery prices rose 11.0% in the twelve months to December, down from 11.4% in November. Meat prices increased 6.0%, while yearly price increases for fresh fruit and fresh vegetables both remained above the ten percent mark. Prices for pasta products, measured year-over-year, were up 21.1%, while dairy prices rose 11.4%, their third consecutive month in double-digit territory. Prices at restaurants were 7.7% higher in the twelve months to December.

Shelter costs continued to rise in December. Prices for owned accommodation were up 6.5% year-over-year, easing slightly from November. Yearly increases in mortgage interest costs remained in positive territory for the sixth consecutive month (+18.0%), reflecting recent upward pressure on borrowing rates. At the same time, yearly increases in the homeowners’ replacement cost index remained below the ten percent mark for the sixth consecutive month (+4.7%), after fourteen consecutive months in double-digit territory.

Annual price increases for rented accommodation were 5.9% in December, matching the increase in November. December marked the eleventh consecutive month that yearly price increases for rented accommodation have been above the four percent mark.

Overall, prices for services were up 5.6% on a year-over-year basis, remaining above the five percent mark for the eighth consecutive month.

Declines in saving and wealth more apparent among vulnerable households

Data from the Distributions of Household Economic Accounts for the third quarter of 2022, released on January 19th, suggest that recent increases in living costs are having a negative impact on net saving and wealth, particularly among households with lower incomes, lower wealth, and in younger age groups. Net saving for the bottom 40% of income earners in the third quarter was down about 12% compared with the start of the COVID-19 pandemic. Similarly, the net worth of the bottom 40% of wealth holders was down 10.8% on a year-over-year basis in the third quarter, while the wealth of young households (less than 35 years) fell 9.8%.

More economically vulnerable households also had higher-than-average increases in their debt in the third quarter of 2022 relative to the same quarter a year earlier, especially the lowest 40% of wealth holders and those less than 45 years old.

Employment surges on gains among core-age workers and private sector employees

Headline employment rose by 150,000 in January, with gains concentrated among core-age workers and private sector employees. Two thirds of January’s headline increase reflected higher employment among 25 to 54 year-olds, with gains split evenly between men and women. Three quarters of the headline print reflected higher employment among private sector employees, while 80% of net gains reflected increases in full-time work.

Total employment in January was about 800,000 above its pre-COVID baseline, with gains among core-age workers accounting for over two-thirds of the increase. All of the net gains since the onset of the pandemic have been in full-time work.

January’s headline increase was led by higher employment in wholesale and retail trade, health and social assistance, and education. In wholesale and retail trade, the number of people working grew by 59,000, the first notable increase since February 2022.

The unemployment rate held steady at 5.0% in January, just above the record low of 4.9% reported in June and July. The unemployment rate among 25 to 54 year-olds edged down to 4.1%, as the proportion of core-age persons who were employed rose to 85.3%, 2.0 percentage points above its pre-COVID baseline.

Average hourly wages, measured on a year-over-year basis, were up 4.5% in January, slowing from 4.8% in December. On a monthly basis, total hours worked rose 0.8%.

Monthly update — January 12, 2023

Economy-wide output continues to expand

Real gross domestic product edged up 0.1% in October, the ninth consecutive monthly increase. Higher activity in public sector and client-facing industries supported the headline gain, while oil sands extraction and factory output declined. Economy-wide output has expanded in sixteen of the last seventeen months and, in October, was 2.9% above pre-pandemic levels.

Activity in arts, entertainment and recreation industries rose 2.2%, advancing for the ninth consecutive month. Despite recent momentum, activity in this sector remained over 9% below its pre-pandemic baseline. Activity in accommodation and food services expanded for the third month in a row but remained over 5% below levels reported in February 2020.

Air transportation rose sharply in October, reaching its highest level since before the pandemic. Despite nine months of uninterrupted gains, activity remained one third below pre-pandemic levels.

Wholesale trade grew 1.3%, supported by increased shipments of pharmaceuticals and pharmacy supplies due to the availability of COVID-19 vaccine boosters targeting Omicron subvariants.

Public sector activity, bolstered by increases in public administration and health care, expanded for the sixth consecutive month.

Higher financing costs continue to dampen activity in the real estate sector. Activity at real estate agents and brokers contracted in October for the eighth month in a row and was 16% below pre-pandemic levels. Legal services, which are strongly impacted by real estate activity, also continued to decline. Residential construction fell for the sixth time in seven months but remained over 6% above its pre-pandemic baseline.

Manufacturing output was down 0.7% in October, the fourth decline in six months. Output at auto assembly plants was over 40% below pre-COVID levels as lack of materials and microchip shortages continue to impact carmakers.

Oil sands extraction contracted 3.9% in October as scheduled maintenance at upgraders affected production. Output in the oil sands remained over 4% above pre-pandemic levels.

Statistics Canada’s advance estimate of real GDP points to a 0.1% increase in November.

Food and shelter costs continue to increase

Headline consumer inflation eased to 6.8% in November as lower gasoline prices were offset by higher prices for food and shelter. November marked the twentieth consecutive month that the headline rate has been above three percent, and the ninth consecutive month above six percent. Excluding gasoline, annual price growth was 6.6%, matching its record peak in July.

Food price inflation accelerated in November, remaining in double-digit territory for the third consecutive month. Grocery prices rose 11.4% in the twelve months to November, up from 11.0% in October. Meat prices increased 6.2%, while yearly price increases for fresh fruit and fresh vegetables both eclipsed the ten percent mark. Prices for pasta products, measured year-over-year, were up 17.1%, easing below the twenty percent mark for the first time in six months. Dairy prices rose 11.6%, their second consecutive month in double-digit territory. Prices at restaurants were 7.7% higher in the twelve months to November.

Shelter costs continued to rise in November. Prices for owned accommodation were up 6.7% year-over-year, easing slightly from October. Yearly increases in mortgage interest costs remained in positive territory for the fifth consecutive month (+14.5%), reflecting recent upward pressure on borrowing rates. At the same time, yearly increases in the homeowners’ replacement cost index remained below the ten percent mark for the fifth consecutive month (+5.8%), after 14 consecutive months in double-digit territory.

Annual price increases for rented accommodation were 5.9% in November, up from 4.7% in October. November marks the tenth consecutive month that yearly price increases for rental accommodation have been above the four percent mark.

Overall, prices for services were up 5.8% on a year-over-year basis, remaining above the five percent mark for the seventh consecutive month.

Employment surges on gains among private sector employees

Headline employment rose by 104,000 in December, supported by broad-based gains across industries. All of December’s headline increase reflected net gains among private sector employees, while over three quarters of the headline print reflected increases in full-time work. Higher employment among 15 to 24 year-olds accounted for two thirds of the headline increase.

Total employment at year-end was 130,000 above its previous peak level reported in May, and about 630,000 above its pre-COVID baseline.

December’s headline increase was led by higher employment in construction, transportation and warehousing, information, culture and recreation, and professional, scientific and technical services. Employment fell in health care and social assistance despite record vacancies in recent months, with declines concentrated in Ontario and Quebec.

The unemployment rate edged down to 5.0% in December, just above the record low of 4.9% reported in June and July. The unemployment rate among 25 to 54 year-olds declined to 4.1%, as the proportion of core-age persons who were employed in December stood at 84.6%, 1.4 percentage points above its pre-COVID baseline.

Average hourly wages, measured on a year-over-year basis, were up 5.1% in December, remaining above the five percent mark for the seventh consecutive month. Total hours worked in December were little changed from November.

More employees were absent due to illness in December as cases of influenza and other respiratory viruses remain elevated in many parts of the country. During the LFS reference week, 8.1% of employees were absent due to illness or disability. While this exceeded December’s pre-pandemic average, it remained below the record high of 10.0% set in January 2022 when the Omicron variant was spreading across Canada (not seasonally adjusted).

Monthly update – December 10, 2022

Energy exports fuel economic growth as final domestic demand contracts

Real gross domestic product rose 0.7% in the third quarter, following similar gains during the first two quarters of the year. Economic activity has increased for five consecutive quarters, expanding by 5.4% over this period. Overall activity in the third quarter was 3.0% above pre-pandemic levels observed in late 2019. Final domestic demand edged down 0.2%, the first decrease since the second quarter of 2021.

Most of the increase in quarterly GDP reflected higher export volumes. Goods exports rose 2.2%, supported by higher shipments of crude oil and bitumen, and agricultural products. While prices of crude oil and bitumen were down, export volumes increased significantly. Higher wheat yields contributed to higher exports of farm products. The total volume of goods exported in the quarter remained 2.3% below pre-pandemic levels.

Import volumes edged lower in the third quarter after advancing swiftly in the second. Goods imports were down 0.8%, reflecting widespread declines in energy products, including crude oil, natural gas, and nuclear fuel. The total volume of goods imported were 11.4% above their pre-COVID baseline.

Non-residential business investment continued to steadily advance. Combined business outlays on structures and machinery and equipment (M&E) have risen for six consecutive quarters as spending surpassed pre-pandemic levels by 3.7%. Outlays on non-residential structures, buoyed by higher spending on engineering projects, rose 2.8%, and were 1.8% above levels observed in late 2019. Investment in M&E contracted by 2.0% but remained 6.1% above its pre-pandemic baseline.

Business stockpiling also supported growth as non-farm inventories reached a record high of $46.8 billion.

Investment in housing contracted sharply for the second consecutive quarter as the housing market continues to adjust to higher borrowing costs. Outlays fell 4.1% as renovation activity and resale activity contracted. Despite the pullback, overall investment in housing remained 1.6% above pre-COVID levels.

Household expenditures edged lower in the third quarter, reflecting lower spending on goods. Outlays on consumer durables fell 2.1% as higher prices on big ticket items weighed on spending volumes. Outlays on semi-durable and non-durable goods were also down, while spending on services edged higher. Total household expenditures in the quarter were 2.7% above pre-pandemic levels.

Nominal GDP fell 0.7% in the third quarter, following a 4.0% increase in the second, reflecting sharp declines in energy prices. Household disposable income increased 0.8%, though wages and salaries advanced at their slowest pace since the second quarter of 2020. Current dollar consumption slowed markedly, pushing the savings rate up to 5.7%.

Household disposable income and saving, measured in current dollars, remained well above their pre-pandemic baselines. Disposable income in the third quarter was 17% higher than before the onset of the pandemic, while the savings rate, at 5.7%, was over twice the rate observed in late 2019.

Business labour productivity, a measure of the volume of goods and services produced per hour worked, rose 0.6%, the second consecutive increase after declining for seven consecutive quarters. Labour productivity in the third quarter was similar to pre-pandemic levels.

Economy-wide output continues to advance at a modest pace

Real gross domestic product edged up 0.1% in September, the eighth consecutive monthly increase. Higher oil sands output supported the headline gain, along with increases in engineering construction. Higher output in professional, scientific and technical services also contributed to the headline gain.

Mining, quarrying and oil and gas extraction increased in October for seventh time in eight months. Output in the oil sands rose 4.0% as crude bitumen production reached a record level.

Output in the construction sector increased 0.5%, bolstered by higher engineering activities as residential construction fell for the fifth time in six months.

Higher financing costs continue to dampen activity in the real estate sector. Activity at agents and brokers fell sharply for the seventh consecutive month and was 13% below pre-pandemic levels.

Activity at food services and drinking places fell for the second time in three months and was about 9% below its pre-pandemic baseline.

Statistics Canada’s advance estimate of real GDP indicated that output was essentially unchanged in October.

Businesses anticipate continued challenges related to inflation and supply chains

Data for the fourth quarter from the Canadian Survey on Business Conditions continue to underscore the cost pressures, and logistical challenges facing many companies. Three in five businesses expect rising inflation to be an obstacle over the next three months, while almost half expect challenges related to higher input costs. Six in ten businesses reported that they were somewhat or very likely to pass costs increases on to consumers over the next twelve months.

Supply chain disruptions continue to be widely anticipated. Nearly a quarter of businesses expect difficulty acquiring inputs, products or supplies domestically over the next three months, with over half of these businesses anticipating that supply challenges will continue for six months or more.

The fourth quarter survey points to little change in the longer-term outlook. Over two-thirds of businesses are either somewhat or very optimistic about their outlook over the next 12 months.

Headline inflation holds steady as gasoline prices rise

Headline consumer inflation was 6.9% in October, matching the pace in September. October marked the nineteenth consecutive month that the headline rate has been above three percent, and the eighth consecutive month above six percent. Excluding gasoline, annual price growth held steady at 6.5%.

Food price inflation eased slightly in October. Grocery prices were up 11.0% in the twelve months to October, slowing from 11.4% in September. Meat prices increased 5.5%, while yearly price increases for fresh fruit edged below the ten percent mark for the first time in seven months. Prices for pasta products were up 27.4% in the twelve months to October, while dairy prices have risen 10.6%. Annual price increases at restaurants topped the seven percent mark for the fifth consecutive month.

Measured month-over-month, grocery prices edged down 0.1% in October, after rising by 1.0% in both August and September. Grocery prices have increased on a monthly basis in ten of the last twelve months.

Shelter costs edged higher in October. Annual price increases for owned accommodation were 6.8%, up from 6.5% in September. Yearly increases in mortgage interest costs remained in positive territory for the fourth consecutive month (+11.4%), reflecting recent upward pressure on borrowing rates. At the same time, yearly increases in the homeowners’ replacement cost index were below the ten percent mark for the fourth consecutive month (+6.9%) after 14 consecutive months in double-digit territory. Annual price increases for rented accommodation (+4.7%) remained above the four percent mark for the ninth consecutive month. Prices for services were up 5.4% on a year-over-year basis in October, remaining over the five percent mark for the sixth consecutive month.

Employment rate among core-age women reaches a record high

Employment was little changed in November (+10,000) following a notable gain in October (+108,000). Full-time employment rose while part-time work was little changed. Employment among core age workers rose for the third consecutive month as the employment rate among core-age women reached a record high (+81.6%).

The unemployment rate edged down to 5.1% in November as fewer people participated in the labour market. The unemployment rate among 15 to 24 year-old women fell 1.2 percentage points to 9.3%, the first decline since June. The rate among young men was little changed at 11.2%. The unemployment rates among core-age men and core-age women were 4.3% and 4.1%, respectively.

Long-term unemployment – the number of people who have been continuously unemployed for 27 weeks or more – was little changed at 174,000, marking the sixth consecutive month that long-term unemployment which long term unemployment was either at or below pre-pandemic levels.

Absences due to illness or disability rose in November as cases of influenza and other respiratory viruses were elevated in many parts of the country. In all, 6.8% of employees were absent due to illness or disability during the Labour Force Survey’s reference week. This was slightly higher than the pre-pandemic average for November, but below the record high set in January 2022, when absences due to illness or disability affected 10.0% of employees (not seasonally adjusted).

Average hourly wages, measured on a year-over-year basis, were up 5.6% in November, remaining above the five percent mark for the sixth consecutive month.

Monthly update – November 10, 2022

Economy-wide output edges higher in August

Real gross domestic product edged up 0.1% in August, matching the gain in July. Increases in crop production, retail trade, and public sector activity supported the headline gain, while lower output in manufacturing, mining and oil and gas extraction, and construction weighed on growth. Economy-wide output has expanded for seven consecutive months and has risen 4.0% since August of last year.

Activity in client-facing industries continued to moderate in August as the pent-up demand for these services levels off. Activity at food services and drinking places edged up 0.4%, remaining at or above pre-pandemic levels for the fourth consecutive month. Accommodation services posted its sixth increase in seven months but remained almost 3% below its pre-COVID baseline. Arts, entertainment and recreation posted its seventh consecutive increase and was 8% below pre-pandemic levels.

Retail trade rose 1.2% in August, led by higher volumes at gasoline stations as prices at the pump continued to decline from highs in the spring. Increases in retail volumes were broad-based, with many store types partly rebounding from lower activity in July.

Output continued to scale back in industries that are sensitive to interest rate changes. Real estate agents and brokers posted their sixth consecutive monthly decrease as homebuyers adjust to higher borrowing costs. Activity at agents and brokers in August was 13% below pre-pandemic levels, after peaking at nearly 50% above that mark in March 2021. Legal services, which are strongly impacted by housing market activity, also fell for the sixth consecutive month.

Construction posted its fifth consecutive decrease but remained slightly above pre-pandemic levels. Lower output in August reflected declines in residential and non-residential activity, while engineering construction also fell for third time in four months.

After steady gains in late 2021 and early 2022, factory output fell in August for the fourth time in five months. Durable manufacturers reported their largest decrease since September 2021, reflecting declines in wood products and non-metallic mineral products. Combined output at automakers and parts suppliers was down for the third time in four months and was 16% below pre-pandemic levels.

Statistics Canada’s advance estimate indicates that real gross domestic product edged up 0.1% in September, pointing to a 0.4% increase in the third quarter.

Food prices continue to rise in September as headline inflation eases

Headline consumer inflation slowed to 6.9% in September, down from 7.0% in August. September marked the eighteenth consecutive month that the headline rate has been above three percent, and the seventh consecutive month above six percent. Headline inflation has eased in recent months on lower prices at the pump. Excluding gasoline, annual price growth rose to 6.5% in September, up from 6.3% in August.

Food prices continued to rise in September. Grocery prices, measured year-over-year, were up 11.4%, the largest yearly increase since 1981. Meat prices increased 7.6%, while yearly price increases for fresh fruit remained at or above the ten percent mark for the sixth consecutive month. Prices for pasta products were up 22.5% in the twelve months to September, while dairy prices have risen 9.7%. Annual price increases at restaurants topped the seven percent mark for the fourth consecutive month.

Shelter costs also rose in September. Annual price increases for owned accommodation were 6.5%, up from 6.2% in August. Yearly increases in mortgage interest costs remained in positive territory for the third consecutive month (+8.3%), reflecting recent upward pressure on borrowing rates. At the same time, yearly increases in the homeowners’ replacement cost index were below the ten percent mark for the third consecutive month (+7.7%) after 14 consecutive months in double-digit territory. Annual price increases for rented accommodation remained above the four percent mark for the eighth consecutive month. Prices for services were up 5.6% on a year-over-year basis in September, remaining over the five percent mark for the fifth consecutive month.

Sizable employment gains in October as the unemployment rate holds steady

Headline employment rose by 108,000 in October, fully offsetting cumulative losses from May to September. All of October’s headline gain reflected increases in full-time work. Gains were also concentrated among private sector employees and core-age workers. October’s headline marked the largest monthly increase since the labour market rebounded from Omicron-related restrictions early in the year.

Employment gains in October were broad-based across industries. Employment rose in manufacturing and construction, offsetting declines in recent months. Accommodation and food services, and professional, scientific, and technical services also posted gains, while employment fell in wholesale and retail trade, and natural resources.

The unemployment rate held steady at 5.2% in October as more people participated in the labour force, led by increases among young women and core-age men. The unemployment rate among 25 to 54 year-olds fell to 4.2%, while the proportion of core-age workers that were employed in October rose to 84.5%, led by increases among men. Employment rates among both core-age men and core-age women remain well above their pre-pandemic benchmarks.

Average hourly wages, measured on a year-over-year basis, were up 5.6% in October, remaining above the five percent mark for the fifth consecutive month. Higher-paid employees have been more likely to receive a pay raise over the past year. Among workers who have been with their employer for at least a year, nearly two-thirds with wages above $40.00 per hour had received a raise, compared to half of those making $20.00 per hour or less.

October’s employment report also examined the prevalence of financial difficulties within the context of concerns over rising living costs. More than one in three Canadians (35.3%) aged 15 and older live in households that found it difficult or very difficult to meet its financial needs in October, up from one in five in October 2020. These financial needs include paying for transportation, housing, food, clothing, and other necessary expenses.

Monthly update – October 13, 2022

Slower output growth continues in July

Real gross domestic product edged up 0.1% in July, matching the increase in June. Increases in mining, oil sands extraction, public sector activity, and crop production supported the headline gain, while lower retail volumes weighed on growth.

Activity in client-facing industries moderated as the pent-up demand for these services levels off. After five consecutive monthly increases, activity at food services and drinking places declined 1.6%, but remained at or above pre-pandemic levels for the third consecutive month. Arts, entertainment and recreation edged up 0.6%, but was 9% below its pre-pandemic baseline. Accommodation services also edged higher but remained over 2% below levels observed in February 2020.

Retail volumes were down 1.9% in July, reflecting declines at gas stations and food and beverage stores as consumers continue to adjust to higher prices. Retail activity in July was at its lowest level since December 2021.

Output continued to scale back in industries that are sensitive to interest rate changes. Real estate agents and brokers posted their fifth consecutive monthly decrease as homebuyers adjust to higher borrowing costs. Activity was 11% below its pre-pandemic baseline, the lowest level since agents and brokers began to recover from the initial lockdowns. Legal services, which are strongly impacted by housing market activity, was also down for the fifth consecutive month.

Construction posted its fourth consecutive decrease but remained slightly above pre-pandemic levels. July’s decrease reflected lower engineering construction as both residential and non-residential building construction edged up following declines in the spring.

Statistics Canada’s advance estimate indicates that real gross domestic product was essential unchanged in August.

Consumer inflation continues to ease on lower gas prices

Headline consumer inflation slowed to 7.0% in August, down from 7.6% in July. August marked the seventeenth consecutive month that the headline rate has been above three percent, and the sixth consecutive month above six percent. Lower prices at the pump have contributed to slower headline inflation during the summer months.

Excluding gasoline, annual price growth eased to 6.3% in August as inflationary pressures remained widespread.

Food prices continued to edge higher in August. Grocery prices, measured year-over-year, were up 10.8%, the largest yearly increase since 1981. Meat prices were up 6.5%, while yearly increases for fresh fruit remained at or above the ten percent mark for the fifth consecutive month. Prices for pasta products were up 20.7% in the twelve months to August. Annual price increases at restaurants topped the seven percent mark for the third consecutive month.

Shelter costs, measured year-over-year, continued to ease but remain elevated. Annual price increases for owned accommodation slowed to 6.2% in August after peaking at 7.6% in April. Yearly increases in the homeowners’ replacement cost index fell below the ten percent mark for the second consecutive month after 14 consecutive months in double-digit territory. At the same time, mortgage interest costs, measured year-over-year, remained in positive territory for the second consecutive month (+4.8%), reflecting recent upward pressure on lending rates. Annual price increases for rented accommodation remained above the four percent mark for the seventh consecutive month as the demand for rental units continues to rise.

Prices for services were up 5.5% on a year-over-year basis in August, remaining over the five percent mark for the fourth consecutive month.

Employment little changed in September

Headline employment was little changed in September (+21,000) as increases in educational services and health care were offset by lower employment in manufacturing and information, culture and recreation. The number of private sector employees and self-employed workers was little changed.

The pace of employment growth has moderated substantially following Omicron-related movements early in the year. Total employment in September was similar to levels reported in February, and down about 90,000 from the recent peak in May.

The unemployment rate declined to 5.2% in September as fewer people searched for work. Average hourly wages, measured on a year-over-year basis, rose 5.2%, remaining above the five percent mark for the fourth consecutive month.

The proportion of workers who reported that they usually work exclusively at home was down slightly from 16.8% in August to 16.3% in September. The share of workers with hybrid arrangements was unchanged in September, at 8.6%.

Wealth inequality rose for the first time since the start of the pandemic

New data from the Distributions of Household Economic Accounts, released on October 3rd, showed that wealth inequality rose in the second quarter as asset markets fell into correction territory. This marked the first quarterly increase in wealth inequality since the start of the pandemic. The net worth of households in the bottom 40 percent of the wealth distribution fell by 12.0%, more than twice the rate of decline of 5.9% among households in the top wealth quintile.

While wealth fell across all age groups, younger households were most impacted. The average net worth of households in the youngest age group (less than 35 years) fell by 8.2%, reflecting the sharp decline in real estate values.

The data on household distributions also showed that the income gap was at its highest level since the start of the pandemic. The gap in the share of disposable income between households in the two highest income quintiles and the two lowest income quintiles reached 46.3% in the second quarter. Strong wages gains among households in the lowest income quintile were more than offset by lower government transfers, mainly due to the expiry of most pandemic-related benefits.

Monthly update — September 15, 2022

Household spending and inventory buildups support economic growth

Real gross domestic product rose 0.8% in the second quarter, matching the gain in the first. Economic activity has expanded for four consecutive quarters, increasing by 4.6% over this one-year period. Overall activity in the second quarter was 1.7% above pre-pandemic levels observed in late 2019.

Increases in household spending and business inventories supported economic growth in the second quarter. Household outlays were up 2.3%, led by higher spending on services and semi-durables, such as clothing and footwear. Outlays on consumer durables fell as price increases for big ticket items weighed on household purchases. Total household spending in the quarter was 3.2% above pre-pandemic levels.

Higher business inventories were a major contributor to growth, supported by increases in machinery and building supplies and fertilizers. Farm inventories, bolstered by higher production of wheat and canola, posted their largest quarterly increase in over sixty years.

Non-residential business investment continues to recover. Combined business outlays on structures and machinery and equipment (M&E) have risen for five consecutive quarters as spending approached pre-pandemic levels. Outlays on non-residential structures, buoyed by higher spending on energy projects, rose 2.7%, but remained about 4% below levels observed in late 2019. Investment in M&E, led by higher spending on transportation equipment, rose 4.5%, and was nearly 5% above its pre-pandemic baseline. Spending on intellectual property products increased after three consecutive quarterly declines.

Lower residential investment detracted from growth as the housing market continues to adjust to higher borrowing costs. Investment in housing fell 7.8% as renovation spending declined. Higher borrowing costs and lower resale activity led to a 24.7% decrease in ownership transfer costs. Despite the pullback, overall residential investment in the quarter remained about 7% above pre-COVID levels.

Export volumes rebounded in the second quarter, supported by higher shipments of metal products and a notable increase in travel services. Import volumes, bolstered by increases in transportation equipment, posted their largest quarterly increase (+6.9%) since trade activity ramped up after the initial COVID-lockdowns.

Total export volumes in the quarter remained about 6% below levels reported in late 2019, while import volumes were over 6% higher than their pre-COVID baseline.

Nominal GDP rose 4.2% in the second quarter, bolstered by the sharp rise in energy prices. Household disposable income increased 1.0% as higher wages and salaries offset lower government transfers, while the sharp rise in household spending pushed the savings rate down to 6.2%.

Household disposable income and saving remain well above their pre-pandemic baselines. Disposable income in the second quarter was 16% higher than before the onset of the pandemic, while the savings rate, at 6.2%, was over twice the rate observed in late 2019.

Business labour productivity, a measure of the volume of goods and services produced per hour worked, edged up after declining for seven consecutive quarters. Labour productivity in the second quarter was 1.3% below pre-pandemic levels.

Slower growth in economy-wide output as borrowing costs rise

Economic activity, measured month-over-month, moderated during the spring months. After remaining essentially unchanged in May, economic output edged up 0.1% in June. While many client-facing services continued to post gains, activity has pulled back in industries that are sensitive to interest rate changes.

Activity at agents and brokers declined in June for the fourth consecutive month, and was 8% below pre-pandemic levels. Residential construction posted its third consecutive decrease, but remained almost 9% above levels in February 2020. Non-residential and repair construction also continued to edge down toward mid-year.

Finance and insurance industries fell 0.6%, the second decline in three months. While declines in financial industries were broad-based at the mid-year mark, financial investment services posted their largest month-over-month decrease (-1.6%) since May 2020.

Increased activity in the public sector—which includes education, health and social assistance, and public administration—supported June’s headline increase.

Statistics Canada’s advance estimate of real GDP for July points to a 0.1% decline.

Businesses anticipate continued challenges related to inflation and supply chains

Data for the third quarter from the Canadian Survey on Business Conditions continue to underscore the cost pressures and logistical challenges facing many companies. Three in five businesses expect rising inflation to be an obstacle over the next three months, while almost half expect challenges related to higher input costs. About one-third of businesses expect to raise prices over the coming months.

Supply chain disruptions continue to be widely anticipated. Over one-quarter of businesses expect difficulty acquiring inputs, products or supplies domestically over the next three months, with over half of these businesses anticipating that supply challenges will continue for six months or more.

The third quarter survey also points to a more optimistic longer-term outlook. Over two-thirds of businesses are either somewhat or very optimistic about their outlook over the next 12 months. In addition, nearly three quarters of businesses expect positive average yearly growth over the next three years.

Consumer inflation slows on lower gasoline prices

Headline consumer inflation slowed to 7.6% in July, down from 8.1% in June. July marked the sixteenth consecutive month that the headline rate has been above three percent, and the fifth consecutive month above six percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth.

Lower gasoline prices contributed substantially to the deceleration in July’s headline rate. Prices at the pump were up 35.6% on a year-over-year basis, down from 54.6% in June. Measured month-over month, gasoline prices fell 9.2% in July. Excluding gasoline, annual consumer price growth edged up to 6.6% as inflationary pressures remain widespread.

Food prices edged higher in July. Grocery prices rose 9.9% on a year-over-year basis, up from 9.4% in June. Annual price increases for meat slowed to 6.1%, while yearly increases for fresh fruit remained at or above the 10 percent mark for the fourth consecutive month. Prices for pasta products have risen 20% in the twelve months to July. Annual price increases at restaurants topped the seven percent mark for the second consecutive month.

Shelter costs, measured year-over-year, eased slightly in July but remained elevated. Annual price increases for owned accommodation slowed to 6.3%, down from 6.7% in June. Yearly increases in the homeowners’ replacement cost index edged under the ten percent mark for the first time since April 2021. At the same time, mortgage interest costs, measured year-over-year, rose back into positive territory for the first time since September 2020, reflecting recent upward pressure on lending rates. Annual price increases for rented accommodation remained above the four percent mark for the sixth consecutive month as the demand for rental units continues to rise.

Prices for services rose 5.7% in the twelve months to July, up from 5.2% in June. Prices for air transportation were up 25.5% from June to July, bolstered by the strong demand for flights.

Employment continues to pull back

Headline employment fell by 40,000 in August as declines in educational services and construction were offset by increases in professional, scientific and technical services and in other service industries. Headline losses were concentrated among public sector employees, as the number of private sector employees and self-employed workers held steady. From May to August, total employment has fallen by 114,000, reflecting declines in wholesale and retail trade, educational services, and health care and social assistance. All of the net losses from May to August were among women.

The unemployment rate was 5.4% in August, up 0.5 percentage points from record lows in June and July. The pace of wage growth edged higher; average hourly wages rose 5.4% on a year-over-year basis, up from 5.2% in July.

Total employment in August was about 380,000 above pre-pandemic levels, with all of the net gains accounted for by core-age workers (25 to 54 year-olds). Despite edging lower during the summer months, the employment rate among core-age workers, at 84.1%, remained well above its pre-pandemic baseline.

August’s employment report provided new information on the number of Canadians who are considering a job change. In August, the proportion of permanent employees who were planning to leave their job within the next 12 months, at 11.9%, was almost double the level recorded at the start of the year (6.4%).

The report also examined how population aging is affecting Canada’s labour supply. In August, there were 307,000 Canadians who had left their job in order to retire at some point in the last year, up from 233,000 one year earlier and from 273,000 in August 2019. If the age composition of the working age population had stayed constant over the past three years—rather than older Canadians comprising a larger and larger share of the population—the number of people in the labour force would have been 374,000 higher than actually observed in August.

Household wealth falls by nearly one trillion

Household net worth—the value of all household assets minus liabilities—fell 6.1% in the second quarter, a decrease of $990 billion and the largest quarterly decline on record. Household financial assets were hit by weaker equity markets, while the value of residential real estate fell sharply as borrowing costs rose. Household liabilities increased as both mortgage and non-mortgage borrowing rose, the former advancing at a near record pace.

Despite the record decline, household net worth remained 23.9% higher than before the pandemic, a net increase of $2.9 trillion.

Monthly update — August 11, 2022

Output growth stalls in May on lower goods production

Real gross domestic product was essentially unchanged in May, after advancing 0.3% in April. The pace of output growth has slowed in recent months following more sizable gains earlier in the year as Omicron-related restrictions began to ease. In May, economy-wide output remained 2.2% above pre-pandemic levels. Manufacturing, construction and oil and gas extraction posted declines, while activity in many client-facing services continued to ramp up.

Factory output fell 1.7% in May, the first monthly decrease since September of last year. Output at auto assembly plants was down over 20% as retooling and semi-conductor chip shortages weighed on production. Monthly output at assembly plants and part suppliers remains substantially below pre-pandemic levels.

Construction activity fell for the second consecutive month as a strike by unionized workers in Ontario delayed numerous projects. Despite the pullback, residential construction remained over 11% above pre-pandemic levels. Both non-residential building and engineering construction were down, and remained below levels observed in February 2020.

Oil and gas extraction declined in May, following three consecutive monthly increases. After a notable increase in April, oil sands extraction fell 3.4% as maintenance at upgrading facilities affected output. Despite the decline, oil sands output was about 6% above pre-pandemic levels. Support activities for oil and gas extraction rose for the fourth consecutive month and have recovered to within 6 percent of levels observed in early 2020.

Stronger activity in transportation services in May helped offset declines in goods production. Air transportation rose 14.1%, the third consecutive double-digit increase. Major Canadian airlines carried 5.3 million passengers on scheduled and charter services, more than 10 times the number of passengers carried in May of last year. Despite strong momentum in recent months, passenger volumes remained nearly one quarter below pre-pandemic levels. Urban transit also continued to recover in May as more people return to in-person work.

Activity in many other client-facing industries continued to strengthen in May. Food services and drinking places posted their fourth consecutive monthly increase, with activity exceeding pre-pandemic levels for the second consecutive month. Arts, entertainment and recreation services also posted a fourth consecutive gain, and has recovered to within 10 percent of levels observed in February 2020. Accommodation services was essentially unchanged in May after strengthening in recent months, and remained about 2% below its pre-COVID baseline.

Statistics Canada’s advance estimate of real gross domestic product points to a 0.1% increase in June.

Consumer inflation continues to accelerate in June

Headline consumer inflation accelerated to 8.1% in June, the largest yearly increase in nearly four decades. June marked the fifteenth consecutive month that the headline rate has been above three percent, and the fourth consecutive month above six percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth.

Higher gasoline prices contributed substantially to the acceleration in June’s headline rate. Prices at the pump were up 54.6% on a year-over-year basis, up from 48.0% in May. Measured month-over month, gasoline prices rose 6.2% in June, after posting their largest monthly increase in May (+12.0%) since oil prices began to recover in the early stages of the pandemic.

Excluding gasoline, annual consumer price growth was 6.5% in June, up from 6.3% in May. Higher prices for passenger vehicles contributed to the acceleration as the demand for autos continues to outpace supply.

Shelter costs, measured year-over-year, eased slightly in June but remained elevated. Annual price increases for owned accommodation slowed to 6.7%, down from 7.3% in May. The homeowners replacement cost index, which partly reflects prices for new homes, rose at a slower annual pace in June, but remained in double-digit territory for the fourteenth consecutive month. At the same time, mortgage interest costs continued to decline at a slower annual pace, but have remained in negative territory, year-over-year, since October 2020. Annual price increases for rented accommodation remained above the four percent mark for the fifth consecutive month.

Food prices also remained elevated in June. Grocery prices were up 9.4% on a year-over-year basis, easing slightly from highs in April and May. Annual price increases for meat slowed to 8.0%, while yearly increases for fresh fruit remained at or above the 10 percent mark for the third consecutive month. Restaurant prices rose 7.1% in the twelve months to June, up from 6.8% in May.

Prices for services rose 5.2% on a year-over-year basis in June, matching the increase in May. Prices for air transportation were up 6.4% from May to June, bolstered by pent-up demand heading into the summer travel season.

Unemployment rate remains at record low in July

Headline employment was little changed in July (-31,000) as declines in service industries were offset by higher employment in the goods sector. Increases in self employment moderated declines among public sector workers, while the number of private sector employees was little changed. From May to July, total employment decreased by 74,000, reflecting declines in wholesale and retail trade, health care and social assistance, and education.

The unemployment held steady at 4.9% in July, matching the record low in June. The adjusted unemployment rate—which includes those who wanted a job but did not look for one—also held steady at a record low of 6.8%. Long-term unemployment continued to edge down in July.

Total employment in July was about 420,000 above pre-pandemic levels, with higher employment among core-age workers (25 to 54 year-olds) accounting for virtually all of the net gains. At 84.3%, the employment rate among core-age workers remained well above its pre-pandemic baseline, while their unemployment rate was 4.0%, a record low.

The pace of wage growth held steady in July. Average hourly wages for all employees rose 5.2% on a year-over-year basis, matching the increase in June. The proportion of workers working most of their hours from home edged up as workers and employers faced the seventh wave of the pandemic. In July, 5.5% (947,000) of employees were absent from work due to illness or disability. This was 0.6 percentage points higher than the July average from 2017 to 2019, but less than the record high of 10.0% set in January 2022, during the fifth wave of COVID-19.

Income inequality rises in early 2022

New data from the Distributions of Household Economic Accounts, released on August 3rd, showed that, despite broad-based increases in wages and salaries, income inequality rose in the first quarter of 2022 relative to the same quarter a year earlier. The rise in income inequality was partly attributable to the expiry of pandemic-related government benefits, which had a larger impact on households in lower-income quintiles and younger age groups.

The new data also showed that, during the first quarter of 2021, households in the lowest two wealth quintiles and those aged younger than 45 years increased their average net worth at a faster pace than wealthier and older households. Less wealthy households grew their net worth as debt declined, while financial market losses weighed on wealthier households.

More than two-thirds of Canadians benefited from at least one of the pandemic relief programs in 2020

A new study based on results from the 2021 Census of Population found that nearly three-quarters of women (74.8%) and just over three in five men (61.6%) received benefits related to the COVID-19 pandemic in 2020. Released on August 2nd, the study showed that women were much more likely than men to receive top-ups to the Canada Child Benefit, but slightly less likely to receive federal emergency and recovery benefits. It also found that middle-income Canadians were more likely to receive benefits from COVID-relief programs, but lower-income Canadians received higher amounts.

Monthly update – July 14, 2022

Slower growth in April as rising borrowing costs cool housing market activity

Real gross domestic product rose 0.3% in April, following two months of stronger growth. Economy-wide output has increased in 10 of the last 11 months and, in April, was 2.2% above pre-pandemic levels. Higher output in mining and oil and gas extraction, transportation and warehousing, and retail trade supported the headline increase, while pullbacks in home resale activity and financial services weighed on gains.

Oil and gas extraction rose sharply in April, the third consecutive monthly increase. Oil sands extraction was up 5.6%, the largest increase since extraction activity began ramping up after the initial COVID lockdowns. Non-metallic mineral mining rose 3.6% on higher potash production, while support activities for mining and oil and gas extraction rose 6.2%. Total mining and oil and gas output rose above pre-pandemic levels in April for the first time since October of last year.

Activity in client-facing industries strengthened in April as capacity limits and travel restrictions continued to be eased or lifted. Food services and drinking places rose for the third consecutive month, edging above February 2020 levels for the first time since the start of the pandemic. Accommodation services, supported by increases in domestic and international travel, also continued to strengthen as activity approached its pre-pandemic baseline. Air transportation rose 20%, after posting a 32% gain in March. Major Canadian airlines carried 4.7 million passengers on scheduled and charter services in April, almost nine times the number of passengers carried in April 2021. Passenger volumes on Canadian carriers remained about one third below pre-pandemic levels.

Activity in arts, entertainment and recreation industries also continued to rebound in April, but remained 11% below pre-pandemic levels.

Retail volumes rose in April for the first time in three months, after lower activity at auto dealers weighed on activity in February and March. Increased activity at general merchandise stores and miscellaneous retailers led the growth, while increases in domestic travel coupled with the gradual return to office work contributed to higher demand at the pumps.

Residential construction fell 1.2% as lower renovation activity offset an increase in new builds. Residential output remained over 13% above pre-pandemic levels. Non-residential building construction rose for the tenth consecutive month, while engineering construction posted its seventeenth consecutive monthly increase. Despite sustained momentum, non-residential output remained slightly below pre-pandemic levels.

A sharp contraction in real estate activity weighed on economic activity in April as homebuyers continued to adjust to higher borrowing costs. Activity at real estate agents and brokers fell by 15%, the largest decrease since the early stages of the pandemic as home resale markets cooled across the country. Activity at agents and brokers in April was 4% above pre-pandemic levels; by contrast, it was nearly 50% above pre-COVID levels when housing market activity peaked in March of last year.

After ten consecutive monthly increases, financial services declined in April as activity in bond and other financial markets cooled.

Statistics Canada’s advance estimate of real gross domestic product in May points to a 0.2% decrease.

Consumer inflation at its fastest pace in nearly four decades

Headline consumer inflation accelerated to 7.7% in May, the largest yearly increase since 1983. May marked the fourteenth consecutive month that the headline rate has been above three percent, and the third consecutive month above six percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth.

Higher gasoline prices contributed substantially to the acceleration in May’s headline rate. Prices at the pump were up 48.0% on a year-over-year basis, up from 36.3% in April. Gasoline prices, measured month-over-month, rose 12.0%, the largest monthly increase since oil prices began to recover following lockdowns in the early stages of the pandemic. Excluding gasoline, annual consumer price growth was 6.3% in May, up from 5.8% in April.

Shelter costs remained elevated in May. Prices for owned accommodation rose 7.3% on a year-over-year basis, as increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the thirteenth consecutive month. In contrast, mortgage interest costs were 2.7% lower in the twelve months to May, and have remained in negative territory since October 2020. Yearly price increases for rented accommodation remained above the four percent mark for the fourth consecutive month.

Food prices also remained elevated in May. Bolstered by rising input prices and transportation costs, grocery prices rose 9.7% on a year-over-year basis, matching the increase in April. Annual price increases for meat edged below the 10 percent mark for the first time in five months, while prices for pasta products were 17.1% higher than in May of last year.

Annual price increases for both food and shelter have exceeded the headline rate for the last six months.

Prices for services rose 5.2% on a year-over-year basis in May, following a 4.6% gain in April. Rising costs for traveller accommodation and higher menu prices contributed to the increase in service prices as the demand for leisure activities and travel continues to strengthen.

Unemployment rate edges below five percent in June

Headline employment fell by 43,000 in June on declines in self-employment and losses among older workers. Declines in service industries, most notably in retail trade, fully offset higher employment in construction and manufacturing. June’s headline losses marked the first decrease in total employment not associated with tighter public health restrictions since the start of the pandemic.

The number of unemployed workers also fell in June as the unemployment rate edged down to 4.9%, marking the fourth consecutive month that the rate has reached a new record low. The adjusted unemployment rate—which includes those who wanted a job but did not look for one—fell 0.2 percentage points to 6.8%, the second consecutive record low. Long-term unemployment also returned to pre-pandemic levels in June.

Total employment in June remained about 450,000 above pre-pandemic levels, with higher employment among core-age workers (25 to 54 year-olds) accounting for virtually all of the net gains. At 84.7%, the employment rate among core-age workers remained well above its pre-pandemic baseline, while their unemployment rate declined to 4.1%, a record low.

The pace of wage growth strengthened in June. Average hourly wages for all employees rose 5.2% on a year-over-year basis, up from 3.9% in May. Average wages rose more sharply among non-unionized workers (+6.1%) than among workers with union coverage (+3.7%).

The proportion of workers that usually work all of their hours at home continued to decline in June, edging down to 1.3 percentage points to 17.9%. The proportion of workers with hybrid work arrangements increased to 6.7%, continuing a slow upward trend observed since the start of the year.

Montly update - June 16, 2022

Economic growth slows on lower export volumes

Real gross domestic product rose 0.8% in the first quarter, after advancing 1.6% in late 2021. Economic activity has expanded in six of the last seven quarters, and, in early 2022, was 0.8% above pre-pandemic levels observed in late 2019.

Lower export volumes weighed heavily on the pace of growth in the first quarter. Goods exports declined 2.7%, reflecting lower shipments of crude oil and crude bitumen, farm and fishing products, and metals and minerals. Exports of passenger cars and light trucks were little changed in the quarter, and remained 25% below pre-pandemic levels as supply disruptions continue to impact automakers and parts suppliers.

Despite gains in five out of the last seven quarters, merchandise export volumes remained almost 7% below pre-COVID levels. After strengthening during the second half 2021, service exports were down 1.1% in early 2022, and remained 14% below their pre-pandemic baseline.

Merchandise import volumes declined 0.9% in the first quarter, after advancing 3.6% in late 2021. Lower imports of energy products contributed to the decline. Merchandise import volumes in the first quarter were about 4% above pre-pandemic levels.

Increases in household spending contributed to economic growth in early 2022. Household outlays rose 0.8%, led by higher spending on consumer durables, including passenger cars, new trucks, vans and sport utility vehicles. Total household outlays remained above pre-pandemic levels for the second consecutive quarter.

Investment in housing also continued bolster economic activity, buoyed by higher outlays on renovations and stronger resale activity. Outlays on housing rose for the second consecutive quarter and were almost 20% above their pre-pandemic baseline.

Non-residential business investment continues to recover. Combined outlays on structures and machinery and equipment (M&E) have risen for four consecutive quarters, and, in early 2022, remained about 4% below pre-pandemic levels. Outlays on non-residential structures rose 2.9% in the first quarter, but remain over 6% below levels observed in late 2019. Business investment in M&E continued to edge higher and was slightly above pre-pandemic levels. Spending on intellectual property fell for the third consecutive quarter.

Nominal GDP rose 3.7% in the first quarter, following a similar gain in late 2021. Wages and salaries posted their largest quarterly increase (+3.7%) since economic activity ramped up after the initial lockdowns. Household disposable income, buoyed by broad-based wage growth across industrial sectors, grew at a faster pace than personal consumption, pushing the savings rate to 8.1%. Disposable income in the quarter was 13.2% above pre-pandemic levels.

Grocery prices rise at their fastest pace in over four decades

Headline consumer inflation accelerated to 6.8% in April, the largest yearly increase in over three decades. April marked the thirteenth consecutive month that the headline rate has been above three percent, and the second consecutive month above six percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth.

The increase in April’s headline rate occurred despite a slight moderation in gas prices. Prices at the pump were up 36.3% on a year-over-year basis, down from 39.8% in March. Gasoline prices, measured month-over-month, edged down 0.7% after posting a double-digit increase in March as oil benchmarks rose sharply in response to Russia's invasion of Ukraine.

Excluding gasoline, annual consumer price growth was 5.8% in April, up from 5.5% in March.

Higher housing-related costs continue to bolster headline inflation. Prices for owned accommodation rose 7.6% in the twelve months to April, as yearly increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the twelfth consecutive month. In contrast, mortgage interest costs, measured year-over-year, were down 4.4%, and have remained in negative territory since October 2020. Yearly price increases for rented accommodation increased to 4.6%, after holding steady at 4.2% in February and March.

Food prices continued to rise in April. Food prices rose 8.8% on a year-over-year basis, up from 7.7% in March. Grocery prices posted their largest annual increase (+9.7%) in over four decades, bolstered by rising input prices and transportation costs. Annual price increases for meat remained in double-digit territory for the fourth consecutive month, while prices for pasta products were 19.7% higher than in April of last year.

Annual price increases for both food and shelter have exceeded the headline rate for the last five months. Consumer inflation has outpaced the annual change in average hourly wages, measured from the Labour Force Survey, since the spring of 2021.

Statistics Canada published new results from the Portrait on Canadian Society survey on June 9th, highlighting the impact that rising consumer prices have on the ability of households to meet day-to-day expenses. When asked in which area they were most affected by rising prices, 43% of Canadians answered food. After food, the most affected areas were transportation (32%), shelter (9%) and household operations (8%). Urban residents reported being most affected by food costs, while transportation costs were of greater concern for rural residents. The survey also found that one in five Canadians are either very likely (7%) or somewhat likely (13%) to obtain meals from community organizations over the next six months.

New second quarter data from the Canadian Survey on Business Conditions highlight the impact that cost pressures are having on selling price intentions in the near term. When asked about their expectations over the next three months, nearly four in ten businesses reported that they expect to raise prices, up from over one-third of businesses in early 2022 and one-quarter in late 2021. Over half of businesses in manufacturing, retail trade, accommodation and food services, construction, and wholesale trade expect to raise prices in the coming months.

Unemployment rate reaches new record low

Employment growth resumed in May, driven by sizable gains in full-time work (+135,000). Headline employment rose by 40,000 as gains in service industries were partly offset by lower employment in the goods sector. Retail trade, educational services, professional, scientific and technical services, and accommodation and food services all posted gains, while employment declined in manufacturing.

The labour market has continued to tighten in recent months. The unemployment rate edged down to 5.1% in May, marking the third consecutive month that the rate has reached a new record low. Similarly, the adjusted unemployment rate—which includes those who wanted a job but did not look for one—fell 0.2 percentage points to 7.0% in May, the lowest rate on record since comparable data became available in 1976.

Total employment in May was nearly 500,000 above its pre-pandemic baseline, with higher employment among core-age workers (25 to 54 year-olds) accounting for 85% of net gains. The employment rate among core-age workers remained at 84.6%, while their unemployment rate held steady at a record low of 4.3%.

The pace of wage growth strengthened in May. Average hourly wages for all employees rose 3.9% on a year-over-year basis, up from 3.3% in April. Average wages increased at a faster pace among permanent (+4.5%) and full-time employees (+4.3%).

In recent months, the number of workers that usually work exclusively from home has declined as health-related capacity limits ease. In May, 19.2% of workers reported that they usually worked exclusively from home, down about five percentage points from January. The proportion of workers with hybrid work arrangements increased slightly to 6.3% in May, continuing a slow upward trend observed since the start of the year.

Monthly update – May 12, 2022

Economy-wide output strengthened in February on broad-based gains across industries

Real gross domestic product rose 1.1% in February, the largest monthly increase since economic activity rebounded in March 2021 from restrictions related to the Beta variant. February’s headline increase marked the ninth consecutive month that economic output has expanded, and the fourth consecutive month that output was at or above pre-COVID levels. Higher output in accommodation and food services, construction, and mining and oil and gas extraction contributed substantially to growth as 16 of 20 industrial sectors posted gains.

Activity in many client-facing industries ramped up as restrictions related to the Omicron variant eased. After two consecutive declines, activity at food services and drinking places rose 17.6% as restaurant sales rose across the country. Despite the gain, overall activity at food services and drinking places remained 8% below pre-pandemic levels.

Accommodation services also posted a solid gain, supported by increases in domestic and international travel. Activity levels, however, remained almost one fifth below their pre-COVID baseline. Arts, entertainment and recreation industries also rebounded in February, but remained one-quarter below pre-pandemic levels. By contrast, retail volumes edged lower as declines at auto dealers offset a strong rebound at clothing stores as capacity limits eased.

Construction activity continued to strengthen in February. Homebuilding rose 3.7% after advancing by 4.2% to start the year. Residential construction in February was 16% above pre-COVID levels. Non-residential activity also continued to advance. Engineering construction rose for the ninth consecutive month, while non-residential building construction posted its eighth straight monthly increase. Despite this momentum, non-residential output remained slightly below pre-pandemic levels.

Real estate agents and brokers posted their second consecutive increase as home resale activity strengthened. Activity at agents and brokers in February was one-third above pre-pandemic levels. Financing activity also increased as home buyers rushed to lock in lower mortgage rates.

Factory output edged up in February as production rebounded at auto assembly plants despite the ongoing semi-conductor shortage and the blockade of the Ambassador Bridge in Ontario. Production at automakers and parts supplies remained one-fifth below pre-pandemic levels.

Oil and gas extraction rose sharply in February after three consecutive declines. Oil sands output rose 3.1% after extreme cold and Omicron-related absences affected operations at some facilities in January. Mining output rose 4.7% as coal mining posted its third consecutive double-digit increase after flooding in British Columbia impacted exports through marine terminals in November.

Statistics Canada’s advance estimate of real gross domestic product by industry points to a 0.5% increase in March and a 1.4% increase in the first quarter.

Headline consumer inflation continued to accelerate in March as upward pressure on prices remains widespread

Headline consumer inflation accelerated to 6.7% in March, the largest yearly increase in over three decades. March marked the twelfth consecutive month that the headline rate has been above three percent, and its eighth consecutive month above four percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth. Measured on a month-over-month basis, consumer prices were up 1.4% in March, the largest increase since early 1991 when the goods and services tax was introduced.

Higher gasoline prices contributed substantially to the increase in March’s headline rate. Prices at the pump rose 39.8% on a year-over-year basis, up from 32.3% in February. Gasoline prices, measured month-over-month, increased by 11.8% in March as global oil benchmarks rose sharply in response to Russia's invasion of Ukraine.

Inflationary pressures also remained widespread in March. Excluding gasoline, annual consumer price growth was 5.5%, the largest increase since the introduction of this index in the late 1990s.

Higher housing-related costs continue to bolster the headline rate. Prices for owned accommodation rose 7.0% in the twelve months to March, as yearly increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the eleventh consecutive month. In contrast, mortgage interest costs, measured year-over-year, were down 5.4%, and have remained in negative territory since October 2020. Annual price increases for rented accommodation held steady at 4.2%.

Prices for durable goods rose at a faster pace in March, led by larger year-over-year increases for passenger vehicles (+7.0%) and furniture (+13.7%).

Food prices also continued to increase in March. Food prices were up 7.7% on a year-over-year basis, up from 6.7% in February. Grocery prices posted their largest annual increase (+8.7%) since March 2009, bolstered by rising input prices and transportation costs. Annual price increases for meat remained in double-digit territory for the third consecutive month, while prices for dairy products and eggs rose 8.5%, the largest yearly increase in almost four decades. Prices for pasta products were up 17.8% in the twelve months to March, as wheat futures reached a 14-year high due to Russia’s invasion of Ukraine.

Annual price increases for both food and shelter have exceeded the headline rate for the last four months. Consumer inflation has outpaced the annual change in average hourly wages, measured from the Labour Force Survey, since the spring of 2021.

Other indicators underscore sharp upward pressure on prices at earlier stages in the supply chain. Industrial product prices, which measure the prices that producers receive as products leave the factory gate, were up 18.5% on a year-over-year basis in March, while the prices that manufacturers pay for key raw materials have risen by 42.7%.

Employment held steady in April as hours worked fell due to illness-related absences

Following combined gains of 409,000 in February and March, employment was essentially unchanged in April as gains in professional, scientific and technical services and public administration offset declines in construction and retail trade. After falling to a record low of 5.3% in March, the unemployment rate edged down 0.1 percentage points to 5.2%.

Total hours worked were down 1.9% in April, partly due to an increase in illness-related absences as the pandemic’s sixth wave peaked in many areas of the country. Nearly one in ten employees were absent due to illness or disability, about two percentage points higher than the average for April in the years leading up to the pandemic.

In recent months, the number of workers that usually work exclusively from home has declined as health-related capacity limits ease. In April, 19.0% of workers reported that they usually worked exclusively from home, over five percentage points lower than in January.

On trend, employment has strengthened markedly since economic activity ramped up in the wake of the pandemic’s third wave in the spring of last year. Total employment has risen by about one million since May 2021, and currently stands 457,000 above pre-pandemic levels. Almost ninety percent of the net employment increase since the onset of the pandemic has been among core-age workers; employment rates among 25 to 54 year-old men and women in April—at 88.0% and 81.2%, respectively—were both well above their pre-pandemic baseline. The unemployment rate among core-age workers was 4.3%, the lowest rate on record.

Monthly update – April 14, 2022

Economy-wide output continues to expand despite the Omicron wave

Real gross domestic product rose 0.2% in January, marking the eighth consecutive month that economic activity has expanded, and the third consecutive month that output was at or above pre-COVID levels. Supported by gains in construction, wholesaling and retailing, economy-wide output increased despite substantial declines in high-contact service industries as public health restrictions tightened in response to the sharp rise in Omicron-related cases.

Higher construction activity factored heavily into January’s headline increase. Residential building construction rose 4.3% after a modest pullback in December. Homebuilding in January was 12% above pre-COVID levels. Engineering construction also posted a notable gain, with activity continuing to strengthen in recent months. Similarly, non-residential building construction rose for the seventh consecutive month. Despite these increases, engineering and non-residential building construction both remained below pre-pandemic levels.

Activity at real estate agents and brokers also increased in January after edging down in November and December. Activity levels have remained about 30% above their pre-pandemic baseline for the last four months.

Wholesalers posted their second sizable gain in the last three months (+3.1%). January’s increase was the largest since wholesaling ramped up in the wake of the initial lockdowns. Increases in building materials and machinery and equipment continue to bolster activity, as wholesaling volumes in January were over 5% above their pre-pandemic baseline.

Retail volumes rose 2.5% in January, after a notable decline at year end. Higher activity at motor vehicle and parts dealers contributed substantially to stronger volumes as auto imports in late 2021 bolstered inventory levels. Higher activity at building materials and furniture stores also supported the headline increase in January.

Factory output edged lower to start the year as automakers posted a double-digit decline. While production had begun to rebound during the fourth quarter, output at assembly plants remained over 40% below its pre-pandemic baseline in January as supply disruptions continue to impact the sector. Overall factory output remained 2% below levels observed in February 2020.

Accommodation and food services fell nearly 12% to start the year as the sharp rise in Omicron-related cases weighed on hotel and restaurant activity. Similarly, arts, entertainment and recreation industries posted their largest monthly decrease since the initial lockdowns. Despite solid momentum during the second half of 2021, activity in these client-facing industries remained well below pre-pandemic levels. Air transportation was also heavily impacted by Omicron to start the year, and remained over two-thirds below its pre-pandemic baseline.

Statistics Canada’s advanced estimate of real GDP for February points to a 0.8% increase.

Headline consumer inflation at a thirty-year high as prices for food and shelter continue to rise

Headline consumer inflation accelerated to 5.7% in February, the largest yearly increase in three decades. February marked the eleven consecutive month that the headline rate has been above three percent, and its seventh consecutive month above four percent. During this period, higher prices for gasoline, shelter, food and durables have all put upward pressure on consumer inflation, as supply disruptions coupled with strong demand have continued to fuel price growth. Measured on a month-over-month basis, consumer prices were up 1.0% in February, the largest increase in nine years.

Gasoline prices continue to exert a substantial impact on headline inflation. Prices at the pump were up 32.3% on a year-over-year basis in February. Excluding gasoline, annual consumer price growth was 4.7%, the largest increase since the introduction of this index in the late 1990s.

Higher housing-related costs continue to bolster the headline rate. Prices for owned accommodation rose 6.2% in the twelve months to February, as yearly increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the tenth consecutive month. In contrast, mortgage interest costs, measured year-over-year, were down 6.0% in February, and have remained in negative territory since October 2020. Annual price increases for rented accommodation stood at 4.2% in February and have accelerated since late 2021.

Food prices rose 6.7% on a year-over-year basis, up from 5.7% at the start of the year. Food price inflation has accelerated sharply since mid-2021. Grocery prices posted their largest year-over-year increase (+7.4%) since May 2009, bolstered by rising input prices and transportation costs. Annual price increases for beef remained in double-digit territory for the sixth consecutive month, while yearly price increases for fresh fruit remained above the seven percent mark. Dairy prices also rose sharply in February as the Canadian Dairy Commission implemented changes to farm gate milk prices, which many processors and retailers passed on to consumers.

Annual price increases for both food and shelter have exceeded the headline rate for the last three months. Consumer inflation has outpaced the annual change in average hourly wages, measured from the Labour Force Survey, since the spring of 2021.

Employment continues to strengthen as the unemployment rate falls to a record low

After surging by nearly 340,000 in February as Omicron-related restrictions eased, employment rose by an additional 73,000 in March, all on gains in full-time work. March’s headline increase reflected higher employment among older women and core-aged men. Most of the headline gain reflected higher employment in Ontario and Quebec.

The unemployment rate fell to a record low of 5.3% in March, 0.4 percentage points below its pre-pandemic baseline. The rates among youth (15 to 24 year-olds), core-age workers (25 to 54 year-olds) and older workers (55 year-olds and older) were all below their pre-pandemic baselines. Among core-age men, the unemployment rate fell to a record low of 4.1%, while the rate among core-age women was similar to its pre-COVID baseline.

The employment rate among core-aged men—the percentage of 25 to 54 year-old men who are employed—rose to 88.6% in March, nearly two percentage points above its pre-pandemic baseline. The employment rate among core-age women has been at or above 80% for the last five months.

Since recovering to pre-COVID levels in September 2021, total employment has risen by over 460,000, led by gains in retail trade, construction, health care and social assistance, and information, culture and recreation. At the same time, labour underutilization has trended lower, essentially returning to pre-pandemic levels.

After rising to a record high in February, total hours worked continued to increase in March (+1.3%). The pace of wage growth, measured year-over-year, also continued to strengthen, accelerating 0.3 percentage points to 3.4%.

With the easing of public health restrictions, the share of workers reporting that they usually work exclusively from home fell 1.8 percentage points to 21.7% in March. At the same time, the number of workers reporting hybrid work arrangements rose 1.4 percentage points to 5.9%.

Monthly update – March 17, 2022

Economic growth strengthens as exports and investment continue to recover

Real gross domestic product rose 1.6% in the fourth quarter, after advancing 1.3% in the third. Inventory buildups contributed substantially to growth in late 2021 as stockpiles rose in manufacturing and wholesaling.

Trade volumes ramped up in late 2021 as exports and imports posted their largest quarterly increases since the economy emerged from the initial lockdowns. Total exports rose 3.2% in the fourth quarter, up from 1.7% in the third. Goods exports rose 2.5%, led by higher shipments of motor vehicles and parts. While exports of passenger cars and light trucks strengthened late in the year, their volumes remained one-quarter below pre-pandemic levels as supply disruptions continue to weigh on automakers and parts suppliers.

Despite gains in five out of the last six quarters, goods exports remained 4% below pre-COVID levels. Service exports, bolstered by higher receipts for travel services as cross-border travel restrictions eased, rose steadily during the second half, but remained 12% below their pre-pandemic baseline.

After edging down in third quarter, total import volumes were up 3.4% in the fourth, led by increases in motor vehicles and parts. Higher imports of consumer products, metal ores, and communications equipment also supported the increase in headline imports.

Non-residential business investment continues to recover. Combined outlays on structures and machinery and equipment (M&E) have risen for six consecutive quarters, and, in late 2021, were 6% below pre-pandemic levels. Outlays on non-residential structures rose 2.7% in the fourth quarter, but remain 10% below levels observed in late 2019. Business investment in M&E, supported by higher spending on communications equipment, also rose late in the year, recovering to pre-COVID levels. Spending on intellectual property products fell for the second consecutive quarter.

After scaling back for two quarters, investment in housing ramped up late in the year, led by a double-digit increase in ownership transfer costs as resale activity strengthened. Renovation activity also edged higher after a sharp decline in the third quarter. Total business outlays on housing in late 2021 were 14% above pre-COVID levels.

After rising sharply in the third quarter as COVID-19 restrictions eased, household spending moderated in the fourth, edging up 0.2% as higher outlays on services offset lower spending on goods. Canadians increased their spending abroad while outlays on food services declined as restrictions in response to the Omicron variant were introduced late in the year. Total household spending, supported by higher outlays on goods over the course of the pandemic, has rebounded to its pre-COVID baseline.

Nominal GDP rose 3.3% in the fourth quarter, up from 2.5% in the third. Canada’s terms of trade improved late in the year, largely reflecting higher export prices for crude oil. Real gross domestic income, which accounts for changes in the terms of trade and measures the purchasing power of domestic production, rose 2.0% in the fourth quarter, and has outpaced real GDP growth in five of the last six quarters.

Businesses continue to strengthen their capital plans

According to new data from the Capital and Repair Expenditures Survey, private sector organizations expect to spend almost 8% more on tangible assets in 2022 as planned capital outlays rebounded to pre-COVID levels. Higher anticipated spending on structures accounts for two thirds of the planned increase in private spending. Capital intentions among public sector organizations are up almost 10% in 2022, and are currently one-quarter above their pre-pandemic baseline.

While public outlays have risen sharply in recent years, private sector spending on structures and M&E has trended lower since oil prices fell sharply in the mid-2010s. Private intentions in 2022 remain nearly 10% below peak levels observed in 2014, when the growth in capital spending was largely driven by higher outlays in Alberta.

Despite strong upward pressure on oil and commodity prices, planned 2022 capital spending in mining, quarrying and oil and gas extraction remain below levels observed before the pandemic. At $43 billion, mining, oil and gas intentions are up about 20% from 2021 levels, but still 6% below levels in 2019, and over 50% below peak levels reported in 2014. Capital intentions among manufacturers in 2022 are little changed from 2021 spending levels, with lower planned spending on structures offsetting higher outlays on machinery and equipment. Total 2022 intentions in manufacturing remain 7% below their 2019 pre-pandemic baseline.

Headline consumer inflation at a thirty year high

Headline consumer inflation accelerated during the second half of 2021, surpassing the five percent mark in January 2022 for the first time in over three decades. January marked the tenth consecutive month that the headline rate has been above three percent, and its sixth consecutive month above four percent. During this period, higher prices for gasoline, shelter, consumer durables and food have all put upward pressure on headline inflation, as supply disruptions coupled with strong demand have continued to fuel price growth.

Higher gasoline prices continue to impact the pace of consumer inflation. Prices at the pump, measured year-over-year, were up 31.7% in January, the eleventh straight month of annual increases above the 30 percent mark. Excluding gasoline, consumer prices rose 4.3% in January, the largest yearly increase since this index became available in the late 1990s. Higher prices for food and shelter have contributed to this acceleration, with annual increases for both outpacing the headline rate.

Food prices have risen steadily in recent months, and were up 5.7% on a year-over-year basis in January. Grocery prices, up 6.5%, posted their largest yearly increase since 2009. Annual price increases for beef remained in double-digit territory for the fifth consecutive month, while those for fresh fruit rose above 8% to start the year.

Higher housing-related costs continue to bolster headline inflation. Prices for owned accommodation rose 6.1% in the twelve months to January, as annual increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the ninth consecutive month. Annual prices increases for rented accommodation rose above the three percent mark in January for the first time since late 2019.

Consumer inflation has outpaced average wage growth since early 2021. In January, average hourly wages, adjusted for changes in the composition of employment due to the pandemic, were up 2.7% on a year-over-year basis. Without adjustment, average wages rose 2.4%, less than half the pace of headline inflation.

Employment rebounds as Omicron-related restrictions ease

Omicron’s impact on the labour market was short-lived. Employment surged in February, more than offsetting January’s headline decrease. Total employment rose by 337,000, led by gains among core-workers and youth. Gains in accommodation and food services fully offset steep losses in January, while employment in information, culture and recreation services rose above its pre-COVID level for the first time. Professional, scientific and technical services and construction also posted notable gains.

The unemployment rate fell to 5.5% in February, edging below its pre-pandemic baseline, while the rate among core-age workers declined to 4.4%. The employment rate among core-aged men rose to a 40-year high and was at record levels among core-age women.

Workplace absences declined sharply in February, while total hours worked surpassed its pre-pandemic baseline, also reaching a record high.

Monthly update – February 10, 2022

Economy-wide output recovers to pre-COVID levels in November

Real gross domestic product rose 0.6% in November, marking the sixth consecutive month that output has expanded. November’s headline increase was also the first time that economy-wide output has fully recovered to pre-COVID levels, nineteen months after the initial lockdowns in March and April 2020. Growth in November was broad-based for the second consecutive month with 17 of 20 industrial sectors posting gains.

Wholesalers posted their largest increase since July 2020, supported by gains in building materials and supplies, and machinery and equipment. Output in the wholesale sector has risen for four consecutive months, after declining from April to July. At 2.0% above pre-pandemic levels, wholesaling activity in November was similar to levels reported in March 2021, when economic activity was strengthening in the wake of the pandemic’s second wave.

Factory output rose 1.4% in November, buoyed for the second consecutive month by higher production at automakers and parts suppliers. Output at assembly plants has risen sharply since September, but remains nearly 40% below pre-pandemic levels as supply chain disruptions continue to affect production. Total manufacturing output in November was 2.5% below levels observed in February 2020.

Residential building construction edged up in November after advancing in October. While activity moderated substantially during the spring and summer months, residential building construction in November remained 10% above pre-pandemic levels.

Activity at real estate agents and brokers edged down following a notable increase in October. While housing market activity has moderated substantially after surging earlier in the pandemic, activity levels at agents and brokers remained almost 30% above pre-pandemic levels.

Air transportation continued to recover in November, posting an eighth consecutive monthly increase. Nonetheless, activity remained over 60% below levels observed in February 2020. Accommodation services rose for the sixth consecutive month, but remained 13% below pre-pandemic levels.

Food services and drinking places rose 2.0% in November, the first increase in three months. After rebounding in the late spring and summer months, activity in November remained 8% below pre-pandemic levels. Activity in the arts, entertainment and recreation sector increased for the sixth consecutive month, but remained almost one-quarter below pre-pandemic levels.

Statistics Canada’s advance estimate indicates that real gross domestic product was essentially unchanged in December.

Headline consumer inflation at a 30 year high in December

Headline consumer inflation accelerated to 4.8% in December, the largest yearly increase in three decades. The headline rate has been above the three percent mark for nine consecutive months, reflecting upward pressure from gasoline, shelter, consumer durables, and food. Measured on a month-over-month basis, consumer prices edged down 0.1% in December, after increasing steadily during the first eleven months of the year.

Gasoline prices continue to exert a substantial impact on headline inflation. Prices at the pump were up 33.3% on a year-over-year basis in December. Excluding gasoline, annual consumer price growth was 4.0%, up from 3.6% in November.

Higher housing-related costs continue to bolster headline inflation. Prices for owned accommodation rose 5.8% in the twelve months to December, as annual increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the eighth consecutive month. Annual prices increases for rented accommodation were up 2.8%, after edging below the 2.0% mark in October and November.

Food prices rose 5.2% on a year-over-year basis in December, up from 4.4% in November. Annual price increases for food accelerated sharply during the second half of 2021. At 5.7%, grocery prices posted their largest year-over-year increase in a decade. Annual price increases for beef remained in double-digit territory for the fourth consecutive month, while prices for fresh fruit, measured year-over-year, rose above the five percent mark for the first time since May.

At year end, annual price increases for food, shelter and transportation were all above the headline rate. Headline consumer inflation has outpaced the growth in average hourly wages, measured from the Labour Force Survey, for nine consecutive months.

Employment losses in January as restrictions tighten in response to Omicron variant

Employment fell by 200,000 in January as tighter capacity limits and closures impacted high-contact sectors. Over two-thirds of headline losses reflected lower employment among youth, with declines in both part- and full-time work. Employment among core-age workers fell by 65,000, largely reflecting part-time losses among women. Losses in accommodation and food services totaled 113,000, the largest monthly decrease in that sector since the initial lockdowns in the spring of 2020. Employment also fell in information, cultural and recreation industries, and in retail trade. Nearly three-quarters of January’s headline losses reflected lower employment in Ontario.

January’s losses marked the first decrease in headline employment in eight months, when tighter public health restrictions in response to the Gamma variant were still in effect. The unemployment rose 0.5 percentage points to 6.5%, the first increase in nine months.

Total hours worked fell 2.2% in January after rebounding to pre-COVID levels in November and December. The number of employed people who worked less than half their usual hours rose by 620,000, the largest increase since March 2020.

One in ten employees was absent from work due to illness or disability—one-third higher than typical January levels—with sizable increases in accommodation and food services and retail trade. Almost one quarter of workers in January reported that they usually work exclusively from home.

Monthly update – January 13, 2022

Output growth strengthens in October on broad-based gains across industries

Real gross domestic product increased 0.8% in October as 17 of 20 industrial sectors posted gains. The output of goods industries rose 1.6%, the largest monthly increase since July 2020, as manufacturing, construction, and resource extraction all advanced. With October’s headline increase, monthly output has recovered to within 0.4% of its pre-pandemic level.

Factory output rose 1.8% in October, buoyed by higher production at automakers and parts suppliers. While output at assembly plants was nearly 50% higher than in September, it remained almost one-half below pre-pandemic levels as the global semi-conductor shortage and supply chain disruptions continued to affect production.

Following five consecutive monthly declines, residential building construction rose 2.0% in October. Activity at real estate agents and brokers also increased sharply as home resale activity picked up across the country. While housing market activity has moderated substantially after surging earlier in the pandemic, activity levels at agents and brokers remained almost one- quarter above pre-pandemic levels.

Air transportation continued to recover in October as domestic and international passenger volumes increased. While air transportation has risen for seven consecutive months, activity remained two-thirds below levels observed in February 2020. Accommodation services increased for the fifth consecutive month, but remained 18% below levels reported in February 2020.

Food services and drinking places edged down for the second consecutive month as sales at full-service restaurants declined. After rebounding in the late spring and summer months, activity in October remained about 10% below pre-pandemic levels. Output in the arts, entertainment and recreation sector continued to recover in October, rising to almost three-quarters of its pre-pandemic level.

Statistics Canada’s advance estimate of real gross domestic product points to a 0.3% increase in November.

Headline inflation holds steady in November at an 18 year high

Headline consumer inflation held steady in November at 4.7%, matching the increase in October. The headline rate has been above the three percent mark for eight consecutive months, reflecting upward pressure from gasoline, shelter, and consumer durables. Measured on a month-over-month basis, consumer prices have risen steadily since the start of 2021, after exhibiting little upward momentum during the second half of 2020.

Gasoline prices continue to exert a substantial impact on headline inflation. Gasoline prices were up 43.6% on a year-over-year basis in November. Excluding gasoline, annual consumer price growth was 3.6%, matching the rate in October.

Higher housing-related costs continue to bolster headline inflation. Prices for owned accommodation rose 5.3% in the twelve months to November, as annual increases in the homeowners’ replacement cost index, which partly reflect prices for new homes, remained in double-digit territory for the seventh consecutive month. Annual prices increases for rented accommodation remained below the 2.0% mark for the third time in four months.

Food prices rose 4.4% on a year-over-year basis in November, up from 3.8% in October. Annual price increases for beef remained in double-digit territory for the third consecutive month, while prices for fresh vegetables, measured year-over-year, increased for the first time in nine months. Overall, food purchased from stores was up 4.7% in November, the largest year-over-year increase since January 2015.

COVID-19 vaccine shipments impact trade flows in November

In November, large shipments of COVID-19 medication came into Canada for packaging and labeling. Most of this medication was subsequently exported. These shipments contributed substantially to headline trade flows.

Headline exports rose 3.8% in November after advancing 6.9% in October. Gains were broad-based, supported by higher shipments of pharmaceutical products, chemicals, energy products, forestry products, and motor vehicles and parts. Headline imports rose 2.4%, as the merchandise trade surplus widened for the fourth consecutive month. Canada’s merchandise trade balance has been in a surplus position since June 2021.

Employment continues to strengthen in December on full-time gains

Following a notable increase in November, headline employment continued to strengthen in December (+55,000) as gains in full-time work offset declines in part-time. Full-time employment rose by 123,000, all on gains among men. The reference week for December’s Labour Force Survey was December 5th to December 11th, before COVID-related public health measures began to tighten substantially across many jurisdictions.

Higher employment among core-age workers (25 to 54 year-olds) accounted for all of the headline gain in December. Since the start of the pandemic, cumulative employment gains among core-age workers stand at 292,000, while their employment rate has risen to 84.2%, 1.1 percentage points above the rate reported in February 2020.

One-half of December’s headline increase reflected higher employment in construction. Employment in accommodation and food services was unchanged for the second consecutive month, following declines in September and October. Net losses in accommodation and food services since the onset of the pandemic stand at 206,000 (-17%).

The unemployment rate was below the six percent mark in December (5.9%) for the first time since February 2020. The rate among core-age workers fell to 4.6%, while the unemployment rate among youth edged up to 10.8%. The unemployment rate among older workers was 6.5%, 1.3 percentage points higher than before the onset of the pandemic.

The number of Canadians experiencing long-term unemployment declined for the second consecutive month in December, but, at 293,000, remained over 100,000 above pre-pandemic levels.

Among workers who worked at least half their usual hours, the proportion who worked from home was little changed in December at 23.8%. The proportion of Canadians working from home has remained stable since August 2021.

Monthly update – December 9, 2021

Output rallies in the third quarter on higher household spending

Real gross domestic product rose 1.3% in the third quarter after declining 0.8% in the second. Higher household spending fueled the headline increase, with support from stronger export volumes. Investment in housing fell for the second consecutive quarter, while non-residential business investment remained subdued. Total economic activity in the third quarter was 1.4% below pre-pandemic levels observed in late 2019.

Consumers pivoted to out-of-the-home purchases in the third quarter as pandemic restrictions eased. Household spending rose 4.2%, buoyed by a 29.0% increase in food, beverage and accommodation services. Spending on recreational and cultural services rose by 26.1%, while outlays on clothing and footwear increased by 27.3% after declining for three consecutive quarters. Total household spending in the third quarter was similar to pre-pandemic levels observed in late 2019.

Export volumes rose 1.9% in the third quarter, partly offsetting sharp declines in the second. Higher shipments of crude oil and crude bitumen accounted for over two-thirds of the net increase. Increases in metal ores and building and packaging materials also contributed to the rebound in export activity. Automotive exports declined for the fourth consecutive quarter as supply chain disruptions continued to impact automakers and parts suppliers. Services exports rose for the first time in three quarters, supported by an increase in travel services. Total export volumes in the third quarter remained almost 9% below pre-pandemic levels observed in late 2019.

Business investment in housing fell 8.9% in the third quarter after declining 3.0% in the second. Resale activity fell by double digits for the second consecutive quarter, while new construction and renovations declined for the first time since the initial lockdowns in the spring of 2020. Total outlays on housing in the third quarter were 11% above pre-COVID levels.

Non-residential business investment edged down in the third quarter and remained about 11% below levels observed in late 2019. Business outlays on non-residential structures edged lower and were 17% below pre-pandemic levels. Business investment in machinery and equipment also edged down, and was 1% below levels observed in late 2019.

Household saving remains in double-digit territory

Household disposable income, buoyed by increases in wages and salaries, rose 1.7% in the third quarter. Government transfers to households declined by 1.6%, but remained elevated relative to pre-pandemic levels. Household disposable income in the third quarter was 12.5% above levels observed in the fourth quarter of 2019.

Household spending rose at its fastest pace since the economy emerged from the initial lockdowns last year. As a result, the household saving rate declined from 14.0% to 11.0%, but remained in double-digit territory for the sixth consecutive quarter.

Higher consumer inflation in October as gasoline prices rise

Headline consumer inflation accelerated to 4.7% in October, the fastest pace since early 2003. The headline rate has been above the three percent mark for seven consecutive months, reflecting upward pressure from gasoline, shelter, and consumer durables. Measured on a month-over-month basis, consumer prices have risen steadily since start of the year, after exhibiting little upward momentum during the second half of 2020. Buoyed by higher prices for gasoline and natural gas, consumer prices rose 0.7% from September from October, the largest monthly increase since June 2020.

Gasoline prices continued to exert substantial pressure on the headline rate. Gasoline prices were up 41.7% on a year-over-year basis in October, after hovering around the thirty percent mark for four consecutive months. Excluding gasoline, annual price growth was 3.6% in October.

Higher housing-related costs continue to bolster headline inflation. Shelter costs, measured year-over-year, were up 4.8% in October for the fourth consecutive month. Prices for owned accommodation were 5.1% higher in the twelve months to October, as the homeowners’ replacement cost index, which partly reflects prices for new homes, was up 13.5%. Prices for water, fuel and electricity, measured year-over-year, rose 8.6% in October, up from 6.8% in September. Annual price increase for household appliances held steady at 5.5% for the second consecutive month.

Food prices have also risen in recent months, buoyed by higher prices for meat. Food prices were up 3.8% on a year-over-year basis in October, as meat prices rose 9.9%. At the same time, prices for fresh fruit and fresh vegetables declined on a year-over-year basis in October.

Employment surges in November on broad-based gains across industries

Employment rose by 154,000 in November, led by gains among private sector employees and core-age workers (25 to 54 year-olds). Gains were split between full-time and part-time work.

Higher employment in health care and social assistance, manufacturing, retail trade, and professional, scientific and technical services supported the headline increase. Employment in accommodation and food services held steady after declines in September and October.

Total employment in November was 186,000 above pre-pandemic levels. Net gains in professional, scientific and technical services since the start of the pandemic totaled 190,000, while net losses in accommodation and food services totaled 202,000.

The employment rate increased to 61.4% in November, down 0.4 percentage points from the level reported in February 2020. The rate among core-age workers rose to 83.9% and was 0.8 points above pre-pandemic levels. The employment rate among core-age women reached an all-time high of 80.7%.

The unemployment rate declined to 6.0% in November, the lowest level since the start of the pandemic. The unemployment rates among youth and core-age workers were similar to those reported in February 2020, while the rate among older workers remained elevated. The number of Canadians experiencing long-term unemployment declined in November for the first time since August.

Labour underutilization fell to its lowest level in November since the onset of the pandemic. Total hours worked returned to pre-pandemic levels for the first time.

Monthly update – November 10, 2021

Gains among hard-to-distance services continue to bolster economic activity

After edging down in July, economy-wide output rose 0.4% in August, buoyed by higher activity at hotels, restaurants and retailers. Higher factory volumes also contributed to the headline gain, while crop production fell sharply for the second consecutive month. Total economic activity in August remained 1.4% below pre-pandemic levels.

Hard-to-distance services continued to rally in the wake of third wave restrictions. Following double-digit gains in June and July, output in accommodation and food services rose 7.0%. Activity at food services and drinking places increased 5.4% as sales at full-service restaurants continued to strengthen. Accommodation services posted a double-digit gain for the second consecutive month as both domestic and international travel increased.

Total output in accommodation and food services in August was 17% below levels reported in February 2020.

Output in the arts, entertainment and recreation sector continued to recover in August, rising for the third consecutive month. Activity in this sector remained over 40% below pre-pandemic levels.

Air transportation also continued to recover in August as activity increased for the sixth consecutive month. Despite these gains, output remained over three quarters below levels reported in February 2020.

Retail volumes rose 1.8% in August after declining 0.6% in July. Higher activity at food and beverage stores, clothing and clothing accessories stores, and health and personal care stores supported the headline increase. Overall retail volumes were 4% above pre-COVID levels, but below levels reported in March 2021 before third wave restrictions came into effect.

Residential construction declined for the fourth consecutive month after rising sharply earlier in the year. Despite lower activity in recent months, housing construction in August was still 11% above pre-pandemic levels. Similarly, activity at real estate agents and brokers declined for the fifth consecutive month, but was still 9% higher than pre-COVID levels.

Statistics Canada’s advance estimate indicates that real gross domestic product was essentially unchanged in September.

Consumer prices continue to rise in September

Headline consumer inflation accelerated to 4.4% in September, the fastest pace in over 18 years. The headline rate has been above the three percent mark for sixth consecutive months, reflecting upward pressure from gasoline, shelter, and consumer durables. Measured on a month-over-month basis, consumer prices have risen steadily from January to September, after exhibiting little upward momentum during the second half of 2020.

Gasoline prices continue to exert a substantial impact on headline inflation. Gasoline prices rose 32.8% on a year-over-year basis in September, the fourth consecutive month that annual increases have hovered around the thirty percent mark. This follows steeper year-over-year increases earlier in the spring as prices at the pump rebounded from sharp declines early in the pandemic. Excluding gasoline, consumer price growth was 3.5% in the twelve months to September, up from 3.2% in August.

Higher housing-related costs continue to bolster headline inflation. Shelter costs, measured year-over-year, were up 4.8% in September, matching the annual increases in July and August. Prices for owned accommodation rose 5.4% in the twelve months to September, as the homeowners’ replacement cost index, which partly reflects prices for new homes, rose 14.4%. Annual prices increases for rented accommodation increased to 2.0% in September.

Global supply chain disruptions have put upward pressure on prices for consumer durables in recent months. Prices for passenger vehicles remained 7.2% higher on a year-over-over basis in September, while annual price increase for household appliances accelerated to 5.5%.

Food prices have also risen in recent months, buoyed by higher prices for meat. Food prices rose 3.9% on a year-over-year basis in September, up from 2.7% in August. Meat prices rose 9.5%, supported by double-digit increases for beef and chicken. Overall, food purchased from stores was up 4.2% on a year-over-year basis in September, while food purchased from restaurants rose 3.1%.

Employment holds steady in October as hours worked increase

After recovering to pre-pandemic levels in September, total employment held steady in October as gains among private sector employees were partly offset by losses in self employment. Employment among core-age workers (25 to 54 year-olds) rose by 53,000, reflecting increases in full-time work. Full-time employment among core-aged men returned to its pre-pandemic level, while full-time work among core-aged women was 98,000 higher than in February 2020.

Employment in retail trade was up 72,000 in October, pushing employment in the industry back to its pre-COVID level for the first time since March 2021. Employment in accommodation and food services declined for the second consecutive month (-27,000), and remained 17% below its pre-pandemic level.

The unemployment rate fell to 6.7% in October, a twenty-month low. The rate among core-age workers declined to 5.6%, while the unemployment rate among youth, at 10.2%, fell below its pre-COVID level for the first time since the onset of the pandemic. The unemployment rate among older workers rose to 7.6%, and was 2.4 percentage points higher than before the onset of the pandemic.

The number of Canadians experiencing low-term unemployment was little changed in October, and remains over twice levels observed prior to the pandemic.

Total hours worked were up 1.0% in October, as the number of employed people working less than half their usual hours fell by 9.7% (-100,000). Total hours worked in October remained 0.6% below pre-pandemic levels.

Monthly update – October 14, 2021

Real gross domestic product edged down in July

Economy-wide output edged down 0.1% in July as drought conditions in Western Canada severely impacted crop production. Factory output and wholesale activity also declined, while retail volumes fell as consumer dollars shifted toward out-of-the-home expenditures. Total economic activity in July remained about 2% below pre-pandemic levels.

Accommodation and food services posted a double digit increase for the second consecutive month as third wave restrictions continued to ease. Activity at food services and drinking places rose by 9.5% as sales at full-service restaurants continued to strengthen. Accommodation services rose by over 20% as both domestic and international travel increased. The passenger load factor among major Canadian airlines rose above 50% for the first time since March of last year.

Total output in accommodation and food services in July was at its highest level since before the start of the pandemic, but remained over 20% below levels reported in February 2020.

Residential construction scaled backed for the third consecutive month in July after rising sharply earlier in the year. Despite lower activity in recent months, housing construction in July was still 12% above pre-pandemic levels. Similarly, activity at real estate agents and brokers was down for the fourth consecutive month, but was still 10% higher than levels reported prior to the pandemic.

Output in the arts, entertainment and recreation sector rose for the second consecutive month as restrictions eased, but remained almost one half below pre-COVID levels.

Factory output declined for the third time in four months and was 4% below pre-pandemic levels. Output at automakers and parts suppliers, which has been heavily impacted by microchip shortages during the first half of the year, was little changed in July, at about one quarter below pre-pandemic levels.

Statistics Canada released an advance estimate of real gross domestic product in August, which points to a 0.7% increase.

Headline consumer inflation edged above the four percent mark in August

Headline consumer inflation accelerated to 4.1% in August, the fastest pace in over 18 years. The headline rate has been above the three percent mark for five consecutive months, reflecting upward pressure from gasoline, shelter, and consumer durables. Measured on a month-over-month basis, consumer prices have risen steadily from January to August, after exhibiting little upward momentum during second half of 2020.

Gasoline prices continue to exert a substantial impact on the headline rate. Gasoline prices rose 32.5% on a year-over-year basis in August, the third consecutive month that annual increases have hovered around the thirty percent mark. This follows steeper year-over-year increases earlier in the spring as prices at the pump rebounded from sharp declines early in the pandemic. Gasoline prices had recovered to pre-pandemic levels by February 2021, and have risen steadily in recent months.

Higher housing-related costs have also contributed to the rise in headline inflation. Shelter costs accelerated notably during the spring and summer months, supported by higher homeowner replacement costs and other expenses for owned accommodation, which include commissions and legal fees on the sale of real estate. In August, shelter prices were 4.8% higher on a year-over-year basis as new home prices and borrowing costs continue to diverge. The homeowners’ replacement cost index, which partly reflects prices for new homes, has risen for eighteen consecutive months, while mortgage interest costs have fallen for sixteen straight months as homebuyers continue to take advantage of historically low interest rates. Price increases for rental accommodation, measured year-over-year, rose above the two percent mark from May to July, before slowing in August.

Global supply chain disruptions have put upward pressure on prices for consumer durables in recent months. The global shortage of semiconductor chips has impacted prices for passenger vehicles, which rose from 4.1% year-over-year in June to 7.2% in August, the largest annual increase in over two and a half decades. Supply chain bottlenecks, including higher shipping costs and import delays, also put upward pressure on prices for household appliances, which increased 5.3% in the twelve months to August.

Employment recovered to pre-pandemic levels in September

Employment rose by 157,000 in September, the fourth consecutive monthly increase in the wake of third-wave restrictions. All of the net increase in September was in full-time work, led by gains among core-age women. Higher employment in public administration, information, cultural and recreation services, and professional, scientific and technical services supported the headline increase.

The unemployment rate fell to 6.9% in September, the lowest rate since the onset of the pandemic. The unemployment rate among core-age workers edged down to 5.9%, while the rate among youth declined to 11.3%.

The employment rate—the percentage of the working age population that is employed—was 60.9% in September, 0.9 percentage points below the rate in February 2020. Employment rates among young and core-age women were both above pre-pandemic levels, while rates among young and core-age men remained below their February 2020 benchmarks.

The number of employed people who worked less than half of their usual hours in September remained elevated (+218,000) when measured against pre-pandemic levels, while total hours worked remained 1.5% below. The number of people working from home was 4.1 million in September, down from 5.1 million during the initial lockdowns in April of last year.

With September’s headline increase, total employment has recovered to its pre-pandemic level. Full-time employment has also fully recovered, as have levels among private and public sector employees. The number of women working full-time in September was 116,000 above pre-pandemic levels, while 107,000 fewer men were working full time compared with February 2020.

While total employment has recovered, substantial differences in the pace of the recovery remain apparent across industries. Cumulative employment losses in accommodation and food services since the onset of the pandemic stood at 180,000 as of September, while cumulative losses in other private services (which include personal services) were 96,000. In contrast, employment in professional, scientific and technical services has risen by 183,000 since February 2020, while employment in public administration has increased by 108,000.

Monthly update – September 16, 2021

Real gross domestic product contracts in the second quarter

Real gross domestic product contracted 0.3% in the second quarter, after advancing 1.4% in the first. Lower export volumes coupled with a pullback in home resale activity contributed to the headline decrease, while business inventories, government current expenditures, and business outlays on machinery and equipment all rose. Household spending edged up 0.1%, despite lower outlays on goods. Total economic activity in the second quarter was 2.0% below pre-pandemic levels observed in late 2019.

Export volumes fell 4.0% on lower shipments of motor vehicle parts and energy products. Supply chain disruptions continued to impact automakers and parts suppliers, leading to significant declines in automotive imports and exports. Exports of motor vehicles and parts in the second quarter were over one-quarter below pre-pandemic levels. Overall export volumes were 10.4% below levels observed in the fourth quarter of 2019.

Business investment in housing declined 3.3% in the second quarter, as home resale activity fell by double digits following three quarters of strong growth. Outlays on new construction and renovations continued to advance. Total outlays on housing in the quarter were 20.9% above pre-COVID levels.

Business investment in machinery and equipment rose 5.7%, the third increase in the last four quarters, while outlays on non-residential structures also strengthened. Combined business investment in non-residential structures and machinery and equipment was 12.7% below pre-COVID levels.

Household spending edged up 0.1%, led by higher spending on services. Spending on goods fell for first time since the second quarter of 2020, but remained 4.5% above pre-pandemic levels. Overall household spending was 3.7% below levels observed in late 2019, reflecting lower outlays on services.

Household saving remains in double-digit territory

Household disposable income, supported by increases in employee compensation and government transfers, rose 2.2% in the second quarter, outpacing the modest gain in consumption. As a result, the household savings rate rose to 14.2%, marking its fifth consecutive quarter in double digit territory.

Household disposable income in the quarter was 12.8% above pre-pandemic levels. Mortgage borrowing rose at a record pace, while non-mortgage borrowing also strengthened. Household debt-to-income and debt service ratios remained below pre-pandemic levels, as household net worth, the value of assets less liabilities, rose $513.4 billion, supported by gains on equity markets and rising values for residential real estate. The net worth of households has risen by $2.5 trillion since the fourth quarter of 2019.

Economy-wide output rebounds in June

After declines in April and May, economy-wide output rose 0.7% in June, led by gains in accommodation and food services, retail trade and manufacturing. Accommodation and food services rose 15% as third-wave restrictions eased. Despite the gain, output in this industry remained 28% below levels observed prior to the pandemic. Retail output rose 4.0% in June, but remained below levels observed in March prior to the onset of the third wave.

Statistics Canada released an advance estimate of real gross domestic in July, which points to a 0.4% decline.

Rising input costs cloud the near term business outlook

New data from the Survey on Business Conditions, collected in July and early August, provide insights into business sentiment as third wave restrictions continued to ease. Three quarters of businesses reported that they were somewhat or very optimistic about their outlook over the next 12 months, while almost one half of businesses indicated that they could continue to operate at current revenue and expenditure levels for a year or more before considering laying off staff.

However, rising input costs related to labour, capital, energy or raw materials continue to be a key factor affecting the outlook in the near term. Nearly four in ten businesses indicated that rising input costs were an obstacle over the next three months, and over one in five businesses expect to raise prices during this period.

Industrial product prices, which measure the prices that manufacturers receive as products leave the factory gate, were up 15.4% on a year-over-year basis in July, while headline consumer inflation rose to 3.7%, remaining above the three percent mark for the fourth consecutive month.

Employment strengthens in the wake of third-wave restrictions

Employment rose by 90,000 in August, the third consecutive monthly increase. Gains in August were concentrated in full-time work and among women. Employment in accommodation and food services increased by 75,000. The national unemployment rate fell to 7.1%, the lowest rate since the onset of the pandemic.

Total employment has risen by 415,000 from May to August as third wave restrictions eased. All of the net gains during this three-month period were in service industries, led by cumulative gains of 211,000 in accommodation and food services. Sixty percent of net employment gains from May to August were among 15 to 24 year-olds, as the employment rate among youth by August had essentially returned to pre-pandemic levels.

With August’s headline increase, total employment has rebounded to within 1% of its pre-pandemic level (cumulative losses since February 2020 stood at 156,000 or -0.8%). The employment rate in August was 60.5%, down 1.3 percentage points from the rate in February 2020. The number of employed people who worked less than half of their usual hours in August remained elevated compared to pre-pandemic levels (+29.9%), while total hours worked remained 2.6% below. Among workers who worked at least half their usual hours in August, 24% worked from home, the lowest share since the onset of the pandemic.

Monthly update – August 12, 2021

Real gross domestic product contracts for the second consecutive month

Economy-wide output declined for the second consecutive month in May as housing market activity cooled and businesses continued to grapple with third-wave restrictions. Real gross domestic product fell 0.3%, after declining 0.5% in April. Economic activity in May was 1.5% below pre-pandemic levels.

Residential construction contracted for the first time since November 2020 on declines in single-family homes. Despite the setback, residential construction remained nearly 20% above its pre-pandemic level as investment in housing construction has risen to record levels in recent months before pulling back in May.

After peaking in March, activity at real estate agents and brokers fell for the second consecutive month as home resale activity slowed across the country. Activity related to real estate transactions has strengthened markedly in the wake of the initial lockdowns as homebuyer preferences shifted towards larger single-family homes. Despite the declines in April and May, activity levels remained over 20% above pre-COVID levels.

Accommodation and food services contracted for the second consecutive month as hotels and restaurants continued to navigate third-wave restrictions. Output in the sector was 38% below pre-COVID levels in May as payroll employment fell by 75,000. Receipts at full service restaurants were down by one quarter during the third-wave and, in May, were about half of pre-COVID levels.

Manufacturing declined for the third time in four months in May as the global semi-conductor shortage continued to impact factory output. Machinery manufacturers reported that a lack of raw materials and shipment delays impacted production levels. After posting a double-digit decline in April as micro-chip shortages hampered activity, production at automakers and parts suppliers edged higher in May, but remained 27% below pre-pandemic levels.

Increases in resource extraction and public sector activity tempered May’s headline decline. Output in mining, quarrying and oil and gas extraction rose for the eighth time in nine months, rebounding to pre-COVID levels. Higher public sector activity reflected increases in education and health care and social assistance.

Statistics Canada released an advance estimate of real gross domestic for June, which points to a 0.7% increase. Other key indicators also point to stronger economic activity to end the quarter. Employment rebounded in June (+231,000) led by gains in high-contact services as public health restrictions eased, while exports rose substantially, reaching a record high on broad-based increases in volumes.

Headline inflation remains above the three percent mark

Headline consumer inflation slowed to 3.1% in June, remaining above the three percent mark for the third consecutive month. Smaller year-over-year price increases for clothing and footwear and gasoline contributed to the moderation in the headline rate. Consumer prices rose 0.3% from May to June, and have risen steadily on a month-over-month basis during the first half of the year.

Gasoline prices rose 32% on a year-over-year basis in June, down from 43.4% in May. The moderation in gas prices reflected an increase in June 2020, when gasoline prices partially recovered after falling significantly during the early stages of the pandemic. Excluding gasoline, consumer prices rose 2.2% in the twelve months to June, after advancing 2.5% in May.

Shelter prices continued to increase in June, supported by higher homeowner replacement costs and other rising expenses for owned accommodation, which include commissions and legal fees on the sale of real estate. Shelter prices were 4.4% higher on a year-over-year basis as new home prices and borrowing costs continue to diverge. The homeowners’ replacement cost index, which partly reflects prices for new homes, has risen for sixteen consecutive months, while mortgage interest costs have fallen for fourteen straight months as homebuyers continue to take advantage of historically low interest rates. Price increases for rental accommodation, measured year-over-year, remained above the two percent mark for the second consecutive month, advancing 2.2% in June.

June’s consumer inflation report also featured a spotlight on supply chains, highlighting the extent to which disruptions in global trade as a result of the pandemic have affected consumer prices in Canada. Input shortages, production bottlenecks, higher shipping costs and delivery delays have impacted the international flow of raw materials and finished goods, putting upward pressure on certain consumer prices. The global shortage of semiconductor chips has affected the prices for passenger vehicles, which were up 4.1% on year-over-year basis in June after reaching the five percent mark in May, the largest annual increase in a decade. Supply chain bottlenecks, including higher shipping costs and import delays, also put upward pressure on the prices for household appliances, where were 5.2% higher in the twelve months to June. These include notable increases for cooking appliances (+6.3%), refrigerators and freezers (+9.8%), and laundry and dishwashing appliances (+7.1%).

Full-time employment strengthens as third-wave restrictions continue to ease

After advancing by 231,000 in June, employment rose by an additional 94,000 in July as third-wave restrictions continued to ease across many jurisdictions. Gains were concentrated in full-time work, which rose for the first time since March. All the net increase in full-time work in July reflected higher employment among core-age workers, led by gains among women. July’s headline increase reflected gains across service industries, led by higher employment in accommodation and food services. Employment rose in Ontario, Manitoba, Nova Scotia and Prince Edward Island.

Employment among 15 to 24 year-olds increased by 62,000 in July, after rising sharply in June (+164,000) as third-wave restrictions began to ease. Over two-thirds of the combined headline gains in June and July reflected higher employment among youth. After falling by nearly 20 percentage points during the initial lockdowns, the employment rate among young Canadians rebounded to 57.0% in July, one percentage point under its pre-pandemic level. The unemployment rate among youth fell to 11.6%, the lowest level since before the pandemic.

Headline employment gains during June and July fully offset combined losses under tighter public health restrictions in April and May, bringing total employment to within 246,000 (-1.3%) of its pre-pandemic level. Net employment losses in accommodation and food services since the onset of the pandemic total 228,000.

The national employment rate in July, at 60.3%, was 1.5 percentage points below it pre-pandemic level, while the unemployment rate, at 7.5%, was 1.8 percentage points higher than the rate in February 2020.

There were notable improvements in other measures of labour market activity in July. Labour market underutilization fell to its lowest level since the beginning of the pandemic. The labour underutilization rate—which complements the unemployment rate by capturing a broader range of people who are available and want to work but did not search for work, as well as those who worked less than half their usual hours—declined 1.2 percentage points to 14.4% in July. Most components of the underutilization rate declined, including the number of people who were employed but that worked less than half their usual hours (-116,000), the number of people who were on temporary layoff (-93,000), and the number people who were not in the labour force but wanted to work (-65,000).

The share of Canadians working from home in July fell to its lowest level since October of last year. Among those who worked at least half their usual hours, the proportion working from home fell 2.0 percentage points to 25.8%. For about half of these workers, working from home continues to represent a temporary adaptation to the pandemic.

Monthly update – July 15, 2021

Real gross domestic product contracts for the first time since the initial lockdowns

Economy-wide output declined in April after eleven consecutive monthly increases. Real gross domestic product fell 0.3% as restrictions on non-essential businesses tightened at the onset of the pandemic’s third wave. After sizable gains in February and March, retail activity fell sharply in April with large declines among traditional brick and mortar outlets that rely more extensively on in-store traffic.

Activity among businesses that provide accommodation and food services also contracted in April after advancing swiftly during the preceding two months as restrictions eased. Output in accommodation and food services remained over one-third below pre-COVID levels.

Manufacturing output also declined as the semi-conductor shortage continued to weigh heavily on the auto sector. Automakers and parts dealers posted double-digit declines as production fell for the sixth time in seven months. Output in April was 30% below pre-pandemic levels.

Activity among real estate agents and brokers declined for the first time since November of last year. Despite the setback, activity remained over 30% above pre-COVID levels.

Higher output in construction, marking the fifth consecutive monthly gain, partly offset declines in high-contact services, manufacturing and real estate. Buoyed by continued growth in single-family homes, residential construction rose by over 4% for the third consecutive month, as activity in April stood 25% above pre-COVID levels.

Overall, economy-wide output in April was 1.2% below pre-pandemic levels. Statistics Canada released an advance estimate of real gross domestic for May, which points to a second consecutive monthly decrease.

Consumer inflation accelerates at the fastest pace in a decade

Consumer inflation accelerated to 3.6% in May as shelter and auto prices put upward pressure on the headline rate. While base effects continue to impact headline inflation, consumer prices, measured on a monthly basis, have steadily risen since the start of 2021. Higher prices for gasoline, housing, and autos have all contributed to recent price growth.

Shelter prices rose sharply in May, supported by higher homeowner replacement costs, rising expenses for owned accommodation, and increases in rental costs. Shelter prices were 4.2% higher on a year-over-year basis as new home prices and borrowing costs continue to diverge. The homeowners’ replacement cost index, which partly reflects prices for new homes, has risen for fifteen consecutive months as shifting consumer preferences and high construction costs continue to fuel price escalation in housing markets across the country. In contrast, mortgage interest costs have declined for thirteen consecutive months as homebuyers continue to take advantage of historically low interest rates.

Prices for passenger vehicles rose 5.0% year-over-year in May, the largest annual increase in over four and a half years. The increase in auto prices was partly the result of supply chain issues related to the global shortage of semiconductor chips.

Other indicators for May underscore the upward pressure on upstream prices. Prices for raw materials rose 3.2% on a monthly basis and were 40% higher than in May of last year. Prices at the factory gate rose 2.7% on a monthly basis and were over 16% higher than in May 2020.

Employment rebounds as third-wave restrictions ease

Following cumulative losses of 275,000 in April and May, employment rose by 231,000 in June as third-wave restrictions eased across the country. All of the net gains were in part-time work, while higher employment among young Canadians accounted for 70% of the headline increase. Over two thirds of June’s gain reflected higher employment in accommodation and food services (+101,000) and retail trade (+75,000). Employment rose in Ontario, Quebec, British Columbia and Nova Scotia.

Among 15 to 24 year olds, employment rose by 164,000, the largest single month increase since June of last year. Over two thirds of the increase reflected gains among young women. After falling by nearly 20 percentage points during the initial lockdowns, the employment rate among young Canadians, at 55.6% in June, has rebounded to within 2.4 percentage points of its pre-pandemic level.

The unemployment rate among 15 to 24 year olds fell to 13.6% in June, the lowest level since before the pandemic. Declines in the youth unemployment rate, unadjusted for seasonality, were more than twice as large among youth in population groups designated as visible minorities than among non-visible minority youth. The national unemployment rate stood at 7.8% in June, down from 8.2% in May.

With June’s headline increase, total employment was 340,000 (-1.8%) below pre-COVID levels, while the national employment rate, at 60.1%, was 1.7 percentage points below. All of the net employment losses that remained since the onset of the pandemic were in full-time work.

There were notable improvements in other measures of labour market activity in June. The labour underutilization rate—which complements the unemployment rate by capturing a broader range of people who are available and want to work—fell 2.0 percentage points to 15.6%. All components of the underutilization rate declined, led by a decrease of 276,000 in the number of people who were employed but who worked less than half their usual hours. Despite this decrease, the number of employed Canadians who worked less than half their usual hours remained 341,000 higher than before the start of the pandemic.

The number of Canadians who worked from home in June, at 4.7 million, was down 400,000 from May. Working from home represents an adaptation to the pandemic for 2.6 million of these workers.

Monthly update – June 10, 2021

Economic activity continues to expand at a solid pace

Real gross domestic product rose 1.4% during the first quarter, buoyed by higher outlays on housing, increased spending on consumer durables, and rising export volumes. Total economic activity in the quarter was 1.7% below pre-pandemic levels observed in late 2019.

Almost two-thirds of economic growth in the first quarter reflected higher investment in housing. Residential outlays rose 9.4%, as resale activity, new construction, and home renovations all strengthened. Total outlays on housing were 25.2% above pre-COVID levels.

Household spending increased 0.7%, up from 0.2% in the fourth quarter of last year. Outlays on consumer durables rebounded after a slight decline in late 2020 as auto purchases strengthened. Spending on food continued to advance at a brisk pace while purchases of clothing and footwear fell sharply for the second consecutive quarter.

Export volumes also contributed to economic growth, rising 1.5% on higher shipments of aircraft, other transportation equipment, and crude oil. Imports rose 1.1%, supported by increases in intermediate metal products and commercial services. Both export and import volumes have risen for three consecutive quarters.

Non-residential business investment declined 0.7% as lower outlays on machinery and equipment (M&E) offset a modest increase in non-residential structures. The decline in M&E spending reflected lower investment in aircraft. Outlays on non-residential structures rose for the first time since early 2020, as higher spending on engineering structures offset lower spending on non-residential buildings. Total business outlays on non-residential structures and machinery and equipment remained over 14% below pre-COVID levels.

Household saving remains in double-digit territory

Household disposable income rose 2.3% in the first quarter, supported by an increase in government transfers as employee compensation continued to rebound. Government transfers to households were up 1.8%, led by increases in Employment Insurance and other benefits as Canadians grappled with a third wave of COVID-19 infections, regional stay-at-home orders, and the potential for future economic disruption. Transfers in the first quarter remained over one-third higher than pre-pandemic levels, while household disposable income was over 10% higher than levels reported in late 2019.

As the growth in disposable income outpaced the increase in consumption, the household saving rate rose to 13.1%, marking the fourth consecutive quarter that the saving rate has been in double-digit territory.

Economy-wide output rises for the 11th consecutive month

Economy-wide output expanded by 1.1% in March, marking the 11th consecutive monthly increase since the initial economic lockdowns in March and April of last year. March’s headline increase, the largest since the summer of 2020, reflected broad-based gains across most industrial sectors as containment measures eased across much of the country. Higher retail activity contributed substantially to the headline increase, while accommodation and food services posted the second consecutive month of solid growth. Total economic activity in March was about 1% below pre-pandemic levels.

Statistics Canada also released an advance estimate of real gross domestic in April, which points to a 0.8% decline as tighter public health measures affected retail trade and accommodation and food services in certain regions of the country.

Improvements to the business outlook despite challenges related to profitability and operating costs

New data from the Survey on Business Conditions for the second quarter pointed to improvements in the near-term outlook. Over two-thirds of businesses in the second quarter indicated they could continue to operate at current revenue and expenditure levels for 12 months or more before considering closure or bankruptcy. At the same time, about 20% of businesses reported that they did not know how long they could continue to operate, down from about one-half of all businesses earlier in the year.

However, nearly four in ten businesses reported rising input costs related to labour, capital and raw materials as an obstacle in the near term, up substantially from one quarter of businesses in the first quarter.

Headline consumer inflation accelerated sharply in March and April

Headline consumer inflation accelerated sharply in March and April as base year effects and current price growth both put upward pressure on the headline rate. Consumer prices rose 3.4% on a year-over-year basis in April, after advancing by 2.2% in March.

Gasoline price dynamics continue to underlie much of the upward pressure on consumer prices. Gas prices, measured year-over-year, were 62.5% higher in April, and have risen by 15% during the first four months of 2021. Excluding gasoline prices, consumer inflation in April stood at 1.9%

Shelter prices rose sharply in April, supported by higher building and electricity costs. The homeowners' replacement cost index, which partly reflects changes in new home prices, rose for the fourteenth consecutive month and was 9.1% higher than in April of last year. At the same time, mortgage interest costs fell for the twelfth consecutive month, and were down 7.3% from levels observed in April 2020.

Food price inflation edged below the one percent mark in April, while prices for clothing footwear, measured year-over-year, and rose back into positive territory for the first time since March 2020.

Employment losses though April and May during third-wave restrictions

Following losses of 207,000 in April, employment fell by an additional 68,000 in May as third-wave restrictions remained in effect across the country. May’s headline decrease reflected declines in part-time work and lower employment in Ontario and Nova Scotia.

In recent months, employment has fallen in industries that are among the most impacted by changes in the intensity of public health measures. From March to May, cumulative losses in retail have totaled 113,000 while those in accommodation and food services were 67,000.

With May's headline decrease, net employment losses since the onset of the pandemic rose to 571,000, one half of which reflected losses among young workers. Employment among young women in May was 187,000 below pre-pandemic levels, while employment among young men was 103,000 below levels reported in February 2020. Almost two-thirds of net employment losses since the onset of the pandemic were in accommodation and food services.

Canada's unemployment rate edged up to 8.2% in May. Among 15 to 24 year-olds, the unemployment rate was 15.9%. The youth unemployment rate stood at 10.4% prior to the onset of the pandemic.

The number of Canadians working from home in May remained at 5.1 million.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, is now available.

Weekly update - Friday, May 7, 2021

Employment fell by 207,000 in April as lockdown measures tightened in several regions of the country. Losses in April reflected declines in both full-time and part-time work. Lower employment in Ontario accounted for nearly three quarters of the headline decrease, while one half of headline losses reflected lower employment among 15- to 24-year-olds.

Employment levels in several high-contact service industries in recent months have moved in parallel with changes in the intensity of public health measures. Employment in accommodation and food services fell 59,000 in April, largely as a result of losses in Ontario and British Columbia, where bans on indoor dining were re-introduced in late March and early April. The number of people working in retail trade fell by 84,000, as stricter restrictions on the operations of non-essential stores were implemented in Ontario, Alberta and several regions of Quebec.

With April's headline decrease, net employment losses since the onset of the pandemic rose to 503,000, more than half of which reflect losses among young workers. Employment among young women in April was 164,000 below pre-pandemic levels, while employment among young men was 99,000 below levels reported in February 2020. More than two-thirds of net employment losses since the onset of the pandemic were in accommodation and food services.

Canada's unemployment rate increased to 8.1% in April. Among 15- to 24-year-olds, the unemployment rate rose to 16.1%. The youth unemployment rate stood at 10.4% prior to the onset of the pandemic.

The labour underutilization rate—which reflects the number of people who are either unemployed, who want a job but did not look for one, or who are employed but worked less than half of their usual hours—rose 2.3 percentage points to 17.0% in April.

The number of Canadians working from home grew by 100,000 in April to 5.1 million. The number of Canadians adapting to COVID-19 by working from home remains above 3 million.

On May 4^th, the agency released March's merchandise trade report. Trade activity strengthened to end the quarter, led by a sizable, broad-based increase in imports. At $102.4 billion, total merchandise trade in March was at its highest level since May 2019, marking the first time since the onset of the pandemic that both monthly exports and imports were above pre-COVID levels.

Following back-to-back surpluses, Canada's merchandise trade balance returned to a deficit position in March (-$1.1 billion). Over one half of the change in the trade balance reflected a smaller surplus in energy products.

Headline exports edged up 0.3%, led by higher shipments of motor vehicles and parts and metal ores. Production slowdowns in the auto sector had less of an impact in March, while exports of iron ores rebounded after declining sharply in February. Non-energy exports rose to $41.2 billion, the third highest level on record.

While lower exports of energy products moderated the headline increase, total merchandise exports, at $50.6 billion, were 5.9% above pre-COVID levels.

Headline imports rose 5.5% in February, led by higher shipments of energy products and motor vehicles and parts. Higher imports of consumer products also supported the headline increase. Total merchandise imports, at $51.8 billion, were 2.9% above pre-COVID levels.

Following three consecutive declines, imports of medical and protective goods, measured on a customs basis, rose 22.6% to $3.2 billion in March, led by higher imports of medical equipment and products and diagnostic products. Imports of "vaccines for human medicine other than for influenza," the category that includes the COVID‑19 vaccines, rose 77.1% to a record $189 million in March. Further increases are anticipated in the months ahead.

March data on trade in services were also released on May 4^th. Canada's total international trade in services edged higher in March, supported by higher receipts and payments for commercial services. Despite the gain, total trade in services remained one-quarter below pre-COVID levels. Most of the decline since the onset of the pandemic reflects lower receipts and payments for travel services.

Building permits data for March were also released on May 4^th. Permits in March posted their third consecutive monthly record, reflecting a booming residential sector. Residential permits rose 15.9%, exceeding the $8 billion mark for the first time. Permits for single family homes increased 7.6% to $3.8 billion, while permits for multi-family dwellings reached an unprecedented $4.3 billion. Total residential permits in March were 47% above pre-COVID levels.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, is now available.

Upcoming releases: The leading indicator of cross-border traveller volume for April will be released on May 11^th. Investment in building construction for March will be released on May 12^th. March's manufacturing report will be released on May 14^th.

Weekly update - Friday, April 30, 2021

Economic activity continued to strengthen in February, albeit at a more moderate pace. Bolstered by higher output in retail trade and construction, real GDP rose 0.4%, after advancing 0.7% to start the year. February's headline gain marked the tenth consecutive monthly increase in economy-wide output since the historic declines recorded in March and April 2020. Total economic activity in February remained 2.2% below pre-COVID levels.

Following two consecutive monthly declines, retail trade rose 4.5% as lockdown measures eased in several regions of the country. Stores more dependent on in-store traffic experienced the largest rebound in activity. Total retail activity in February was 2.2% above pre-pandemic levels.

Construction activity continued to advance, buoyed by a strong increase in residential output. With gains in nine of the last ten months, residential construction in February was 15.3% above pre-COVID levels.

Accommodation and food services rose 3.5%, following five consecutive monthly declines. Output in this sector in February was about 40% below its pre-COVID level.

Lower output in mining and oil and gas extraction tempered February's headline gain. Output in the oil sands fell 4.8% after five months of steady growth. Manufacturing output also declined in February as the global semi-conductor shortage affected production levels in the auto sector.

Statistics Canada also released an advance estimate of real GDP for March, with preliminary information pointing to a 0.9% increase. This advance estimate points to an approximate 1.6% increase in real GDP in the first quarter of 2021.

There was a modest rebound in payroll employment in February as containment measures eased in several regions of the country. The number of employees receiving pay or benefits from their employer rose by 43,400, after declining by nearly 136,000 to start the year. February's headline increase reflected gains in Quebec, Alberta and British Columbia.

Following three consecutive months of substantial losses, payroll employment in accommodation and food services rose by 14,700. Retail payrolls rose by 13,300, after declining sharply in January.

February's increase in payroll employment was smaller than the headline increase reported from the Labour Force Survey, in part because of lags in new or returning employees receiving their first paycheques. Total payroll employment in February was 6.8% below pre-COVID levels, with net losses since the start of the pandemic remaining over 1.1 million.

February's retail report was released on April 28^th. Retail sales rebounded sharply in February (+4.8%), after lockdown measures in central Canada had weighed on retail spending in December and January. Over three quarters of February's headline increase reflected higher sales in Quebec.

Sales at food services and drinking places rose 6.7% to $4.4 billion in February, supported by higher sales at full-service restaurants and drinking places as several provinces eased COVID‑19-related restrictions. Ontario, Alberta, and Quebec posted the largest increases in dollar terms. However, on a seasonally unadjusted basis, total sales in February were still down 34.2% from pre-pandemic levels.

Civil aviation statistics for February were released on April 28^th. The situation remained bleak for the Canadian airline industry, which carried 482,000 passengers in February, down 93.1% from last year and 39.5% from January 2021. February saw the suspension of flights to Mexico and the Caribbean as well as testing on arrival with a hotel stopover for passengers arriving from abroad. Operating revenue earned by airlines totaled $267.9 million in February, down 85.5% from the same month last year.

While the pandemic continues to curtail the movement of people, the agency reported on April 26^th that Canadian railways carried 27.2 million tonnes of freight in February, up 1.0% from a year earlier, marking the fourth consecutive year-over-year increase. Domestic intermodal loadings – mainly containers – accounted for most of the increase in the volume of cargo in February, surging 42.0% from February 2020 on the heels of a 20.2% year-over-year gain in January. It appears that the replenishment of inventories and higher imports of some consumer goods in February helped to create stronger demand for multimodal containerized transport to dispatch larger and quicker shipments in the wake of COVID.

Weekly update - Friday, April 23, 2021

Headline consumer inflation returned to pre-pandemic levels in March as the downwards pressure from the base year coupled with current price growth led to a sharp acceleration in the headline rate. Consumer prices rose 2.2% on a year-over-year basis in March, the largest increase since February 2020.

Higher gasoline prices, bolstered by a rising global demand for oil and production cuts in OPEC+ countries, were the main contributor to the acceleration in headline rate. Gas prices, measured year-over-year, were 35.3% higher in March, the largest increase in twenty years. Excluding gasoline, consumer inflation stood at 1.2%, up from 1.0% in February.

Shelter prices rose sharply in March, supported by higher building costs and the surging demand for single family homes. Measured year-over-year, shelter prices rose above the two percent mark (+2.4%) for the first time since the start of the pandemic. The homeowners' replacement cost index, which partly reflects changes in new home prices, rose for the thirteenth consecutive month and was 7.9% higher than in March of last year. At the same time, mortgage interest costs fell for the eleventh consecutive month, and were down 6.3% from levels observed in March 2020.

Food price inflation held steady at 1.8% in March and has been below the two percent mark since November of last year. Prices for clothing and footwear were 5.4% lower than in March 2020.

On April 22^nd, the agency reported on travel between Canada and other countries for February. While an advisory against travel outside Canada and a mandatory 14-day quarantine period for those returning were still in effect, additional restrictions were imposed as of February 22^nd. Non-residents and returning Canadians arriving by air were required to take a COVID‑19 test on arrival and remain in a government-authorized hotel while awaiting the results. Arrivals to Canada from other countries in February were down 93.6% year-over-year. Similarly, the number of Canadians returning from abroad was down 93.1% over the same period. Just under 111,800 Canadians flew home during the month, down by over half (-52.1%) from January.

Upcoming releases: On April 26^th, the agency releases data on railway carloadings for February and, on April 29^th, aircraft movement statistics for the same month.

Weekly update - Friday, April 16, 2021

After advancing swiftly to start the year, factory sales fell 1.6% to $55.4 billion in February as the global shortage of semiconductors continued to impact production levels in the auto sector. Sales at auto assembly plants fell 14.5% to $3.3 billion, their lowest level since May 2020. Sales at assembly plants have declined in five of the last seven months and, in February, were 31% below pre-COVID levels. The tight supply of semiconductors also negatively impacted sales of plastics and rubber products manufacturers as many plastic products are used as intermediate inputs in auto production.

February's headline decrease was moderated by higher sales of petroleum and coal products, chemicals, and wood products. Sales of petroleum and coal products rose for the fifth consecutive month, rebounding to within 15% of pre-pandemic levels as prices continued to strengthen. Sales of wood products, supported by higher prices and volumes, rose for the ninth time in ten months and were nearly 70% above pre-pandemic levels.

After rising above pre-COVID levels to start the year, total factory sales in February were 0.8% below levels reported in February 2020.

February's wholesale report was released on April 16^th. Wholesale sales edged down 0.7% after advancing by 4.0% to start the year. February's headline decrease reflected lower sales of building materials and supplies and motor vehicles and parts. Despite the decrease, sales in February were the second highest on record.

The decline in building materials and supplies (-6.1%) followed the double-digit increase in January. Sales in this subsector, buoyed by strong momentum in housing markets, have advanced in eight of the last ten months, and remained almost 20% above pre-COVID levels. Sales of motor vehicles and parts fell for the third time in four months as the semiconductor shortage negatively impacted supply chains in the auto sector. Wholesale sales of motor vehicles and parts in February were almost 10% below pre-pandemic levels.

On April 12^th, Statistics Canada updated the adjusted price index that can be used to evaluate how monthly changes in consumer expenditure patterns since the onset of the pandemic have affected the overall pace of consumer price inflation. Estimates from this adjusted index are now available up to February 2021. The year over-year change in the adjusted index in February was 1.5%, while headline consumer inflation stood at 1.1%. The gap between the two measures has remained at 0.4 percentage points since September 2020.

On April 13^th, the agency released Experimental estimates of economic activity in the provinces and territories for the December 2020 reference month. These estimates pointed to a slowdown in the pace of the recovery in many regions of the country as containment measures tightened in late 2020. Slowdowns in economic activity were observed in Saskatchewan, Alberta, Quebec, Ontario and New Brunswick.

The agency also released the 2020 international trade report on April 14^th, which provided detailed contextual analysis of how the extraordinary events of last year impacted Canadian trade activity. The report is available at the following link: The Daily — Canadian international trade in 2020: A year without precedent

Weekly update - Friday, April 9, 2021

Employment rose by 303,000 in March as public health restrictions continued to ease in many regions of the country. March's headline increase reflected gains in industries that were most impacted by lockdown measures early in the year. Employment in retail trade rose by 95,000, as gains over the last two months fully offset the large decline in January. Employment in information, culture and recreation services rose by 62,000, the first increase since September. Employment in accommodation and food services rose by 21,000, after advancing by 65,000 in February.

With March's headline increase, net employment losses since the onset of the pandemic declined to 296,000, more than half of which reflect losses among 15 to 24 year-olds. Employment among young women in March was 122,000 below pre-pandemic levels, while employment among young men is 39,000 below levels reported in February 2020.

Canada's unemployment rate in March fell to 7.5%, the lowest level since February 2020. Among 15 to 24 year-olds, the unemployment rate declined to 14.0%. The youth unemployment rate stood at 10.4% prior to the onset of the pandemic.

The labour underutilization rate—which reflects the number of people who are either unemployed, who want a job but did not look for one, or who are employed but worked less than half of their usual hours—fell 1.9 percentage points to 14.7% in March, the lowest level since February 2020.

On April 7^th, the agency released February's merchandise trade report. Trade activity moderated in February after an export-led surge to begin the year. At $98.7 billion, total merchandise trade remained above pre-COVID levels for the second consecutive month, supported by stronger exports levels. Total merchandise exports in February were 4.1% above pre-COVID levels, while imports were 2.8% below levels reported in February of last year.

The merchandise trade balance remained in surplus for the second consecutive month, marking the first back-to-back monthly surpluses since late 2016.

Headline exports were down 2.7% in February after advancing by over 8% to start the year. Lower exports of metals, motor vehicles and parts, and aircrafts contributed to the moderation in export levels. Exports of passenger cars and light trucks fell by 11.5% as many assembly plants were forced to slow production because of the global shortage in semiconductor chips. Exports of auto and auto parts have declined in five of the last seven months and were almost 19% below pre-COVID levels in February.

Higher exports of energy products, buoyed by higher prices for natural gas due to extreme weather conditions in the southern United States, partially offset lower shipments of metals, motor vehicles and parts, and aircraft. Energy exports have increased for five consecutive months.

Headline imports fell 2.4% in February, the third decline in the last four months as imports fell to their lowest level since August of last year. Lower imports of motor vehicles and parts and energy products contributed to the headline decrease.

Imports of medical and protective goods, measured on a customs basis, were down 1.6% to $2.6 billion in February, the third consecutive monthly decrease. Imports of personal protective equipment were lower, as imports of other protective equipment and face and eye protection continued to gradually return to levels seen before the COVID‑19 pandemic. Imports of gloves have declined each month since reaching a peak in November, but remained well above pre-pandemic levels.

February data on trade in services were also released on April 7^th. Canada's total international trade in services declined in February, and remained over one-quarter below pre-COVID levels. Most of the decline since the onset of the pandemic reflects lower receipts and payments for travel services.

February's report on building construction, released on April 9^th, underscored the ongoing momentum in Canada's housing market. Investment in residential construction has been at record levels since September 2020, reaching a new high of $12.3 billion in February. The majority of this growth stemmed from single-family home construction, which rose for the fifth consecutive month to $6.7 billion in February.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, is now available.

Weekly update - Thursday, April 1, 2021

Economic activity strengthened in early 2021 despite the lockdowns impacting high-contact services in different regions of the country. After edging up 0.1% at year end, real GDP rose 0.7% in January, supported by increases in wholesaling, manufacturing, and resource extraction. January's headline gain marked the ninth consecutive monthly increase in economy-wide output since the historic declines recorded in March and April 2020. Total economic activity in January remained about 3% below pre-COVID levels.

Wholesaling activity strengthened markedly to start the year, rebounding from the pull-back in December. January's increase reflected broad-based gains, and was led by increases in machinery and equipment wholesaling, and building material and supplies wholesaling. Manufacturing output also rose to start the year, supported by increases in fabricated metals, machinery, and wood products. Mining and oil and gas extraction advanced for the fifth consecutive month as oil sands production continued to strengthen.

Accommodation and food services fell 3.0% in January, following the 6.7% decline at year end. January's decline marked the fifth consecutive monthly decrease, as output in accommodation and food services fell to 58% of its pre-COVID level. Retail trade was down 1.7% to start the year following the 3.6% decline in December. Retail activity in January was about 3% below levels observed before the onset of the pandemic.

Statistics Canada also released an advance estimate of real GDP for February, with preliminary information pointing to a 0.5% increase.

January's payroll employment report, released on March 30^th, underscored the continued impact of the lockdowns on high-contact services. The number of employees receiving pay or benefits from their employer fell by 134,500 in January, reflecting sharp losses in retail trade, accommodation and food services, and arts, entertainment and recreation. Cumulative employment losses in accommodation and food services from October to January totaled nearly 128,000.

Hourly paid workers continue to be among those hardest hit by the lockdown measures. Employment among hourly paid workers fell sharply in January, marking the third consecutive monthly decrease. The number of hourly-paid workers receiving pay or benefits from their employer was 10% below pre-COVID levels. Total payroll employment in January was 7.0% below pre-COVID levels, with net losses since February 2020 remaining over 1.1 million.

On March 30^th, the agency released January data on aircraft movements. In January, one year after the first Canadian airline routes were suspended due to COVID‑19, total aircraft movements were down 29.8%. Compared with January 2020, itinerant movements declined by 41.8% while local movements increased by 3.4%.

With Canada's largest carriers announcing further service reductions during the first quarter of 2021, year-over-year declines in transborder and international movements continued into January (-78.6% and -73.2% respectively).

Boundary Bay, British Columbia was Canada's most active airport in January with 13,164 movements.

Weekly update - Friday, March 26, 2021

Sales at food services and drinking places fell for the fourth consecutive month in January, reflecting sharp declines in Ontario and Quebec as restaurants and customers continued to adjust to tighter containment measures.  Headline sales were down 2.8% to $4.1 billion, the lowest monthly level since May 2020. About 60% of the headline decrease reflected lower sales at full-service restaurants, with receipts at these establishments in January amounting to less than one half of pre-COVID levels. Overall sales at food services and drinking places were 37% below levels reported prior to the start of the pandemic.

On March 22^nd, Statistics Canada reported that the volume of cargo carried by Canadian railways in January reached 32.6 million tonnes, up 7.7% from levels in January 2020. January's increase marked the third straight month of year-over-year growth. Loadings of coal surged by 35.5% from levels in January 2020, while loadings of iron ore and concentrates were 13.0% higher, appearing to signal a rebound in steel production. The agency reported last week that January sales in the primary metals industry increased for the fourth consecutive month. Railcar loadings of many agricultural and food products remained strong; wheat loadings rose 28.6% year-over-year in January, following similar increases in November and December 2020. Energy products continued to decline year-over-year, with loadings of fuel oils and crude petroleum down 45.1% in January, after similar drops in November and December 2020.

Counts of travel between Canada and other countries in January were released on March 23^rd. With another wave of the virus washing over many parts of the world, additional restrictions on international arrivals by air were announced by the federal government in January and existing restrictions on non-essential travel across the Canada-US border were extended into February. In January, arrivals of non-residents from the United States and other countries were down 92.3% compared with January 2020. Similarly, the number of Canadian residents returning from abroad was down 90.4% over the same period. While the number of Canadians flying home from abroad in January was down 89.9% from a year earlier, over 233,200 Canadians flew home during the month, up by over one-third from December.

Weekly update - Friday, March 19, 2021

Headline consumer inflation edged up to 1.1% in February, led by higher prices for gasoline.  Gasoline prices rose over 6% from January to February, as stronger global demand pushed year-over-year prices into positive territory for the first time since the start of the pandemic. Headline consumer inflation has averaged 0.5% since COVID‑19 began impacting the Canadian economy in March 2020, largely reflecting the impact of lower gas prices on the headline rate. Excluding gasoline, consumer inflation has averaged 1.1% since the start of the pandemic.

February's inflation report continued to highlight the ongoing divergence between mortgage borrowing costs and new housing costs. Measured month-over-month, mortgage interest costs fell for the tenth consecutive month as lower interest rates continued to put downward pressure on borrowing costs. At the same time, the homeowners' replacement cost index rose for the twelfth consecutive month as strong demand for single-family homes and higher construction costs continue to put upward pressure on new home prices. According to February's new housing price index, released on March 18^th, new home prices rose at their fastest monthly pace in more than three decades (+1.9%), as high demand and limited supply continue to fuel price increases in many areas of the country.

On March 19^th, the agency released January's retail report. Following a sharp decline at year end, retail sales fell 1.1% in January as lockdown measures weighed on activity in Quebec and Ontario. Lower sales at clothing and clothing accessories stores and at furniture and home furnishing stores contributed to the headline decrease.

Sales in Quebec fell 9.8% as retailers faced new restrictions on non-essential businesses and on the sale of non-essential goods. The curfew also reduced operating hours for some essential retailers.

Sales in Ontario declined 2.6% after contracting sharply at year end. January's decrease reflected lower sales at clothing and clothing accessories stores.

Retail e-commerce sales, measured on an unadjusted basis, were $3.5 billion in January, accounting for 7.8% of total retail trade. Based on respondent feedback, approximately 14% of retailers were closed at some point in January, on average, for three business days.

Total retail sales in January remained 0.5% above pre-COVID levels. The agency also released an advance estimate of retail sales for February 2021, which points to an increase of 4.0%.

The agency released January's manufacturing report on March 15^th. Factory sales rose 3.1% to start the year, surpassing February 2020 levels for the first time since the start of the pandemic. Higher sales of wood products, computers and electronic products, and primary metals supported the headline increase.

Sales of wood products, buoyed by rising lumber prices, rose for the eighth time in nine months. Bolstered by strong housing markets in the Canada and United States, sales in January were 62% above pre-pandemic levels.

Sales of computer and electronic products rose by over 22%, advancing for the fifth time in the last six months. January's increase reflected higher sales of navigational, measuring, medical and control instruments. Sales of primary metals rose for the fourth consecutive month, supported by higher prices and volumes.

January's headline increase was tempered by lower sales of motor vehicles and parts, as a global shortage of semi-conductor chips affected production levels across the auto sector. Sales at auto assembly plants were down 8.2%, falling to their lowest level since May 2020.

Weekly update - Friday, March 12, 2021

Employment rose by 259,000 in February as public health measures eased in many regions of the country. February's gain, concentrated in industries that were heavily impacted by the recent lockdown measures, offset headline losses in December and January. Employment in retail trade rose by 122,000, while employment in accommodation and food services increased by 65,000. Overall gains were concentrated in Quebec and Ontario.

About one-half of February's headline increase reflected higher employment among core-age workers, while almost 40% reflected gains among younger Canadians, who were heavily impacted by the recent lockdown measures.

Canada's unemployment rate in February fell to 8.2%, the lowest level since March 2020. Among 15 to 24 year-olds, the unemployment rate declined to 17.1%.

The labour underutilization rate—which reflects the number of people who are either unemployed, who want a job but did not look for one, or who are employed but worked less than half of their usual hours—fell 1.8 percentage points to 16.6%, the lowest level since February 2020.

January's report on building construction, released on March 8^th, underscores the pandemic's continuing impact on Canada's housing market. Investment in single-unit dwellings advanced for the eighth time in the last nine months, and was 19% above pre-pandemic levels to start the year. While higher outlays in Ontario have led the growth in single-unit construction, single-unit investment in Nova Scotia and Quebec both reached record highs in January. Total residential outlays, which include combined spending on singles and multi-unit buildings, rose to $11.6 billion in January,13% above levels reported in February 2020.

Non-residential outlays, which held steady at $4.4 billion, remained over 12% below pre-pandemic levels. Following sharp declines from July to October, spending on non-residential buildings has been stable in recent months. Spending on industrial buildings in January was down 12% from levels reported in February 2020, while outlays on commercial buildings were down 17%.

On March 11, the Leading indicator of international arrivals to Canada provided a first glimpse of travel into Canada during February. US residents made 41,200 trips to Canada through land ports with electronic sensors, down 94.5% compared with February 2020, while 130,200 Canadians returned from the United States through these same ports, down 91.9%. Non-residents arriving in Canadian airports equipped with electronic kiosks were down 96.6% year-over-year in February while the number of Canadian residents returning from abroad via these same airports fell 95.6%. Before testing on arrival and a hotel stopover was required as of February 22, the average number of returning Canadians by air was 2,583 per day, reaching 4,065 from February 19 to 21 and then dwindling to 718 after the additional requirements.

The national balance sheet and financial flow accounts for the fourth quarter of 2020 was released on March 12^th. Despite the ongoing challenges posed by the pandemic, household sector net worth—the value of all assets less liabilities—rose 3.7% to $12.8 trillion in the fourth quarter. Gains in the value of household financial assets, led by increases in pension wealth and equities, contributed to higher net worth late in the year, as did increases in the value of residential real estate, which surpassed $6 trillion for the first time on record. Over the course of 2020, household net worth has increased by 9.3%.

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Weekly update - Friday, March 5, 2021

Economic activity continued to strengthen at a sturdy pace in late 2020 despite the widespread introduction of tighter containment measures in many regions of the country. Real GDP rose 2.3% in the fourth quarter, supported by large changes in business stockpiles, continued strength in housing market activity, and higher exports. Increased business outlays on machinery and equipment and higher government spending also contributed to the headline gain.

Real GDP growth in fourth quarter exceeded market forecasts, despite the slight decline in household spending which reflected reduced outlays on food and accommodation services, clothing and footwear, and new vehicles. At the same time, household spending on furniture and appliances continued to rise late in the year, and has strengthened markedly in the wake of the initial lockdowns.

December's GDP report showed that output continued to edge higher (+0.1%), despite declines in many high-contact services as lockdown measures tightened. The headline increase at year end largely reflected higher output in mining and oil and gas extraction, stronger housing market activity, and increased activity in the public sector. By contrast, output in accommodation and food services fell for the fourth consecutive month, to about 60% of its pre-COVID level. Retail output fell for the first time in seven months, edging just below levels observed in February of 2020.

On March 1^st, the agency released experimental measures of economic well-being that provided new information on the extent to which emergency government transfers contributed to elevated levels of disposable income and saving among different groups of households. The data highlight how extensive these income supports were across household income levels.

The emergency support measures introduced in the second quarter more than compensated for lost wages and salaries during the lockdowns in the second quarter of 2020, irrespective of household income levels. Although a larger proportion of total COVID‑19 support went to middle- and upper-income earners, the impact of benefits were larger for households with lower incomes. Households in the bottom quintile saw their disposable income rise by 33%, while incomes in the top quintile grew by 7%.

As containment measures loosened during the third quarter, COVID support programs augmented the broad-based rebound in wages and salaries as disposable incomes continued to expand. Among top earners, disposable income rose by an additional 5.5%, while households in the middle and bottom quintiles saw more modest gains.

While many households benefitted from these programs, their economic impact was felt among low-income households. Over the first three quarters of 2020, the value of government COVID‑19 support measures represented 16.4% of disposable income for the lowest-income earners, compared with 4.3% among the highest earners.

On February 26, the agency released non-residential capital intentions for 2021. The data indicate that companies are strengthening their capital plans, but that private spending will remain well below pre-pandemic levels. While private organizations expect to spend 5.6% more on structures and machinery and equipment this year than during 2020, anticipated outlays remain 12% below levels reported in 2019, and about 20% below peak levels observed in 2014, prior to the mid-decade collapse in oil prices.

On March 5^th, the agency released the merchandise trade report for January. Merchandise exports surged to start the year, up 8.1% on broad-based increases across commodities. Higher exports of aircraft, consumer goods, energy products, and forestry products all contributed to the headline increase. About one-third of the 8.1% gain reflected higher export prices, while the volume of goods exported rose 5.1%. Exports to the United States were up 11.3% to start the year, exceeding levels in February 2020 for the first time since the start of the pandemic.

Imports advanced 0.9%, led by higher imports of energy products. Canada posted its first merchandise trade surplus since May 2019 as the total value of monthly merchandise trade surpassed the $100 billion mark for the first time since August of that year.

Weekly update - Friday, February 26, 2021

Payroll employment increased by 44,200 in December as gains in health care and social assistance and in transportation and warehousing offset continued losses in industries more heavily impacted by tighter public health restrictions. Payroll employment in accommodation and food services fell by 32,900, bringing combined losses in this industry over the last two months of 2020 to nearly 83,000. Employment also fell in arts, entertainment and recreation for the second consecutive month. Retail payrolls were down at year end, following six consecutive monthly increases.

All of the headline increase in payroll employment in December reflected gains among salaried workers. Employment among hourly paid workers edged lower following sharp losses in November. The number of hourly paid workers receiving pay or benefits from their employer at year end was 8.9% below pre-COVID levels, with cumulative losses since February 2020 totaling almost 870,000.

Total payroll employment in December was 6.2% below pre-COVID levels, with net losses since February remaining over one million. Total hours worked were little changed in December and 5.3% below the level reported in February 2020.

Data on job vacancies in December were also released on February 25^th. Canadian employers were actively recruiting for an estimated 478,000 positions (not seasonally adjusted) as they continued to navigate public health measures and the threat of COVID‑19. One-fifth of all vacancies were in the health care and social assistance sector. Canada's job vacancy rate, which represents vacant positions as a proportion of all positions (vacant and occupied) was 3.0% in December.

This week also saw a number of transport and travel-related releases that ended a devastating year for travel and tourism. On February 23^rd, travel between Canada and other countries reported that arrivals of non-residents to Canada from both the United States and overseas countries were down 93.0% compared to December 2019. Similarly, the number of Canadian residents returning internationally was down 91.3% from December of last year. Over the year, international travel to and from Canada declined to 25.9 million from 96.8 million arrivals in 2019. The travel release included a study on the number of "other travellers", including truck drivers and transport crew members, crossing the border each month during 2020.

On February 24^th, Statistics Canada reported that Canadian railways carried 32.4 million tonnes of freight in December, unchanged from the same month a year earlier. Following a strong 6.0% year-over-year increase in November, this signaled a recovery to more seasonal levels after seven straight months of year-over-year declines since March. The total volume of rail freight in 2020 totaled 365.5 million tonnes, a decrease of 5.4% from 2019. Although total tonnage in 2020 was near the five year annual average, COVID‑19 brought a stark change in the commodities moved by rail—most evident in a shift from energy-related commodities to agricultural and food products.

As the year ended with closings of non-essential businesses to combat the second wave of the virus in many parts of the country, COVID had more impact on passenger transportation. On February 25^th, the agency reported that public transit networks carried 52.5 million passengers in December, down 65.8% from December of 2019. The industry ended the year with three consecutive months of similar year-over-year declines, with December marking the lowest number of passengers since July 2020. For 2020 as a whole, Canada's public transit networks transported 848.8 million passengers, down over one-half from about 1.9 billion passengers in 2019.

December punctuated a disastrous year for aviation in Canada and around the world as two decades of commercial traffic growth was wiped out in a matter of months. On February 25^th, civil aviation statistics reported that the number of passengers carried on scheduled and charter services by major Canadian airlines was down 87.0% from December 2019, while operating revenues fell 80.6% year-over-year. Any glimmer of recovery with the 19.7% increase in passenger volumes from November to December due to higher international traffic soon ended with announcements of flight suspensions to some sun destinations as well as tighter travel restrictions, including a COVID‑19 test for international arrivals with a mandated three-night stay in a government-approved hotel.

Weekly update - Friday, February 19, 2021

Headline consumer inflation rose to the one percent mark in January, supported by higher prices for passenger vehicles and gasoline. Higher auto prices reflected the availability of new model-year vehicles, while gasoline prices rose as production cutbacks in major oil-producing countries have put upward pressure on benchmark crude prices. Consumers also paid more for phones and phone plans in January.

Overall changes in goods prices, measured year-over-year, edged into positive territory in January for the first time since the start of the pandemic, supported by higher prices for consumer durables. Headline consumer inflation has averaged 0.5% since COVID‑19 began impacting the Canadian economy in March 2020, largely reflecting the impact of lower gasoline prices on the headline rate. Excluding gasoline, consumer inflation has averaged 1.1% since the start of the pandemic.

January's consumer prices data also highlight the ongoing divergence between mortgage borrowing costs and new housing costs. Measured month-over-month, mortgage interest costs fell for the ninth consecutive month as lower interest rates continued to put downward pressure on borrowing costs. At the same time, the homeowners' replacement cost index rose for the eleventh consecutive month as strong demand for single-family homes and higher construction costs continue to put upward pressure on new home prices. According to January's new housing price index, released on February 18^th, new home prices rose at their fastest monthly pace (+0.7%) since October, as high demand and limited supply continue to fuel price increases in many areas of the country.

On February 19^th, Statistics Canada released December's retail report. Sales contracted sharply at year end as public health measures tightened in many regions of the country. Total sales fell 3.4% to $53.4 billion, the lowest level since July. Lower sales at general merchandise stores, clothing and clothing accessories stores, and sporting goods, hobby, book and music stores accounted for two-thirds of the headline decrease. While lower receipts in Ontario accounted for more than two-thirds of the headline decrease, sales fell in every province for the first time since April.

Retail e-commerce sales, measured on an unadjusted basis, reached a record high of $4.7 billion in December. E-commerce sales at year end accounted for 7.8% of total retail trade, the highest share since May.

Despite the pullback in December, overall retail sales remained 2.1% above pre-COVID levels. The agency also released an advance estimate of retail sales for January 2021, which points to a decline of 3.3%.

December's sales report for food services and drinking places, released February 18^th, underscores the severe impact that tighter public health restrictions continue to have on many high-contact services. Sales at food services and drinking places fell 8.0% in December, the third consecutive monthly decline. Sales at year end were at their lowest level since June and 35% below pre-pandemic levels. Receipts at full-service restaurants were more than 50% below levels reported in February 2020.

The agency released December's manufacturing report on February 15^th. Factory sales rose 0.9% at year end, offsetting the modest pullback in November. Higher sales of wood products, petroleum and coal products, and motor vehicles and parts supported the headline increase.

Sales of wood products, buoyed by rising prices, rose for the seventh time in eight months. Bolstered by strong housing markets in the Canada and United States, sales at year end were 45% above pre-pandemic levels.

Sales of petroleum and coal products advanced for the third consecutive month, supported by higher energy prices. Despite these late-year gains, sales in December remained almost one quarter below pre-pandemic levels.

Following four consecutive monthly declines, sales of motor vehicles and parts rose in December. Sales at year end were 7% below levels reported in February 2020.

After rebounding in May and June as factory activity ramped up after the lockdowns, total manufacturing sales were largely stable over the remainder of 2020. Overall sales in December were 2.9% below pre-COVID levels, largely reflecting lower sales of petroleum and coal products. Excluding petroleum and coal, manufacturing sales in December were 0.6% below levels reported in February.

Weekly update - Friday, February 12, 2021

After seven consecutive monthly increases, wholesale sales fell 1.3% in December on lower sales of motor vehicles and parts. Sales at auto and auto parts wholesalers fell for the second consecutive month to their lowest level since July, reflecting weakness in the domestic demand for Canadian-built vehicles, parts and accessories. Sales in this subsector at year end were 9% below pre-pandemic levels. Lower sales of machinery, equipment and supplies also contributed to the headline decrease.

Despite the pull-back, total wholesale sales in December were still the third highest on record and 3% above pre-COVID levels. Sales at wholesalers rebounded quickly from the lockdowns in the spring, surpassing February levels in July, and then steadily advancing through the late summer and fall months. Higher sales of building material and supplies, and machinery and equipment supported the rebound in wholesale sales. At year end, sales of building materials and supplies were 12% above pre-COVID levels, while sales of machinery and equipment were 7% above levels reported in February.

December's building construction report, released on February 8^th, continues to underscore the pandemic's divergent effects on residential and non-residential property markets. Investment in single-unit dwellings has risen markedly since the initial lockdowns, reflecting the shift in buyer preferences towards larger homes.  Outlays on residential dwellings rose 1.9% in December, led by higher spending on singles in Ontario, Quebec and Alberta. With gains in seven of the last eight months, single-unit investment at year end was 14% above pre-COVID levels. Total residential outlays, which include combined spending on singles and multi-unit buildings, rose to a record $11.1 billion in December, 8% above levels reported in February 2020.

While outlays on housing have strengthened, investment in non-residential buildings has contracted in the wake of the lockdowns. Non-residential outlays, which held steady in December at $4.4 billion, remained 13% below pre-pandemic levels. Spending on industrial buildings in December was down 11% from February's level, while outlays on commercial buildings were down 17% as many businesses continue to re-evaluate their commercial property requirements.

On February 9^th, Statistics Canada released experimental estimates of economic activity for October. These estimates highlight the slowdown in the pace of the recovery in most provinces and territories as public health restrictions began to tighten in several parts of the country. The pull-back in economic activity in October was most apparent in Quebec where stronger public health restrictions were enacted earlier than in other provinces and territories.

Weekly update - Friday, February 5, 2021

After declining by 53,000 in December, employment fell by 213,000 in January, reflecting sharp losses in Ontario and Quebec. January's headline decrease was entirely in part-time work as total employment fell to its lowest level since August 2020.

Employment declined in three industries most affected by new and continuing public health restrictions—accommodation and food services, retail trade, and information, culture and recreation. Lower employment among young Canadians accounted for about one-half of the headline decrease. Youth employment in January was 14.5% below pre-COVID levels, with female youth continuing to be harder hit than their male counterparts.

Canada's unemployment rate rose to 9.4%, the highest level since August. Cumulative employment losses since the start of the pandemic totaled 858,000.

On February 5^th, the agency released December's international merchandise trade report. Merchandise trade continued to slow in December as lower imports moderated higher exports. At $96.3 billion, total merchandise trade was 2.0% below pre-COVID levels.

Headline exports rose 1.5% in December, supported by higher prices for crude oil. Exports of energy products rose 10.2%, the seventh increase in the last eight months. Despite these gains, energy exports remained 8.2% below pre-COVID levels, while total merchandise exports were 1.9% below levels observed in February 2020.

Headline imports edged down 2.3% in December, falling below pre-COVID levels for the first time since September. Lower imports of consumer products contributed to the headline decrease.

Canada's international trade in services edged lower in December, reflecting lower trade in commercial services. Canada's trade in services remained one-quarter below pre-COVID levels, largely reflecting lower receipts and payments for travel services.

A study released on February 2^nd highlighted how COVID‑19 affected the composition of Canada's merchandise imports during the first half of 2020. Using a classification structure that distinguishes between the different end-uses for imported products, the report outlines the extent to which imports of capital goods, intermediate goods, and consumption goods were all impacted by the pandemic, particularly those related to transport equipment and travel services. The study, Impact of COVID‑19 on merchandise imports: evidence based on end-use goods, also highlights how the pandemic affected the supply chains for various commodities, often via altering the supply of imports coming from the U.S. and China.

At the end of January, Statistics Canada released two reports on aviation, both for November. The total number of aircraft movements (i.e. take-offs and landings) across Canada was down 26.6% from November 2019. The month featured two notable pandemic-related developments. First, Kitchener/Waterloo in Ontario was Canada's busiest airport with 13,619 take-offs and landings, mostly local traffic including private operators and flight schools. Second, itinerant movements (i.e. from one airport to another) at Hamilton International in Ontario increased year-over-year (+0.4%) in November for the first time since March, largely resulting from cargo traffic and a surge in helicopter movements, shuttling Canadian snowbirds over the US–Canada border.

The agency's civil aviation report signaled that the air travel recovery appeared to stall in November, with major Canadian airlines carrying 780,000 passengers on scheduled and charter flights. This was down 87.3% from the same month in 2019 and down 12.0% from October 2020, somewhat larger than a typical seasonal decline. As in previous months, most travel was domestic as international demand remained generally weak amid border travel restrictions and enforcement of quarantines. However, two more major air carriers that operate mostly international flights resumed limited services in November. While domestic air travel declined from October, international travel in November actually increased.

On January 25^th, the agency released business openings and closures for October. Business openings (41,900) exceeded closures (32,400) for the fourth consecutive month as the number of active businesses edged up 0.6%. The growth in active businesses has slowed in recent months as closures have risen while openings have declined. The total number of active businesses in October was 6.7% below pre-COVID levels. In accommodation and food services, the number of active firms was just over 10% below levels reported in February 2020.

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Weekly update - Friday, January 29, 2021

Economic activity rose for the seventh consecutive month in November, supported by increases in mining, oil sands extraction, and factory output. Real gross domestic product increased 0.7%, following the 0.4% gain in October. Total economic activity in November was 3.5% below pre-COVID levels.

Oil sands extraction rose for the third consecutive month as a number of facilities restarted production. Output in the oil sands remained about 5% below pre-COVID levels. Support activities for mining and oil and gas extraction rose for the fifth consecutive month but remained over 40% below pre-COVID levels.

Manufacturing output increased for the sixth time in seven months, and was about 3% below levels observed prior to the pandemic.

Output in service industries that were among the most impacted by the pandemic remained well below February levels. Despite a 6% increase in accommodation services in November, activity was almost 40% below pre-COVID levels. Activity among food services and drinking places fell for the third consecutive month as public health measures tightened, and was down over 30% from pre-COVID levels. While air transportation posted a notable gain in November, output remained 83% below levels observed in February.

Retail trade strengthened in November, and was 3.5% above levels reported in February. At the same time, activity among real estate agents and brokers declined for the second consecutive month after reaching a peak in September. Nonetheless, activity among agents and brokers was almost 30% above February levels.

Statistics Canada also released an advance estimate of real GDP for December, with preliminary information pointing to a 0.3% increase.

November's payroll employment report was released on January 28^th. Payroll employment fell as public health measures tightened in many areas of the country. Nationally, the number of employees receiving pay or benefits from their employer declined by nearly 80,000, the first decrease since May. Losses were concentrated in Quebec, Ontario, Alberta and Manitoba.

Payrolls fell in industries that were directly affected by tighter public health measures. Employment in accommodation and food services was down by over 48,000, while payrolls in arts, entertainment and recreation services declined by almost 9,000. Payrolls in both these industries were about 30% below levels observed prior to the pandemic.

All of the headline losses in November reflected lower employment among hourly paid workers, who have been relatively hard hit by the pandemic. The number of hourly paid workers receiving pay or benefits from their employer was 8.7% below pre-COVID levels, with cumulative losses since February totaling almost 850,000.

Total payroll employment in November was 6.6% below pre-COVID levels, with net losses since February totaling over 1.1 million.

Data on job vacancies in November were also released on January 28^th. Canadian employers were actively recruiting for an estimated 523,000 positions (not seasonally adjusted) as they continued to navigate public health measures and the threat of COVID‑19. More than one-fifth of all vacancies were in the health care and social assistance sector. Canada's job vacancy rate, which represents vacant positions as a proportion of all positions (vacant and occupied) was 3.3% in November.

On January 27^th, Statistics Canada reported railway traffic for November, when Canadian railways carried 32.1 million tonnes of freight, an increase of 6.0% compared with November 2019. This marked the first year-over-year increase since March, with overall tonnage in November just below the peak reached in 2018. However, with a labour dispute affecting rail transport during November 2019, it is not possible to attribute all of the year-over-year growth to a post-pandemic recovery. In terms of commodities, loadings of agricultural and food products have increased while energy-related products continue to experience declines.

On January 28^th, the agency released data on urban transit for November, when ridership was 64.2% (or 105.8 million trips) below November 2019 levels. This was the eighth consecutive month of steep year-over-year declines, each less severe, signaling a slow recovery until an abrupt stop in October.

Following steady passenger gains during the summer, the recovery in transit stalled for the second straight month, edging down in November. This coincides with stricter COVID-related restrictions in some areas of the country.

Weekly update - Friday, January 22, 2021

Consumer price inflation slowed to 0.7% in December after reaching the one percent mark in November for the first time since the start of the pandemic. Slower price growth for food and lower air transportation prices contributed to the deceleration in the headline rate. Consumer inflation has averaged 0.4% since COVID‑19 began impacting the Canadian economy in March.

Overall changes in goods prices, measured year-over-year, remained in negative territory in December for the tenth consecutive month as lower gasoline prices continued to weigh on the headline rate. While gas prices rose from November to December, prices at the pump were 8.5% lower than in December of 2019 as COVID-related restrictions have sharply dampened global demand. Prices for consumer durables at year end were 2.2% higher than in December of last year.

December's inflation report also highlighted the continued divergence in mortgage interest costs and homeowners' replacement costs. Measured month-over-month, mortgage interest costs fell 1.0%, the eighth consecutive monthly decline as lower interest rates continued to put downward pressure on borrowing costs. At the same time, the homeowners' replacement cost index, which reflects prices for new homes, rose 0.7%, the tenth consecutive monthly increase as strong demand for single-family homes and higher building material costs put upward pressure on new home prices.

Earlier in the month, the agency released consumer price data based on an adjusted index that reflects changes in spending patterns since the onset of the pandemic. Estimates based on this adjusted index are available up to reference month November. This index shows slightly faster price growth than the official headline rate. In November, the year over-year change in the adjusted index was 1.4%, while headline inflation stood at 1.0%. The gap between the two indexes has remained at 0.4 percentage points since September.

November's retail report was released on January 22^nd. Retail sales rose 1.3%, supported by higher sales at food and beverage stores and an uptick in e-commerce sales. November's headline gain marked the seventh consecutive monthly increase as total sales exceeded pre-COVID levels by 5.6%.

The reintroduction of physical distancing measures directly affected the retail sector. Based on respondent feedback, approximately 3% of retailers were closed during November, on average, for one business day. Retail e-commerce sales reached $4.3 billion, accounting for 7.4% of total retail trade—the largest share since May. The rise in e-commerce sales coincided with retailers urging online shoppers to buy early to avoid shipping delays, as well as promotional events such as Black Friday.

Statistics Canada also released an advance estimate of retail sales for December, which point to a decline of 2.6%.

The agency released November's manufacturing report on January 19^th. Factory sales fell for the first time in three months, declining 0.6% to $53.7 billion. Lower headline sales in November reflected declines in transportation equipment as aerospace production and motor vehicle sales both decreased. Sales of transportation equipment have fallen in three of the last four months and were about 16% below levels observed in February. Overall manufacturing sales in November were 3.8% below pre-COVID levels.

The agency also released November's wholesale trade report on January 19^th. Wholesale sales rose 0.7%, advancing for the seventh consecutive month as sales exceeded pre-COVID levels by 4.4%.

Travel between Canada and other countries for November was released on January 22^nd. With restrictions on non-essential travel in place and a mandatory 14-day quarantine period for Canadians returning from abroad, volumes remained low. Non-resident travel to Canada from the United States and overseas countries was down 92.9% from November 2019. Similarly, the number of Canadian residents returning from other countries was down 92.1% on a year-over-year basis.

Despite the ongoing the travel restrictions, the number of Canadians returning from the U.S. and abroad increased from October to November. In all, 42,200 Canadians returned from the United States by plane in November, up 29% from October, while 73,200 Canadian residents returned home from travel overseas, which also exceeded October levels.

Weekly update - Friday, January 15, 2021

On January 13^th, Statistics Canada released new data on cross-border travel. December’s leading indicator of cross-border traveller volume showed that the number of American residents and returning Canadians crossing the Canada-U.S. border by automobile remained low. With restrictions on non-essential travel still in effect, crossings were down by more than 90% from levels observed in December of 2019. In 2019, more than 270,000 Canadian residents returned home from the United States during the weekend following Christmas Day (December 28^th to 30^th). In 2020, only 146,000 Canadian residents crossed back into Canada by automobile during the entire month of December.

The leading indicator of international arrivals to Canada by air for the fourth quarter was also released. The total number of international arrivals (i.e. non-residents and returning Canadians) remained far below pre-pandemic levels. Just over 71,000 non-residents (from the United States and overseas) arrived at Canadian airports from October to December. During these months, 217,100 Canadian residents returned home by air, with a discernible uptick in December. The average daily travel volume rose from 1,883 in October to 2,165 in November, and then to 3,025 in December, a month when 93,800 Canadians returned from abroad by air.

On January 12^th, the agency released investment in building construction for November. Outlays on residential dwellings edged down 0.1% as higher spending on single units was offset by lower investment in multi-unit dwellings. November’s slight decline followed six months of steady increases in total residential outlays, which, at $10.8 billion, remained 5.5% above pre-COVID levels.

Outlays on non-residential construction were unchanged in November as higher spending on institutional and industrial building was offset by lower investment in commercial buildings. Following four months of steady declines, total non-residential outlays, at $4.4 billion, were nearly 13% below pre-COVID levels. Spending on commercial buildings was at its lowest level since the April lockdown.

Weekly update - Friday, January 8, 2021

Employment contracted by 63,000 in December as tighter public health measures went into effect in various parts of the country. December’s headline decrease, which reflected losses in part-time work and self employment, marked the first monthly decline since the lockdowns in April. Employment fell in Nova Scotia, Saskatchewan, Manitoba and Prince Edward Island and held steady in the other six provinces.

Employment in the service sector declined by 74,000, reflecting losses in industries that are heavily impacted by public health restrictions. Employment fell in accommodation and food services, other services, and information, culture and recreation industries.

Youth employment contracted in December, as part-time losses (-58,000) offset gains in full-time work (+32,000). Youth employment remained over 10% below pre-COVID levels, with female youth continuing to be harder hit than their male counterparts.

Canada’s unemployment rate edged up slightly to 8.6%, after peaking at 13.7% in May.

After peaking at 5.5 million in April, the total number of Canadian workers directly affected by the COVID‑19 economic shutdown, either through lost employment or substantial reductions in hours worked, stood at 1.1 million in December.

On January 7^th, the agency released November’s international merchandise trade report. Merchandise trade slowed in November as lower imports moderated higher exports. At $96.9 billion, merchandise trade was 1.4% below pre-COVID levels. Much of the net decline since February reflected lower trade in energy products and aircraft and other transportation equipment, which both remained well below pre-COVID levels.

The divergent trend between Canada's trade with the United States and with other countries continued in November. Total trade with countries other than the U.S. rose 2.1%, reaching a record $33.1 billion. Total trade with the United States fell 1.0% to $63.8 billion, the lowest level since June.

Headline exports rose 0.5% in November, supported by higher exports of gold to the United Kingdom. At $46.8 billion, total exports were 3.1% below levels observed in February. Energy exports rose for the sixth time in the last seven months but remained 16.5% below pre-COVID levels. Exports of motor vehicles and parts fell for the third time in the last four months, and were 6.1% below levels observed in February.

Headline imports edged down 0.3% in November but remained slightly above pre-COVID levels. Lower imports of industrial machinery contributed to the headline decrease.

Imports of medical and protective goods rose in November after two consecutive monthly declines. Imports of these products are up 46% on a year-over-year basis.

Canada’s international trade in services edged higher in November, marking the third increase in the last four months. Despite these gains, trade in services remained over one-quarter below February’s level, largely reflecting lower receipts and payments for travel services.

The agency released the national tourism indicators for the third quarter on January 8^th. Although tourism spending in Canada rose 56.4% in the third quarter, it only partly offset the second quarter decline (-65.0%). While tourism's share of GDP improved to 1.0% in the third quarter, it remained lower than pre-pandemic levels (2.0%). Third quarter employment attributable to tourism rose 27.1%, driven mainly by gains in food and beverage services and accommodation, but partly offset by losses in air transportation. Domestic tourism accounted for nearly all of total tourism spending in the third quarter.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, with a focus on news related to the COVID‑19 pandemic, is now available.

Weekly update - Thursday, December 24, 2020

Economic activity increased for the sixth consecutive month in October, led by gains among service industries. Real gross domestic product rose 0.4%, following the 0.8% increase in September. Higher output in professional, scientific and technical services, finance, and public service industries supported the headline gain. Total economic activity in October was about 4% below pre-COVID levels.

Output in several industries that were among the most impacted by the pandemic remained well below pre-COVID levels. Activity in accommodation and food services fell for the second consecutive month as momentum built up through the late spring and summer continued to dissipate. Output in this sector in October was down 31% from levels observed in February. Similarly, despite five consecutive monthly increases, activity in arts, entertainment and recreation industries remained 44% below pre-COVID levels.

Retail trade continued to strengthen in October, advancing for the sixth consecutive month. Output in the retail sector was 2.5% above levels reported in February. At the same time, activity among real estate agents and brokers pulled back slightly, after reaching a peak in September. Nonetheless, activity among agents and brokers was 32% above February levels.

Statistics Canada also released an advance estimate of real GDP for November, with preliminary information pointing to a 0.4% increase.

Payroll employment continued to rebound in October, albeit at a slower pace, as COVID-related public health restrictions had begun to tighten in parts of central Canada. Nationally, the number of employees receiving pay or benefits from their employer rose by 183,700, about one-half of September’s reported increase. Gains across industries were broad-based as all provinces except for New Brunswick reported higher payrolls. October’s headline gain brought total payroll employment to within 6.1% of pre-COVID levels, with net losses since February totaling just over one million.

About two-thirds of October’s increase in payroll employment reflected gains among hourly paid workers, who have been relatively hard hit by the pandemic. The number of hourly paid workers receiving pay or benefits from their employer in October was 8.1% below pre-COVID levels, with cumulative losses since February totaling almost 800,000.

November’s new housing price index was released on December 21^st. New home prices continued to rise at a brisk pace across much of the country as strong momentum in housing markets extended into late fall. Nationally, prices for new home rose 0.6%, with home builders in 21 of the 27 census metropolitan areas reporting increases. Since the beginning of the pandemic in March, new home prices have risen by 3.7%, supported by a shift in buyer preferences toward single-family homes, coupled with lower borrowing costs. According to the consumer price index, mortgage interest costs, measured on a month-over-month basis, have fallen for seven consecutive months, with November’s decrease marking the largest decline in over 26 years. Upward pressure on new home prices has been apparent in all provinces except Saskatchewan and Alberta.

There were several data releases this week related to travel, transportation and food services. On December 21^st, the agency reported that, while the volume of rail freight continued to move closer to pre-pandemic levels in October, overall tonnage was down 7.1% since January when compared to the same 10-month period last year. Loadings of fuel oils and crude petroleum as well as gasoline and aviation fuel were down by more than 50% from levels observed last October. Large increases in loadings of some agricultural and food products, including canola and other cereal grains, helped offset declines in energy products.

On December 22^nd, Statistics Canada reported that, after climbing steadily each month following the drastic plunge last April, urban transit ridership dipped slightly in October. As a result, total operating revenues excluding subsidies remained almost two-thirds below the same month last year. The first signs of a second wave have also stalled any recovery of the Canadian airline industry. The agency reported on December 22^nd that, in October, operating revenue earned by the largest air carriers was down 82.6% from the $1.9 billion earned in October 2019. The outlook remains bleak with countries further restricting air travel in response to a second wave.

Statistics Canada also reported that arrivals to Canada from both the United States and overseas countries were down almost 95% in October, compared to the same month last year.

With the extension of travel restrictions and tighter public health measures in some provinces, sales reported by food services and drinking places in October were not encouraging. Following five consecutive monthly gains, sales in restaurants and bars fell almost 9% from September to October. Establishments in Ontario and Quebec both reported 30% declines in year-over-year (unadjusted) sales.

Weekly update - Friday, December 18, 2020

Consumer price inflation accelerated in November, reaching the one percent mark for the first time since the start of the pandemic. The headline rate has averaged 0.4% since COVID‑19 began impacting the Canadian economy in March.

Overall changes in goods prices, measured year-over-year, remained in negative territory in November for the ninth consecutive month as lower gasoline prices continued to weigh on the headline rate. Gasoline prices were down nearly 12% on a year-over-year basis as the tightening of COVID-related restrictions continued to dampen global demand. At the same time, prices for consumer durables, supported by higher prices for furniture and household appliances, were 1.7% higher than in November of last year.

November’s consumer inflation report also highlighted movements in housing-related prices, as mortgage interest costs and homeowners’ replacement costs continued to diverge. Measured month-over-month, mortgage interest costs fell 0.9%, the seventh consecutive monthly decline as lower interest rates continued to put downward pressure on borrowing costs. At the same time, the homeowners’ replacement cost index, which reflects prices for new homes, rose 1.1%, the ninth consecutive monthly increase as strong demand for single-family homes and higher building material costs put upward pressure on new home prices.

Retail sales continued to advance in October, albeit at a slower pace. Headline sales edged up 0.4%, the six consecutive monthly increase, led by higher sales at motor vehicle and parts dealers. October’s retail report, released on December 18^th, also pointed to higher sales at sporting goods, hobby, book and music stories, furniture and home furnishing stores, as well as at building material and garden equipment and supplies dealers.

Total retail sales in October were 4.5% above pre-COVID-levels, with nine out of eleven subsectors reporting sales that exceeded levels in February. Headline sales have been above pre-COVID levels since June.

Measured on an unadjusted basis, retail e-commerce sales reached $3.1 billion in October, accounting for 5.2% of total retail trade. Retail e-commerce sales were up by two-thirds on a year-over year-basis, while total unadjusted retail sales increased by 9.1%.

Statistics Canada also released an advance estimate of retail sales in November, which suggests that headline sales were relatively unchanged.

The agency released October’s manufacturing report on December 15^th. Factory sales edged up 0.3%, supported by higher sales at pulp, paper and paperboard mills. Higher sales of petroleum and coal products, led by rising prices, also contributed to the headline gain.

Overall manufacturing sales in October were 3% below pre-COVID levels, largely reflecting lower sales of petroleum and coal products, which, despite gains in four out of the last six months, remained nearly 30% below pre-COVID levels.

Following two consecutive monthly increases, total manufacturing inventories declined in October on lower inventories of transportation equipment. Unfilled orders also fell on lower orders of aerospace products and parts.

On December 16^th, the agency released October’s wholesale trade report. Wholesale sales rose 1.0%, advancing for the six consecutive month as sales exceeded pre-COVID levels by 3.3%. Six out of seven wholesale subsectors reported sales that exceeded February levels.

On December 18^th, the agency released aircraft movement statistics for October. With ongoing border and travel restrictions, the number of itinerant movements (i.e. from one airport to another) fell by 41.5% in October compared to the same month last year. Domestic traffic was down 34.2%, but more so with the United States (-84.2%) and other international destinations (-69.4%). Despite some carriers adding flights to sun destinations in October and the resumption of service by other carriers in November, the outlook remains grim for the travel industry.

The agency resumed publishing Employment Insurance statistics on December 17^th. Measured on a seasonally adjusted basis, 1.4 million Canadians received regular EI benefits in October, more than triple the number reported in February. Data from the Labour Force Survey indicate that there were 1.8 million unemployed in October, including 1.5 million who were looking for work and 300,000 who had a connection to a job, either because they were on temporary layoff or had arrangements to begin a new job in the near future.

Upcoming releases: Railway carloadings for October, and new housing prices for November, will be released on December 21^st. Payroll employment, earnings and hours, and sales of food services and drinking places, both for October, will be released on December 22^nd. October’s GDP report will be released on December 23^rd.

Weekly update - Friday, December 11, 2020

The household balance sheet continued to strengthen in the third quarter, buoyed by increases in the value of financial assets and housing. Household net worth, the value of assets less liabilities, rose 3.0% to $12.3 trillion, following the record rebound in the second quarter. Household disposable income and savings remained at elevated levels as rising wages coupled with government transfers offset a strong rebound in spending. Household disposable income in the third quarter was over 9% higher than in the fourth quarter of last year.

Higher equities and increases in the value of residential real estate were both major contributors to the increase in household net worth. Equities were bolstered by increases in the value of mutual fund shares, while strong sales volumes spurred price growth in the housing market.

Household credit market borrowing rebounded in the third quarter, as the demand for both mortgage and non-mortgage loans increased. The household debt service ratio rose to 13.22%, while household credit market debt as a proportion of household disposable income rose to 170.7% following the record decline in the second quarter. By comparison, the ratio of credit market debt to disposable income was 181.0% in the fourth quarter of last year.

On December 7^th, the agency released data on investment in building construction for October. Outlays on residential dwellings edged up 0.7%, advancing for the sixth consecutive month. Higher spending on single-unit dwellings led the gain, with all provinces reporting increases expect for Prince Edward Island. Total outlays on residential construction, at $10.9 billion, were 5.7% above pre-COVID levels.

In contrast, non-residential outlays fell 3.2% to $4.4 billion, the fourth consecutive monthly decline. While the pull-back in October largely reflected lower spending in Quebec, non-residential outlays fell in all provinces except for Prince Edward Island. Overall spending on commercial, industrial and institutional buildings fell to its lowest level since the April lockdowns and was 13.5% below pre-COVID levels.

On December 7^th, Statistics Canada also released experimental indexes of economic activity in the provinces and territories for August. These data highlight the increase in economic activity in all provinces and territories during the summer months as COVID-related restrictions continued to ease. By August, overall activity in most provinces remained below pre-COVID levels, most notably in Alberta. Economic activity in Saskatchewan, Ontario and British Columbia was also substantially affected by the pandemic.

Final estimates from the National Travel Survey, released on December 9^th, indicated that Canadian residents made a total of 313 million trips in 2019, when the pandemic was not yet a consideration. Year-over-year, Canadians took slightly fewer trips domestically, while the number of trips to overseas countries (other than the United States) rose 4.0%. In 2020, the impact of COVID‑19 was felt foremost on travel. On December 10^th, the agency reported the leading indicator of travel across the Canada-United States land border during this November. As restrictions on non-essential travel remained in effect, U.S. residents made just 53,300 trips to Canada in automobiles during the month, down 93.7% from November 2019, while the number of Canadians returning by automobile was 136,900, down 92.5%.

Weekly update - Friday, December 4, 2020

Employment growth continued to slow in November as targeted public health measures designed to address the recent surge in COVID‑19 cases continued to be introduced in various parts of the country. Employment rose by 62,000 in November, all on increases in full-time work. Gains in construction, transportation and warehousing, and retail trade were offset by losses in information, culture and recreation services, and accommodation and food services. November’s headline gain brought total employment to within 574,000 of its pre-COVID level.

Employment rose in Ontario, British Columbia and throughout Atlantic Canada. Growth in Ontario slowed as employment in the Toronto CMA was unchanged after increasing for five consecutive months. Employment in Quebec was little changed for the second consecutive month.

Canada’s unemployment rate fell to 8.5%, after peaking at 13.7% in May. The unemployment rate among core-age workers remained at 7.1%, while the rate among young Canadians declined to 17.4%. In all, 1.7 million Canadians were unemployed in November, compared to 1.1 million in February.

After peaking at 5.5 million in April, the total number of Canadian workers directly affected by the COVID‑19 economic shutdown stood at one million in November. This includes net employment losses of 574,000 along with an increase of 448,000 in the number of Canadians who were employed but working less than half their usual hours.

On December 4^th, the agency released October’s international merchandise trade report. Merchandise trade continued to strengthen in October as both exports and imports advanced. At $96.7 billion, merchandise trade in October was 1.5% below pre-COVID levels. Much of the decline in the total value of trade since February reflected decreases in energy products and aircraft and other transportation equipment.

Headline exports rose 2.2% in October, supported by a sharp rebound in exports of pharmaceutical products to the United States. Higher exports of energy products also contributed to the headline gain. Total merchandise exports in October were 3.6% below pre-COVID levels.

Merchandise imports rose 1.9% in October, exceeding February levels for the first time since the pandemic began. Higher imports of electronic products and consumer goods contributed to the headline increase.

The GDP report for the third quarter, released on December 1^st, highlighted the strong resurgence in economic activity as COVID-related restrictions eased and businesses reopened. Real gross domestic product rose 8.9% in the third quarter, following the record 11.3% contraction in the second. Despite the sharp rebound, economic activity in the third quarter was over 5% below levels observed in the fourth quarter of last year.

Stronger household outlays, led by higher spending on consumer durables and services, contributed substantially to the resurgence in the third quarter. Buoyed by pent-up demand, household expenditures on durables rose by 38.0%, led by increased spending on trucks, vans and sport utility vehicles, and cars. Outlays on services rose 9.6%, led by higher spending on food and beverage services.

Investment in housing rose by a record 30.2% in the third quarter, supported by increases in resale activity, renovations and new construction. Total housing investment in the third quarter was about 10% higher than in the fourth quarter of last year.

While non-residential business investment picked up in the third quarter, business outlays on non-residential structures and machinery and equipment remained over 13% below levels observed in late 2019.

Export and import volumes also rebounded sharply in the third quarter, led by higher shipments of motor vehicles and parts as auto-related trade normalized following severe disruptions during the lockdowns in the spring. Despite strong gains, total export and import volumes were both down about 9% from levels observed in the fourth quarter of last year.

Income support programs continued to have a marked impact on household disposable income and savings in the third quarter. While employee compensation strengthened as more people returned to work, household disposable income fell just over 3% as fewer Canadians relied on support programs. Despite this decline, government transfers to households remained at evaluated levels, which coupled with the increase in employee compensation, helped offset the rebound in consumer spending, leading to evaluated levels of household saving in the quarter. As a result, the household savings rate stood at 14.6%, down from 27.5% in the second quarter. In late 2019, the household savings rate stood at 2.0%.

Large quarter-over-quarter changes in output and hours worked also continued to have a marked impact on estimates of business productivity. After a record increase in the second quarter, productivity fell 10.3% in the third as hours worked rebounded faster than business output. Small and medium-size businesses recovered more hours lost in the third quarter than large enterprises. The reallocation of hours worked in favour of smaller businesses, for which economies of scale are limited, contributed to the sharp decline in business productivity.

September’s GDP report illustrated that economic activity continued to rebound after the historic declines in March and April. Real gross domestic product rose 0.8% in September, following the 0.9% gain in August. Increases in oil and gas extraction and manufacturing output contributed to the gain, as did increased public sector activity and higher output among professional, scientific and technical services. After five consecutive months of growth, total economic activity in September remained about 5% below pre-pandemic levels observed in February.

Statistics Canada also released an advance estimate of real GDP for October, with preliminary information pointing to a 0.2% increase.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, is now available.

Weekly update - Friday, November 27, 2020

Payroll employment continued to rebound in September, while the pace of the recovery slowed among hourly paid workers. The number of employees receiving pay or benefits from their employer rose by 337,500 in September, following a similar increase in August. Gains across industries were broad-based, led by increases in accommodation and food services, health care and social assistance, and retail trade. All provinces reported higher payrolls, led by increases in Ontario, Quebec, and British Columbia. September’s headline gain brought total payroll employment to within 7.3% of pre-COVID levels, with net losses since February totaling 1.2 million.

Gains among hourly paid workers slowed in September, as payroll employment among this group rose by 54,900, less than one-third of the increase reported for salaried workers. Employment losses since the onset of the pandemic remain concentrated among hourly paid workers, who tend to earn substantially less than salaried employees. In September, the number of hourly paid workers receiving pay or benefits from their employer was 9.4% below pre-COVID levels, with cumulative losses since February totaling over 920,000.

On November 23^rd, Statistics Canada released travel between Canada and other countries for September. With restrictions on non-essential travel still in effect during the month, travel to Canada from the United States and overseas countries was down roughly 95% compared with September of last year. Similarly, with a mandatory 14-day quarantine period for Canadians returning from abroad, the number of returning residents in September was down almost 93% from the same month last year.

On November 24^th, the agency reported the September sales for food services and drinking places. Overall sales were up almost 2% from August on higher sales among full-service restaurants (+2.9%) while receipts declined at drinking places (-3.2%). Nevertheless, on a year-over-year (and seasonally unadjusted) basis, sales in September were down by one-fifth, with Ontario, Quebec and British Columbia reporting the largest declines in both dollar and percentage terms.

Data on monthly railway carloadings in September were released on November 25^th. After recording five consecutive months of double-digit annual declines, Canadian railways carried 31 million tonnes of freight, down slightly (-1.2%) from last September. The improvement reflected strong growth in agriculture and food products, notably canola, which helped to offset continued declines in energy-based products. Loadings of fuel oils and crude petroleum as well as gasoline and aviation fuel both declined by more than 60% from September 2019.

Aircraft movement and civil aviation statistics were both released on November 26^th. During September, the number of itinerant take-offs and landings (flights from one airport to another) was down about 40% from last September, with American and other international traffic plunging 85% and 74%, respectively. Major Canadian airlines carried about 914,000 scheduled and charter passengers in September. While this represented a typical seasonal decline of about 16% from August, passenger volumes were almost 87% below the same month last year. The $315.7 million in operating revenue earned by these carriers was down sharply (-85%) from last September’s $2.1 billion and there is little indication of clear skies ahead with the number of COVID‑19 cases rising.

On November 26^th, the agency released data on business openings and closures for the August reference month. Openings outpaced closures for the second consecutive month as restrictions across the country continued to ease. Business openings in August totaled 40,700, while closures totaled 34,100. Nevertheless, the total number of active businesses in August was 9.0% below pre-pandemic levels. Of the 17% of businesses that were operating in February that closed in March and April, 56% had reopened by August.

The agency also released new data on business openings and closures for tourism industries that highlight the severe impact of the pandemic on tourism-related activity. While closures in the business sector doubled from February to April 2020, the number of closures in tourism industries more than tripled over this period.

Weekly update - Friday, November 20, 2020

Headline consumer inflation accelerated to 0.7% in October, mainly due to higher food prices. Led by higher prices for fresh vegetables and meat, food prices rose 2.3% on a year-over-year basis, up from 1.6% in September.

Changes in goods prices, measured year-over-year, remained in negative territory in October for the eighth consecutive month as lower prices for gasoline continued to weigh on the headline rate. Excluding gas prices, consumer inflation was 1.0%, matching the rate in September. Services price growth slowed to 1.2% in October as prices for traveller accommodation fell less in October than in September. Prices for traveller accommodation, however, were nearly 23% below prices observed in October of last year.

October’s consumer inflation report also highlighted notable movements in housing-related prices, as interest costs and replacement costs continued to diverge. Measured on a month-over-month basis, mortgage interest costs fell 0.7%, as mortgage rates continue to face downward pressure following reductions in the Bank of Canada's policy interest rate in March. At the same time, the homeowners' replacement cost index, which reflects prices for new homes, rose 1.4%, the largest monthly increase since June 1991.

October’s new housing price index, released on November 20^th, highlighted the strong momentum in housing markets across the country. Nationally, prices for new homes rose 0.8% with home builders in 21 out of 27 census metropolitan areas reporting increases. Since the beginning of the pandemic in March, new home prices have risen 3.1%, supported by lower borrowing costs as buyer demand shifted towards larger homes. In comparison, new home prices edged up 0.1% from March to October of last year.

September’s retail trade report was also released on November 20^th. Retail sales rose 1.1%, supported by higher sales at motor vehicle and parts dealers, general merchandise stores and food and beverage stores. September’s headline gain was the fifth consecutive monthly increase since the lockdowns in April. Monthly retail sales have exceeded pre-pandemic levels since June.

Retail e-commerce sales, unadjusted for seasonality, reached $3.2 billion in September, accounting for 5.6% of total retail trade. Measured year-over-year, e-commerce sales were up nearly 75% in September, while total unadjusted retail sales increased by 9.3%.

Statistics Canada also released an advance estimate of retail sales in October. Preliminary information suggests that October sales were relatively unchanged from levels reported in September.

September’s manufacturing report was released on November 16^th. Factory sales rose 1.5% on higher volumes, offsetting the pullback in August. Higher sales of wood and chemical products contributed substantially to the headline gain, while food sales also increased. Total manufacturing sales in September were 3.6% below pre-COVID levels.

Sales of wood products advanced for the fifth consecutive month, buoyed by strong housing markets in Canada and the United States. Sales of wood products manufacturers in September were over 30% above pre-COVID levels, bolstered by rising lumber prices and higher volumes.

Higher pharmaceutical and medicine sales led gains among chemical manufacturers. Sales of chemical products rose for the fourth consecutive month, surpassing pre-COVID levels. Sales among food manufacturers also increased, and have exceeded pre-COVID levels since June.

Following five consecutive monthly declines, unfilled orders rose in September on higher orders for transportation equipment and primary metals. Manufacturing inventories rose for the second consecutive month.

On November 17^th, the agency released September’s wholesale trade report. Wholesale sales rose 0.9%, remaining above pre-COVID levels for the third consecutive month. Higher sales of food products and pharmaceuticals and pharmacy supplies led the gain. Wholesale inventories also rose for the second consecutive month.

Weekly update - Friday, November 13, 2020

On November 9^th, the agency released data on investment in building construction for September. Outlays on residential dwellings edged up 1.6%, advancing for the fifth consecutive month. Higher spending on multi-unit buildings accounted for the gain, led by increases in Manitoba and Quebec. Total outlays on residential construction, at $10.7 billion, were over 4% above pre-COVID levels.

In contrast, non-residential outlays fell 8.5% to $4.5 billion in September, the third consecutive monthly decline. Lower outlays in Ontario and Quebec contributed substantially to the pull back in non-residential spending. Overall spending on commercial, industrial and institutional buildings fell to its lowest level since the April lockdowns and was over 10% below pre-COVID levels.

On November 12^th, the leading indicator of travel across the Canada-United States border was released for October. The number of American residents and returning Canadians crossing the border from the United States by automobile remained low in October as restrictions on non-essential travel continued throughout the month. The roughly 65,000 American travellers entering Canada by automobile was down 93.5% compared with October 2019.

Similarly, the nearly 160,000 Canadians returning from the United States by automobile was 92.1% lower than levels observed in October of last year. Restrictions on non-essential travel across the border, which initially took effect in March, have been renewed until at least November 21, 2020.

On November 13^th, the agency released new data from the Canadian Survey on Business Conditions. From mid-September to late October, the survey collected information from businesses on how the pandemic affected their operations during the summer months, and on their outlook going forward.

About three-quarters of businesses reported that they expect to retain the same number of employees over the next three months and had the cash or liquid assets required to operate. Conversely, over two-fifths of businesses reported that they could not take on more debt, while 5.2% were actively considering bankruptcy or closure.

The outlook for many businesses remains uncertain. Close to one-third of businesses reported that they did not know how long they could continue to operate at current revenue and expenditure levels before considering further staffing actions, closure or bankruptcy, while nearly one-fifth reported they could continue for less than six months.

The survey also highlights the impact of the pandemic on businesses that provide accommodation and foods services, or arts, entertainment and recreation services. Larger numbers of businesses in these sectors expect to reduce the size of their workforce over the next three months. Similarly, about 30% of these businesses reported that they could continue to operate at current revenue and expenditure levels for less than six months before considering further staffing actions, closure or bankruptcy.

October’s consumer price index will be released on November 18^th, and the new housing price index for October on November 20^th

Weekly update - Friday, November 6, 2020

Employment growth slowed in October as several provinces tightened public health measures in response to a spike in COVID‑19 cases. Employment rose by 84,000, led by an increase in full-time work. Gains in professional, scientific, and technical services and in retail trade were partly offset by lower employment in accommodation and food services, with losses in this sector concentrated in Quebec. October’s headline gain brought total employment to within 636,000 of its pre-COVID level.

Higher employment among core-age workers accounted for much of the headline increase in October. Among 25- to 54-year-olds, employment was 1.7% below its pre-COVID level. Employment among young Canadians was little changed and remained over 10% below the level observed in February.

Canada’s unemployment rate edged down to 8.9% in October, after peaking at 13.7% in May. The unemployment rate among core-age workers declined to 7.1%, while the rate among young Canadians edged down to 18.8%. In all, 1.8 million Canadians were unemployed in October, compared to 1.1 million in February.

After peaking at 5.5 million in April, the total number of Canadian workers directly affected by the COVID‑19 economic shutdown stood at 1.1 million in October. This includes net employment losses of 636,000 along with an increase of 433,000 in the number of Canadians who were employed but working less than half their usual hours.

On November 4^th, the agency released September’s international merchandise trade report. After edging lower in August as trade flows stabilized, merchandise trade picked up in September as both exports and imports advanced. At $94.3 billion, merchandise trade in September was 4% below pre-COVID levels. Much of the decline in the total value of trade since February reflected decreases in energy products and aircraft and other transportation equipment.

Headline exports rose 1.5% in September, supported by a 23% increase in lumber exports which advanced for the fifth consecutive month. Rising lumber prices, bolstered by strong demand and lower supplies, brought lumber exports to their highest level in 14 years. Higher shipments of aircraft and passenger cars and light trucks also contributed to the increase in headline exports.

Despite these gains, overall exports in September were 5.8% below pre-COVID levels, reflecting a sharp decrease in energy exports and lower shipments to the United States. Exports to countries other than the U.S. were 1% above pre-pandemic levels.

Merchandise imports also rose 1.5% in September, led by a notable increase in crude oil shipments and higher imports of industrial machinery and equipment. Total merchandise imports in September were 2.3% below pre-pandemic levels, reflecting lower shipments from the United States.

While merchandise trade flows have largely rebounded to near pre-pandemic levels, Canada’s international trade in services remained well below levels observed in February, due to severe contractions in travel-related services. Receipts from travel services in September were 70% below pre-COVID levels, while payments for travel services were 90% below.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, is now available.

Weekly update - Friday, October 30, 2020

The economy continued to rebound in August from COVID-related shutdowns as real gross domestic product rose for the fourth consecutive month. Real GDP increased 1.2% in August, after advancing by 3.1% in July. Overall economic activity in August was about 5% below pre-COVID levels, as output increased in 15 out of 20 industrial sectors.

Higher output in the public sector, buoyed by increases in educational services, health care and social assistance, and public administration, contributed substantially to the headline gain. The increase in educational services reflected efforts by primary and secondary school teachers, support staff, and administrators to prepare for a return to school.

Higher output in manufacturing and construction also supported the headline increase. Output in construction increased to within 2% of pre-COVID levels, while manufacturing was about 4% below levels observed in February.

Accommodation and food services rose 7.3% as establishments continued to reopen and adjust to COVID-related protocols. Activity in this sector is still down 28% from levels observed in February.

The real estate sector continued to advance as home resale activity remained strong across the country. Activity at real estate agents and brokers in August was 32% above pre-COVID levels. Professional, scientific and technical services continued to increase steadily.

Lower output in mining and oil and gas extraction in August detracted from gains as oil sands production continued to decline. Output in the oil sands is down almost 20% from levels observed in February.

Statistics Canada also released advance estimates of real gross domestic product for September and the third quarter. Preliminary information points to an approximate 0.7% increase in September and an approximate 10% increase in the third quarter.

On October 29^th, the agency released payroll employment data for August. The number of employees receiving pay or benefits from their employer rose by 303,200 in August, following gains of 759,500 in July and 665,500 in June. August’s headline increase brought total payroll employment to within 9.5% of pre-COVID levels, with net losses since February totaling 1.6 million.

The largest net declines in payroll employment since the onset of the pandemic were in accommodation and food services (-390,300), retail trade (-160,400) and arts, entertainment and recreation (-114,600). As of August, payroll employment in accommodation and food services was 29% below pre-COVID levels, while payrolls in arts, entertainment and recreation were down over 36%. Payroll employment in retail trade was 8% below levels observed in February.

Despite strong gains since late spring, overall declines in payroll employment since the onset of the pandemic remain concentrated among hourly paid workers. In August, the number of hourly paid workers receiving pay or benefits from their employer was down over one million from pre-COVID levels.

Earlier releases this week pointed to ongoing challenges in transportation. On October 27^th, the agency reported that Canadian railways moved 29.0 million tonnes of freight in August, down 14.7% from August 2019, the largest of five consecutive year-over-year declines reported since March. The decline in August reflects a decrease in Canada’s exports of energy products. Moreover, at just over 3.0 million tonnes, intermodal freight loadings (containers) were down 5.8% from August of last year. The extent to which an August work stoppage at the Port of Montréal contributed to this decline is difficult to discern from the economic conditions spawned by the pandemic.

On October 29^th, Statistics Canada released data on passenger transportation. While major Canadian airlines carried more than one million passengers in August for the first time since March, passenger volumes were down 86.8% on a year-over-year basis, the sixth consecutive month of severe declines. This capped a period with the sharpest and deepest drops in air passengers on record. On the ground, the country’s transit operators reported 56.1 million passenger trips in August, continuing a steady increase reported each month since April. However, when measured on a year-over-year basis, the number of passenger trips was down 59.8% from August of last year. Compared with February, payroll employment in transportation and warehousing was down 9.7% (-76,600), with the air and the transit and ground passenger subsectors reporting large declines.

On October 28^th, the agency released data on business openings and closures for the July reference month. Openings outpaced closures for the first time since the pandemic began as the number of closures returned to pre-COVID levels.

After increasing sharply in June as restrictions continued to ease, business openings declined by 3.3% to 52,300 in July. At the same time, the number of closures fell by 34% to 36,500. Over 712,000 businesses were operating in business sector industries in July, down about 11% from levels observed in July of last year. Of the 17% of businesses that were operating in February that closed in March and April, one-half had reopened by July.

A new report that highlights changes in economic activity in the months following the lockdowns is available at: Recent Developments in the Canadian Economy, 2020: COVID‑19, fourth edition.

Weekly update - Friday, October 23, 2020

A strong demand for housing and building materials in the wake of the lockdowns was reflected in several of the headline indicators released this week.

The New Housing Price Index for September, released on October 21^st, highlighted a surge in new home prices across the country, buoyed by strong demand and higher construction costs. New home prices rose 1.2%, the largest gain in 14 years, as builders surveyed in 24 out of 27 census metropolitan areas reported increases. September’s headline increase reflected higher prices for building materials along with a shift in buyer preferences for larger homes

The Consumer Price Index for September was also released on October 21^st. Headline consumer inflation accelerated to 0.5% after holding steady at 0.1% during the summer months. The homeowners’ replacement cost index, which is related to the price of new homes, rose 2.6%, the largest year-over-year increase since April 2018. At the same time, prices for air transportation, which fell sharply on a year-over-year basis during July and August, declined at a more moderate pace in September, while prices for traveller accommodation remained down over one-quarter from levels observed in September of last year.

Overall, changes in goods prices, measured year-over-year, remained in negative territory in September for the seven consecutive month as lower prices for gasoline continued to weigh on the headline rate. Excluding gas prices, consumer inflation was 1.0%, up from 0.6% in August. Services price growth accelerated to 1.3% in September, after holding steady at 0.5% during the summer months.

Retail sales, released on October 21^st, continued to edge higher in August, buoyed by strong sales at building materials and garden equipment and supplies dealers. Overall retail sales edged up 0.4% and were 1.8% above pre-COVID levels. Sales and building materials and garden equipment and supply stores rose by 4.5% and were 11% above levels reported in February. Higher sales of building materials and supplies also bolstered the sales of wholesalers in August, released on October 19^th.

On October 22^nd, the agency reported sales of food services and drinking places for August. Sales in this subsector rose 6.4% with receipts at full-service restaurants rising 10.4% as dining rooms and patios kept sales growing during the summer months. Sales at limited-service restaurants increased by 3.4% while those at drinking places rose 14.4%, as bars, pubs and some nightclubs continued to reopen. Despite this growth, unadjusted sales of food services and drinking places were down by over one-fifth (-22.1%) compared with August 2019. While the fall season may see additional recovery if patio weather continues and with more re-openings, there is some uncertainty as public health agencies begin to confront a second wave of COVID‑19.

Weekly update - Friday, October 16, 2020

On October 13^th, Statistics Canada published Leading indicators of land border crossings for September and international arrivals to Canada by air for the third quarter. The number of American residents and returning Canadians crossing the border by automobile remained low in September with restrictions on non-essential travel still in effect. Compared to September 2019, there were over 94% fewer Americans entering Canada by automobile through land ports with electronic sensors while the number of Canadians returning from the United States by automobile via these same ports was down roughly 93%.

The third quarter includes the busy summer travel season which last year recorded over nine million air arrivals into Canada. Although Canadian airlines resumed some trans-border and international flights that had been cancelled earlier in the pandemic, 2020 was a rather subdued summer travel season. At Canadian airports equipped with Primary Inspection Kiosks, about 51,000 overseas residents and 19,900 US residents arrived by air from July to September. In the same three months, the number of Canadian residents returning from trips abroad by air was roughly 200,000, a fraction of the usual volume.

On October 16, the agency released the latest report from the Monthly Survey of Manufacturing. Following three months of strong growth in the wake of COVID-related shutdowns, factory sales fell by 2.0% in August, largely reflecting lower sales of transportation equipment. Sales at automakers and parts suppliers fell by double-digits after posting strong gains in July when several assembly plants skipped or shortened their annual shutdowns. In contrast, sales of wood products rose for the fourth consecutive month, supported by strong housing markets in Canada and the United States.

Excluding transportation equipment, manufacturing sales rose 1.1%. Total factory sales in August were 6.6% below pre-COVID levels.

Weekly update - Friday, October 9, 2020

Employment growth strengthened in September, bringing total employment to within 720,000 of its pre-COVID level. Employment rose by 378,000, mostly on full-time gains, led by increases in Ontario and Quebec. Higher employment in accommodation and food services, educational services, and manufacturing supported the headline increase.

Employment among core-age workers rose by 194,000 in September, with gains among women accounting for over two-thirds of the increase. Among 25 to 54 year-olds, employment was 2.3% below its pre-COVID level. Employment among young Canadians rose by 127,000, with gains split evenly between young men and young women. Despite these gains, employment among 15 to 24 year-olds remained over 10% below the level observed in February.

Canada’s unemployment rate declined to 9.0% in September, after peaking at 13.7% in May. The unemployment rate among core-age workers declined to 7.3%, while the rate among young Canadians fell to 18.9%. In all, 1.8 million people were unemployed in September, down from a peak of 2.6 million in May.

The total number of Canadian workers affected by the COVID‑19 economic shutdown stood at 1.3 million in September, after peaking at 5.5 million in April.

Labour underutilization occurs when people who could potentially work are not working, or when people could work more hours than they are currently. Labour underutilization reached a peak of 36.1% in April and has decreased steadily as the economy continues to reopen. In September, labour underutilization fell to 18.3%, but remained substantially higher than the pre-COVID level of 11.2% observed in February.

On October 6^th, the agency released the international merchandise trade report for August. After rebounding sharply during June and July, trade activity stabilized in August as both exports and imports edged lower. At $92.3 billion, merchandise trade in August was about 6% below pre-COVID levels. Much of the overall decline in the value of trade since February reflects decreases in energy products and aircraft and other transportation equipment.

Following double-digit gains in June and July, exports fell by 1.0% in August, led by lower shipments of passenger cars and light trucks. This followed a sharp rise in automotive exports in July as carmakers ramped up production in the wake of COVID‑19-related shutdowns. At $7.5 billion, exports of motor vehicles and parts remained slightly above pre-COVID levels. Declines in other transportation equipment, reflecting lower shipments to Saudi Arabia, also weighed on headline exports.

Merchandise imports fell 1.2% in August after rebounding sharply in June and July. Lower imports of aircraft and other transportation equipment contributed substantially to the decline, along with lower shipments of metals and non-metallic minerals, and industrial machinery and equipment. Lower imports from the U.S. accounted for much of the overall decline.

Canada's international trade in services continued to edge higher in August as both service exports and imports advanced. Exports of commercial services increased by 1.0% to $6.5 billion, while imports of commercial services rose 1.8% to $6.4 billion. Canada’s total trade in services in August remained over one-quarter below pre-COVID levels.

On October 7^th, Statistics Canada released investment in residential and non-residential building construction for August. Outlays on residential construction rose for the fourth consecutive month as spending on both single-unit and multi-unit dwellings advanced. Total outlays on residential buildings, at $10.8 billion, exceeded pre-COVID levels.

By contrast, investment in non-residential buildings fell for the second consecutive month in August as outlays on industrial, commercial and institutional buildings all declined. Despite these declines, total spending on non-residential building construction remained above levels reported in February.

On October 8^th, the agency released new data that inform how observed changes in consumer spending patterns since February have affected estimates of consumer price inflation. The new data are based on an adjusted price index that takes these sudden changes in consumer spending into account, which is then compared to the official Consumer Price Index.

This adjusted measure yields slightly higher estimates of consumer inflation since the onset of the pandemic. While the gap between the adjusted index and the official CPI narrowed in June, the adjusted measure remained higher than the official CPI in July and August. During these two months, the adjusted price index rose 0.4% on a year-over-year basis, while the official CPI rose 0.1%.

Weekly update - Friday, October 2, 2020

Economic output continued to rebound in July, supported by higher factory production, increased activity in accommodation and food services, and a sharp increase in activities related to the housing market.

Real gross domestic product rose 3.0% in July as all 20 major industrial sectors advanced. While output has strengthened for three consecutive months as reopening efforts continue to advance across the country, overall economic activity in July remained about 6% below pre-COVID levels.

Higher output in the manufacturing sector was a major contributor to July’s headline gain, as automakers continued to ramp up production in response to strong consumer demand. Total manufacturing output in July was about 6% below levels in February.

Accommodation and food services rose by 20.1% as businesses continued to reopen and adjust to COVID-related restrictions. Despite three consecutive months of double-digit gains, overall activity in this sector remained about one-third below pre-COVID levels.

The activities of real estate agents and brokers rose markedly for the third consecutive month as home resale activity continued to strengthen in major urban markets. Activities of real estate agents and brokers in July were over 20% above pre-COVID levels. An increase in legal services related to real-estate transactions also supported stronger housing market activity.

Statistics Canada released an advance estimate of real gross domestic product for August, Preliminary information for August points to a 1% month-over-month increase in real gross domestic product.

Several releases on September 30^th showed that transportation activity continued to recover during July. Although the volume of rail freight decreased slightly from June, it was annual declines in the tonnages of fuel oils, crude petroleum and coal products that offset healthy year-over-year increases in agricultural products, such as wheat and canola, as well as in motor vehicle parts and other transportation equipment.

During the usually busy travel season in July, major Canadian airlines carried almost twice as many passengers than in June, but passenger volumes remained down almost 90% from July 2019. While public transit reported a third consecutive monthly increase in passengers during July, ridership only reached about one-third of the total from the previous July.

On September 28^th, the agency released data on business openings and closures for June. The number of businesses that closed in June was 56,300, down slightly from 59,600 in May. Monthly closures had peaked at 89,100 in April during the COVID‑19 lockdowns. The number of business openings rose to 52,700 in June as COVID‑19 restrictions eased across the country.

The June report also presented new information on the number of businesses that shut down and subsequently reopened. In total, just over 17% of businesses that were active in February closed during March or April. Of those businesses that closed, only about 19% had reopened by June.

Weekly update - Friday, October 2, 2020

On September 24^th, Statistics Canada released data on payroll employment for July. These data provide labour market information on workers that received pay or benefits from their employer, excluding those who are self-employed, owners and partners of unincorporated businesses and professional practices, or employed in the agricultural sector.

Payroll employment continues to recover as reopening efforts advance across the country. Payroll employment rose by 740,000 in July, after increasing by 666,000 in June. Almost three-quarters of July’s gain reflected higher employment among hourly paid workers, who were much more severely impacted by the lockdowns in the spring. Since February, hourly paid workers have accounted for two-thirds of payroll job losses. Payroll employment among hourly paid workers in July was 1.3 million below pre-COVID levels, while total payroll employment was 1.9 million below the level observed in February.

The payroll estimates reported above are based on employees who received pay or benefits; accordingly, they do not include workers who continue to have an attachment to a job but who are not being paid by their employer. The number of these workers has risen substantially since the onset of the pandemic. According to July’s Labour Force Survey, the number of employed workers who were absent from work for more than four weeks and that did not receive pay or benefits was 389,000 higher than pre-COVID levels in February.

Earlier in the week, two Statistics Canada releases pointed to ongoing challenges facing the tourism sector during the pandemic. Travel between Canada and other countries, released September 23^rd, confirmed that international travel to and from Canada remained at extremely low levels throughout July with travel restrictions implemented in March still in effect. In July, the number of Canadian residents returning from the United States or from overseas was about 95% lower than levels observed in July of 2019. Travel to Canada from both the United States and overseas countries was down roughly 97% over the same one-year period. This severe decline has left many businesses in accommodations and food services as well as in arts and cultural industries struggling during what is usually peak tourist season. While sales at food services and drinking places (also released on September 23^rd) did increase for the third consecutive month in July, sales remained over 25% below pre-COVID levels.

As dining rooms and patios continued to re-open in early summer, sales at full-service restaurants increased by more than one-third in July (+36.2%) compared with June. Likewise, with many bars, pubs and some nightclubs re-opening in July, sales reported by drinking places also rose substantially (+40.8%). However, when compared with July 2019, unadjusted sales across the entire sector were down by one-quarter (-24.5%) with sales in tourism-dependent Prince Edward Island down more than one third (-34.6%).

With the colder fall weather approaching, the challenges faced by many of these businesses are expected to continue. With recent concerns over a second wave of infections, Canada announced on September 18^th that its southern border will remain closed to non-essential travel, including tourism, until at least October 21^st.

Weekly update - Friday, September 18, 2020

After recovering to pre-COVID levels in June, retail sales edged higher in July, led by sales at auto dealers. Total retail sales increased 0.6% to $52.9 billion, as strong consumer outlays during the reopening phase have supported a V-shaped recovery in the sector.

Sales at motor vehicle and parts dealers in July reached $14.0 billion, building on a strong rebound in May and June after sales fell to $5.1 billion during the shutdowns in April. Sales at auto and parts dealers in July were about 1% below February levels.

Receipts at gasoline stations also rose in July as COVID‑19-related restrictions continued to ease and travel volumes increased. Sales at clothing and clothing accessories stores increased as more regions allowed malls to reopen.

Retail e-commerce sales, measured on an unadjusted basis, edged down to $2.8 billion in July, accounting for 4.8% of total retail trade. The share of retail e-commerce sales to total retail sales had declined as restrictions on storefront activity have eased. On a year-over-year basis, e-commerce sales have increased 63.2% while total unadjusted retail sales have risen 5.6%.

Approximately 3% of retailers reported being closed in July, on average, for one business day. Statistics Canada also released an advance estimate of total retail sales in August, which point to a month-over-month increase of approximately 1.1%.

Wholesaling activity also continued to strengthen in July as sales advanced for the third consecutive month. Wholesale sales rose 4.3% to a record $65 billion, led by higher sales of motor vehicles and motor vehicle parts as production ramped up in response to pent-up demand. Excluding auto-related sales, wholesale sales increased by 1.8%. Total wholesale sales in July were 0.6% higher than pre-COVID‑19 levels.

Factory sales continued to rebound from COVID‑19-related shutdowns, advancing in July for the third consecutive month. Total manufacturing sales rose by 7.0% as factories continued to ramp up production. Led by higher sales in Ontario and British Columbia, July’s headline gain followed a record 23% increase in June as activity strengthened across the sector. Nevertheless, total factory sales in July remained just over 5% below pre-COVID levels.

Higher sales among motor vehicle and parts producers accounted for almost two-thirds of the headline increase, as many automakers shortened or skipped their summer shutdowns. Sales of motor vehicles and parts in July were 10% above February’s level. Higher sales of petroleum and coal products also contributed to the overall gain as prices and volumes advanced. However, sales of these products were about one-third below pre-COVID levels.

Consumer price inflation remained subdued in August as lower gasoline prices and lower prices for air transportation continued to weigh on the headline rate. The all-items consumer price index, measured year-over-year, edged up 0.1% in August, matching the increase in July. Headline inflation has averaged 0.2% since COVID‑19 began impacting the Canadian economy in March.

Gasoline prices, measured year-over-year, declined for the sixth consecutive month in August. Excluding gas prices, consumer price inflation slowed to 0.6%, down from 0.7% in July. Prices for air transportation, down 16.0% on a year-over-year basis, fell for the second consecutive month as airlines continued to offer discounts to encourage a return to travel. Prices for traveller accommodation fell 25.4%, the fourth consecutive month of steep declines.

Weekly update - Friday, September 11, 2020

On September 9, Statistics Canada reported over 43,000 itinerant aircraft movements (take-offs and landings) at major Canadian airports with NAV CANADA control towers for the week ending August 28. After border closures and public health restrictions took effect in March, total movements fell to a low of just over 14,100 (unadjusted) during the week ending April 18. Total movements have steadily increased since, driven mainly by domestic flights, albeit with fewer passengers, and by more dedicated cargo traffic resulting from the surge in e-commerce sales. However, this year’s summer travel season was anything but busy. Domestic aircraft movements for the 12 week period ending August 28 were at 87% of the total for the 12 week period before the March restrictions, while trans-border (Canada - U.S.) and overseas movements both remain more than one-fifth below their pre-pandemic level.

August marked the fifth consecutive full month of restrictions on non-essential travel across the Canada-US border. And cross border travel remained low according to Statistics Canada’s Leading indicator of cross-border traveller volume, released on September 11^th. In August at the 111 land ports equipped with electronic sensors, automobile arrivals to Canada by US residents were more than 95% lower than August of 2019. Similarly, the number of Canadian residents returning from the United States by automobile through these same land ports was more than 95% below last year. Canada and the United States temporarily restricted non-essential travel across the land border in the second half of March and these restrictions will remain in effect at least until September 21, 2020.

According to the September 10^th Commercial rents services price index report, average commercial rents fell nationally by just over 3% during the second quarter of 2020. The drop was similar for all building types - offices, retail and industrial buildings and warehouses. Average rents were down across the country, with declines more acute in some Census Metropolitan Areas (CMA). For example, average rental rates for retail buildings fell by over 13% in Calgary and for offices by about 11% in Montréal. Office rents remained more or less the same in the Toronto CMA but rents for industrial building and warehouses were down by almost 6%. While the extent to which COVID‑19 was directly associated with these declines is not known, the long-term outlook of the commercial real estate market remains uncertain with many employees working from home and the recent shift in retail to online sales.

On September 11^th, the agency released the national balance sheet accounts for the second quarter. The data underscore the extraordinary impacts that COVID‑19 has had on financial conditions in the household sector. After a record decline in the first quarter, the net worth of households rose 5.0% to $11.96 trillion in the second, supported by gains in equity markets and in the value of residential real estate. Residential resale sales volumes strengthened markedly in June after grinding to a crawl in April and May due to COVID‑19 related restrictions.

Households sharply decreased their borrowing in the second quarter. Total credit market borrowing fell to $0.9 billion, down from $26.0 billion in the first. The decline was a result of a sharp decrease in non-mortgage and consumer credit borrowing, as households reduced their principal balance at a much faster pace than they added new debt as household spending contracted sharply.

Household credit market debt as a proportion of household disposable income fell to 158.2% in the second quarter, down from 175.4% in the first, as disposable income rose sharply while the stock of credit market debt remained relatively unchanged. The household debt service ratio dropped from 14.54% to 12.40%, the largest decline on record.

Weekly update - Friday, September 4, 2020

After increasing by 419,000 in July, employment rose by 246,000 in August, led by gains in full-time work. Overall employment gains since the economic shutdown in April have totaled 1.9 million. Despite these gains, employment in August remained about 1.1 million below pre-COVID levels.

Higher employment among core-age workers accounted for over one-half of the overall increase in August, as employment among 25 to 54 year-olds rose to over 96% of pre-COVID levels. The recovery in core-age employment has been stronger among men. Employment among young Canadians increased by 55,000 in August, after rising by 400,000 during June and July. Despite these gains, employment among 15 to 24 year-olds in August remained over 15% below pre-COVID levels.

Canada’s unemployment rate declined to 10.2% in August, after reaching a record high of 13.7% in May. Among core-age workers, the unemployment rate stood at 7.8%, while the rate among youth was 23.1%.

The number of job searchers increased for the six consecutive month in August, while the number of people wanting a job but not searching held steady. If people not searching for work were included as unemployed, the adjusted unemployment rate would be 13.0%.

Labour underutilization occurs when people who could potentially work are not working, or when people could work more hours than they are currently. Labour underutilization reached a peak of 36.1% in April and has decreased substantially as the economy reopens. In August, labour underutilization fell to 20.3%, but remained almost twice as high as pre-COVID levels.

On September 3^rd, the agency released the international merchandise trade report for July. Following a strong rebound in June, merchandise trade continued to strengthen in July, bolstered by higher shipments of motor vehicles and parts and energy products. Almost 90% of July’s increase in trade activity reflected higher trade flows with the United States. Overall trade activity in July was 5% below pre-COVID levels.

Following a 20.5% increase in June, exports rose by 11.1% in July on broad-based gains across commodities. Higher exports of motor vehicles and parts accounted for about one-half of the overall increase as auto producers responded to COVID‑19-related closures by ramping up production and undergoing shorter seasonal shutdowns. At $8.2 billion, exports of motor vehicles and parts were nearly 12% above February levels. Exports of energy products, which strengthened for the third consecutive month, also contributed to July’s gain.

After rising 20.3% in June, merchandise imports rose by 12.7% in July as shipments of most major commodities increased. Higher imports of motor vehicles and parts accounted for about one-half of the overall gain. Despite substantial increases in June and July, imports of autos and auto parts remained about 11% below levels observed in February. July’s headline increase was also supported by higher imports of cellphones, which reflected the reopening of retail activity and the availability of new models.

Canada's international trade in services also increased in July as both exports and imports advanced. Exports of transportation services rose 9.3% to $1.1 billion as COVID‑19 related restrictions on businesses in Canada continued to ease. Imports of transportation services rose by 5.3% to $1.7 billion. Canada’s total trade in services in July was about 29% below pre-COVID levels.

On September 2^nd, the agency released data on labour productivity for the second quarter. Following a 4.5% increase in the first quarter, business sector labour productivity rose by a record 9.8% in the second as hours worked fell at a much faster pace than business output. Hours worked in the business sector was down 22.1% in the second quarter, while the real gross domestic product of businesses fell 14.5%.

Weekly update - Friday, August 28, 2020

The GDP report for the second quarter underscored the severe, broad-based impacts of the COVID‑19 pandemic on Canadian economic activity. Following the 2.1% decline in the first quarter, real gross domestic product fell by 11.5% in the second, reflecting record declines in household spending and non-residential business investment, as well as steep contractions in cross-border trade.

Sharp declines in household spending were broad-based as consumers faced non-essential businesses closures and heightened levels of income uncertainty. Purchases of new passenger cars fell by over one-third, while spending on new trucks, vans and SUVs was down by about one-quarter. Household spending on services was down by almost 17%, reflecting sharp declines in food and accommodation services and transportation.

Business investment contracted sharply as firms faced increased levels of economic uncertainty. Outlays on non-residential structures and machinery and equipment were down by almost 20% while spending on intellectual property fell by nearly 8%. Investment in housing also declined substantially.

Export and import volumes were down by about 18 % and 23% respectively, as business closures in Canada and abroad weighed severely on trade activity.

The pandemic substantially impacted household earnings. Measured in nominal terms, employee compensation fell by about 9% in the second quarter. However, these declines in employment income were offset by large increases in government transfers, resulting in nearly an 11% increase in household disposable income. Coupled with the sharp pull-back in household spending, these income gains pushed the household savings rate to just over 28%, up from about 8% in the first quarter.

While the second-quarter GDP report illustrated the severe impacts of COVID‑19 on different aspects of the economy, June’s monthly GDP report highlighted the gradual strengthening of economic activity as efforts to reopen the economy continued. Real gross domestic product rose 6.5% in June, following a 4.8% increase in May. Economic activity in June remained 9% below pre-pandemic levels in February. Manufacturing output continued to strengthen in June, and was 12% below pre-pandemic levels. Activity in accommodation and food services also strengthened notably in June, but remained 45% below pre-pandemic levels. Output in retail trade industries in June exceeded pre-pandemic levels.

Statistics Canada also released an advance estimate of real gross domestic product in July. Preliminary information for July points to a 3% increase in real GDP.

On August 25, Statistics Canada released data on food services and drinking places. In June, sales by these establishments rose 26.8% (seasonally adjusted) to $3.9 billion from May, the second consecutive monthly increase. With many businesses reopened under new rules and restrictions by June, higher sales were reported in all industry groups across the country. Unlike May when growth in sales at limited-service eating places outpaced those at full-service restaurants, June’s larger increase was for full-service restaurants (+58.3%) rather than limited-service eating places (+12.8%). When data for June 2020 are compared with June 2019 however, unadjusted sales were down by over one-third (-37.1%).

Also this week, the agency released data on railways and on aviation. Despite the economic reopening, Canadian railways carried 29.8 million tonnes of freight in June, down 10.4% from June of 2019 and the third consecutive month of double-digit decline. While June’s Canadian international merchandise trade reported growing exports, the rail decline was driven by weak demand for some key commodities. Loadings of oil and crude petroleum (-69.4%) and of coal (-11.9%) both fell from June 2019, reflecting weak global energy demand. Even with the onset of the summer driving and vacation season, border closures and travel restrictions lowered demand for gasoline and aviation fuel as loadings fell (-55.3%).

In June, Canada’s largest airlines used just 103.3 million litres of turbo fuel (down 85.3% year-over-year) to fly 440,000 scheduled and charter passengers (down 93.9% year-over-year). This fourth consecutive decline in passengers marks the steepest and deepest drop on record. Some signs of recovery at major Canadian airports appeared in June. Domestic itinerant movements (take-offs and landings) increased from May but remained almost 50% below those reported in June of 2019 while both trans-border (between Canada and the U.S.) and other international traffic remained about 90% lower. It appears that there is much uncertainty as to when commercial air traffic will begin to fully recover.

Weekly update - Friday, August 21, 2020

After rebounding by 21.2% in May, retail sales rose by an additional 23.7% in June as reopening efforts continued across the country. At $53.0 billion, total sales in June surpassed pre-pandemic levels by 1.3% as all store types reported gains. Retail sales surpassed pre-pandemic levels in all provinces except Ontario and British Columbia.

Higher sales at motor vehicle and parts dealers accounted for almost one-half of the growth in June as spending strengthened to near-February levels. Sales at clothing and clothing accessories stores more than doubled in June as brick-and mortar stores continued to open, including those in malls. Spending at these stores remained about 20% below levels in February.

Retail e-commerce sales, measured on an unadjusted basis, were $3.2 billion in June, accounting for 5.4% of total retail trade. E-commerce sales in June made up a smaller share of retail sales than in April and May, as more non-essential retailers opened their brick-and-mortar stores.

Statistics Canada also released an advance estimate of total retail sales in July, which point to a month-over-month increase of approximately 0.7%.

Wholesaling activity strengthened markedly in June as widespread gains across subsectors pushed sales to near pre-pandemic levels. Wholesale sales rose 18.5% to $62.1 billion, about 4% below the level observed in February. June’s increase was led by higher sales of motor vehicles and parts, which more than doubled to $8.9 billion. Despite the sharp increase, sales at auto and auto parts wholesalers remained almost one-quarter below pre-pandemic levels. Higher sales of personal and household goods, building materials and supplies, and machinery and equipment also contributed to June’s headline increase.

Consumer price inflation moderated in July as lower gasoline prices and lower prices for air transportation and traveller accommodation weighed on the headline rate. The all-items consumer price index, measured year-over-year, rose 0.1% in July, after advancing 0.7% in June. The headline rate had fallen into negative territory during April and May as COVID‑19-related restrictions led to severe declines in economic activity.

Gasoline prices, measured year-over-year, declined for the fifth consecutive month in July. Excluding gas prices, consumer price inflation slowed to 0.7%. Prices for air transportation fell for the first time on a year-over-year basis (-8.6%) since December 2015. While many flights remained cancelled or suspended as a result of the COVID‑19 pandemic, airlines were offering various incentives such as reduced fees, discounts and promotions to encourage a return to travel. Prices for traveller accommodation declined 27.0% year-over-year, posting record declines for the third consecutive month.

A new study released by Statistics Canada evaluated the extent to which small, medium and large businesses were affected differently by COVID‑19 restrictions during the early stages of the pandemic. The report highlights relatively large declines in economic activity among smaller firms, particularly in service industries. The study "Economic Impact of the COVID‑19 Pandemic on Canadian Businesses across Firm Size Classes” was released on August 19^th.

Weekly update - Friday, August 14, 2020

Factory sales strengthened markedly in June as plants continued to increase their operating capacity. Total manufacturing sales rose by 20.7% as all 21 manufacturing industries reported gains. Led by higher sales in Ontario and Quebec, June’s record increase followed an 11.6% gain in May as manufacturing activity continued to recover from COVID‑19 related shutdowns. Nevertheless, total factory sales in June remained about 13% below pre-pandemic levels in February.

Sales in the transportation equipment industry more than doubled in June, led by higher sales of motor vehicles and parts as most plants returned to full production following COVID‑19 related shutdowns earlier in the spring. Over one-half of June’s headline increase reflected higher sales of motor vehicles and parts. Higher sales of petroleum and coal products also contributed to the record gain, as refineries ramped up production in response to higher fuel demand as provincial economies continued to reopen.

On August 11^th, the agency released revised capital intentions data for 2020. Based on survey information collected in June and July, these new estimates underscore the extent to which COVID‑19 has weighed on the capital plans of businesses in most industrial sectors.

Prior to COVID‑19, private-sector organizations anticipated spending 0.9% more in 2020 on non-residential construction and machinery and equipment (M&E); the new, revised intentions for 2020 point to a 16.6% decrease in private-sector outlays, reflecting sharply lower intentions among oil and gas producers, manufacturers, and accommodation and food service companies. By contrast, public-sector organizations anticipate spending 4.2% more on non-residential construction and M&E. Overall, combined spending by private and public organizations is now expected to be 9.5% below levels in 2019, with steep declines in Newfoundland and Labrador, Alberta and Saskatchewan.

Annual capital outlays in oil and gas extraction are expected to decline by 31.7% as many energy companies have substantially revised their capital plans in recent months. At $21.7 billion, anticipated spending among oil and gas producers is down over two-thirds from levels reached in 2014 before energy companies reduced their investment spending during the oil shock.

Manufacturers now anticipate their annual capital outlays to fall by 18.5% in 2020, led by sizable declines among chemical producers and makers of transportation equipment. Annual capital spending in the accommodation and foods service sector is expected to fall by almost 40%.

The leading indicator of cross-border traveller volume for July was also released on August 11^th. July marked the fourth consecutive full month of restrictions on non-essential travel across the Canada-U.S. border and crossings by automobile remained flat. The usual spikes associated with Canada Day and the Fourth of July did not occur. U.S. residents took just 70,500 trips to Canada through 111 land ports equipped with automated Integrated Primary Inspection Lines (IPIL), down 97% from the same month last year. And Canadian residents made 144,500 return trips from the United States through these same ports, down 95% from last July. Since the 30-day restriction on non-essential travel across the border was imposed on March 21^st, it has been extended on four occasions. The most recent of these, on July 16^th, extended the border closure until August 21^st. As such, land crossings will remain more or less flat well into August.

Weekly update - Friday, August 7, 2020

After increasing by nearly one million in June, employment rose by 419,000 in July as businesses and workplaces affected by COVID‑19-related restrictions continued to reopen. Gains in July were concentrated in part-time work and among women, with almost one-half of the net increase reflecting higher employment in wholesale and retail trade, and accommodation and food services. After advancing steadily from May to July, overall employment remains 1.3 million below pre-COVID levels, reflecting large cumulative losses in accommodation and food services, wholesale and retail trade, construction, transportation and warehousing, and manufacturing.

The employment rate, the portion of the working-age population that is employed, rose to 57.3% in July, 4.5 percentage points below its pre-COVID level. The employment rate among young Canadians, at 47.9%, is about 10 percentage points below its pre-COVID level.

The unemployment rate fell to 10.9% in July, after reaching a record high of 13.7% in May. Despite this decrease, almost 2.2 million Canadians were unemployed, nearly twice as many as in February. The number of people who wanted a job but did not search for work, likely for reasons related to COVID‑19, continued to fall in July. If these people were included as unemployed, the adjusted unemployment rate would be 13.8%.

On August 5^th, the agency released the international merchandise trade report for June. Trade activity rose sharply, bolstered by higher auto shipments as Canada-U.S. trade flows rebounded. The total value of merchandise trade, at $82.6 billion, was 20% higher than in April when business closures, notably in the auto sector, severely hampered Canada-U.S. trade flows. Overall trade activity in June, however, remained 16% below levels observed in February, before the economic impacts of the pandemic took hold.

Following a 5.6% gain in May, merchandise exports rose 17.1% in June, led by higher shipments of motor vehicles and parts. Production at Canadian assembly plants continued throughout June after activity resumed in mid-May. Auto-related shipments rose sharply to $6.1 billion, and accounted for almost three-quarters of the overall increase in merchandise exports. Excluding motor vehicles and parts, exports rose 5.1%, supported by an increase in metal and non-metallic mineral products. Overall, 85% of the growth in merchandise exports in June reflected higher shipments to the United States.

After declining by 4.6% in May as COVID‑19 continued to disrupt supply chains, merchandise imports rebounded sharply in June, advancing 21.8% on widespread gains across commodities. Higher imports of motor vehicles and parts accounted for almost one-half of the overall increase, as auto-related shipments climbed to $5.2 billion after falling to $1.7 billion in May. Excluding motor vehicles and parts, merchandise imports rose by 12.2%, supported by an increase in aircraft and other transportation equipment.

Canada's international trade in services also began to show signs of recovery in June following declines due to business closures and travel restrictions related to COVID‑19. Imports of services rose 17.0% to $8.8 billion, largely reflecting higher payments for travel services. Despite the gain, payments to non-residents for travel services were roughly one-quarter of that observed in February. At the same time, exports of services in June rose 4.1% to $8.1 billion, supported by higher receipts for commercial services, but remained 14% below February levels.

On August 5^th, the agency also released a new experimental series on business openings and closures that highlighted the extent to which the COVID‑19 pandemic has led to a substantial increase in business closures along with a decline in business openings. Closures in April 2020 were more than twice the level observed in April 2019, while openings fell by almost one-quarter over this period.

Weekly update - Friday, July 31, 2020

Most industrial sectors reported stronger economic activity in May as COVID‑19-related restrictions began to ease across the country. After contracting by over 18% from February to April, real gross domestic product rose 4.5% in May as 17 out of 20 industrial sectors advanced. Higher output in the goods sector, led by sharp increases in construction and manufacturing, accounted for 44% of the overall growth in May, while stronger activity in service industries, including retail, wholesale and educational services, accounted for 56% of the economy-wide gain.

Following the severe decline in April, construction rose 17.6% in May as restrictions on activity eased in Ontario and Quebec. Both residential and non-residential activity rebounded sharply. Despite these gains, the overall output of construction industries in May was about 14% below levels in February.

The manufacturing sector rose 7.4% in May, supported by higher activity among transportation equipment manufacturers as production in the auto sector resumed. Increases in petroleum and coal products also supported growth as refineries ramped up production. Manufacturing output in May remained about 24% below levels in February.

Retail trade rose 16.6% in May, led by higher activity at motor vehicle and parts dealers. Overall retail output in May was down almost 17% from levels in February.

Statistics Canada also released an advance estimate of real gross domestic product for reference month June. Preliminary information for June indicates an approximate 5% increase in real GDP. This flash estimate for June points to an approximate 12% decline in real GDP in the second quarter of 2020.

With the partial opening up of the economy in many provinces during May, there was an expected upturn in the movement of both goods and people. New data on railway carloadings released on July 29^th showed that Canadian railways carried 30.1 million tonnes of freight in May; roughly the same as April but a drop of 13.3% from May of 2019. This was driven largely by year-over-year declines in the loadings of Fuel oil and crude petroleum (down 63.3%), despite a partial rebound in crude oil prices, and in Gasoline and aviation turbine fuel (down 71.8%), as some travel restrictions remained. Also, loadings of Coal (-8.8%) and of Iron-ore and concentrates (-6.0%) fell with continued shut-downs of some mines.

From July 30^th releases on the passenger side, total aircraft movements (take-offs and landings) at Canada’s major airports in May were 63.3% lower than the same month in 2019. However, this was still an increase of almost 38,000 itinerant movements (from one airport to another) from April, comprised mainly of domestic flights with fewer passengers. Indeed, the major Canadian airlines carried only 224,000 passengers on scheduled and charter services in May, down 96.7% from May 2019, the third consecutive year-over-year monthly decline. Fewer passengers in May helped to push operating revenues down 89.2% from a year earlier. Finally on the ground, Canadians made 26.2 million urban transit trips in May, up 12% from the April low but still over 80% fewer trips then taken during last May.

Weekly update - Friday, July 24, 2020

After declines in April and May, consumer price inflation rose into positive territory in June as upward pressure on energy prices supported the increase in the headline rate. Consumer prices, measured year-over-year, rose by 0.7% in June, after declining 0.4% in May. Gasoline prices declined less on a year-over-year basis in June than in May as businesses impacted by COVID‑19-related restrictions continued to gradually reopen, which, coupled with an increase in local travel, bolstered demand.

Excluding gasoline prices, consumer price inflation accelerated to 1.2% in June, as prices for durable and semi-durable goods, such as passenger vehicles, clothing and footwear, contributed to the increase.

More information about the impact of COVID‑19 on the consumer price index is available in the report Consumer expenditures during COVID‑19: An exploratory analysis of the effects of changing consumption patterns on consumer price indexes, released by Statistics Canada on July 13^th.

Following April’s historic decline, retail sales in May rose by 19% to $41.8 billion as COVID‑19-related restrictions eased in several provinces. About one half of the growth in May reflected higher sales at motor vehicle and parts dealers, which increased by $3.4 billion after low consumer demand contributed to severe declines in March and April. Sales at auto and parts dealers in May remained 40% below levels in February. Higher receipts at general merchandise stores also contributed to stronger retail sales in May. Receipts at merchandise stores rose by $1.1 billion, offsetting the decline in April, and were 5% above levels in February

Higher retail sales in Quebec led the rebound in May as many retailers began to reopen early in the month. Total retail sales for Canada as a whole in May remained 20% below levels observed in February, as almost one quarter of retailers reported being closed, on average, for five business days.

E-commerce sales by Canadian retailers, unadjusted for seasonality, increased to $3.8 billion in May, after rising dramatically in April as many retailers started or expanded their on-line platforms. On-line sales in May were more than double the level observed in May of 2019.

Statistics Canada also released an advance estimate of total retail sales in June, which point to a month-over-month increase of approximately 25%.

Businesses in the food service industry were among those most heavily impacted by COVID‑19. On July 22^nd, the agency released May sales data for food services and drinking places. After falling from $6.3 billion in February to $2.3 billion in April, receipts at food services establishments and drinking place rose by 35% in May to $3.1 billion. Monthly sales in Quebec, British Columbia and New Brunswick rose by over 40%.

Also on July 22^nd, the agency released data on travel between Canada and other countries which remained low throughout May, the second full month that travel restrictions were in effect. Arrivals from overseas countries (those other than the U.S.) to Canada dropped by 97.9% compared with May 2019, while arrivals from the United States were down 96.6%. The number of air arrivals to Canada from the United States in May was the lowest number of trips since modern record keeping began in 1972.

Weekly update - Friday, July 17, 2020

Factory sales strengthened in May as manufacturing activity ramped up after plants had scaled back or shuttered operations in April due to COVID‑19. Total manufacturing sales in May rose 10.7% to $40.2 billion. While manufacturers in many industries reported gains, higher sales among motor vehicle assembly plants and parts suppliers accounted for nearly 40% of the overall increase. Higher sales among refineries and fabricated metal producers also contributed to gains in May, while machinery sales declined as producers reported lower demand due to the pandemic.

May’s double-digit increase in manufacturing sales followed April’s record 27.9% decline. Four out of five manufacturing establishments reported that their activities in May were affected by COVID‑19, while one-quarter of establishments reported that they have a recovery plan in place. Overall factory sales in May remained almost 30% below levels in February.

New motor vehicle sales in May also recovered slightly from the historic declines reported in April. Measured on a year-over-year basis, new motor vehicle sales were down 47% in May, after falling 75% in April. Dealer showrooms began to reopen in May with physical distancing measures in place.

On July 13^th, an agency study pointed to signs of economic recovery in transportation. With border closures and travel restrictions, itinerant aircraft movements (take-offs and landings) declined to just over 14,100 during the week of April 11^th. Since reaching this low, movements have steadily increased to the end of June, driven by domestic flights, albeit with fewer passengers, as well as by more dedicated, but less lucrative air cargo, reflecting a surge in e-commerce sales. On the freight side, the amplitude was less severe as goods movement remained an essential service. System-wide, the number of railcars online reached a low of 126,400 during the week of May 9^th. By mid-month, some non-essential businesses, including automobile manufacturers and parts suppliers, gradually resumed production. This resulted in the use of relatively more box cars and multilevel automotive cars in June by Canada’s mainline railways.

On July 14^th, leading indicators were released on international arrivals by air and on cross-border travel volumes. At airports equipped with electronic kiosks for customs clearance, the number of international arrivals to Canada by air began to decline sharply following border restrictions in mid-March and then remained flat from April through to the end of June. On the ground, 64,200 US residents entered Canada in June through 111 land ports equipped with automated scanning devices, down 96% from 1.6 million in June of 2019. There were 136,400 Canadian residents who returned to Canada through these same ports—94% fewer than the 2.1 million recorded last June. Agreement to restrict the Canada-US border to essential travel is likely to be extended into late August.

Also on July 14^th, Statistics Canada released new data from the Canadian Survey on Business Conditions for reference month May that highlighted how restrictions on social and economy activity have affected businesses as the economy begins to reopen. Nearly two-thirds of businesses expect the size of their workforce to remain the same over the next three months, while nearly one-third of businesses reported that at least 10% of their workforce was teleworking or working remotely at the end of May. The survey also provided information on the financial health of businesses. Eight percent of businesses reported that they would only be able operate at current revenue and expenditure levels for less than three months, before having to consider additional staffing actions, closure or bankruptcy. Among newer businesses, those that are two-years old or less, this figure rose to 14%.

The survey also found that nearly one-quarter of businesses that make rent or mortgage payments had their rent or mortgage payments deferred, while about 6% of businesses had their request to defer payments rejected. Three out of five businesses that make rent or mortgage payments had not asked or been offered the option to defer payments owed.

Weekly update - Friday, July 10, 2020

Today the agency released a key economic barometer for June – the Labour Force Survey – covering the first full month when public health restrictions had been eased in most parts of the country, including the partial re-opening of businesses and workplaces. After falling by more than 3 million from February to April, employment rose by 290,000 in May. Despite this first sign of a labour market recovery, Canada’s unemployment rate in May rose to an historic 13.7% as more people began looking for work.

In June, employment increased by a further 953,000, pushing the unemployment rate down to 12.3% as the decline in the number of people on temporary layoff more than offset an increase in the number of job seekers. The employment gain was split almost evenly between full-time work (+488,000) and part-time work (+465,000). However, despite this broad based gain, total employment still remained 1.8 million (-9.2%) below the February level.

Employment rose slightly faster among women (+6.1% or +467,000) than men (+5.5% or +487,000). On a cumulative basis however, employment among men had recovered to 92.3% of its February level, compared with 89.2% among women. And in each of the three major age groups—youth aged 15-24, core-aged workers aged 25-54 and those aged 55 and older—recovery of COVID‑19-related employment losses was more advanced among men than among women.

By the LFS reference week of June 14 to June 20, all provinces had substantially eased COVID‑19 restrictions and, as such, recorded an increase in employment and a decrease in COVID-related absences. Employment rose by 378,000 in Ontario while Quebec recorded gains of 248,000. Employment in British Columbia rose by 118,000. Again, despite increases across the board, employment in all provinces in June remained below pre-pandemic levels in February.

While employment grew in most industries in June, there was little change in industries where a high proportion of workers were able to work from home, such as professional, scientific and technical services. Conversely, retail trade and accommodation and food services, where jobs often involve close physical proximity with others, recorded large employment gains of 184,000 and 164,000 respectively. However, accommodation and food services still remains furthest below pre-pandemic levels.

On July 8, the agency released the National Travel Survey and the Visitor Travel Survey for the fourth quarter of 2019. Although the looming pandemic was not yet a consideration in the travel decisions of Canadians in the final months of 2019, trips by Canadians were down 1.5% year-over-year from October through December 2019. International travellers made more trips to Canada over the same period, up 2.8% from the same quarter of 2018. These releases complete 2019 and will serve as a benchmark to measure the impact of COVID‑19 on tourism and travel behaviour during 2020.

Weekly update - Friday, July 3, 2020

April’s GDP report, released on June 30^th, underscored the extent to which the extraordinary measures taken to contain COVID‑19 impacted economic activity in all major industrial sectors. Following a 7.5% decline in March, real gross domestic product fell by 11.6% in April as output declined across all 20 major industrial groups.

Lower production in the goods sector accounted for over one-third of April’s historic decline as construction and manufacturing output both fell by over 20%. All types of construction and manufacturing activity declined in April as businesses closed or limited their operations in response to emergency health measures.

Output in the service sector fell by 9.7% in April following the 8.1% decline in March. Retail trade contracted by nearly one-quarter as storefront closures impacted activity across the industry. Transportation and warehousing activity was also down by nearly one-quarter as border closures and travel restrictions continued to affect the industry. After falling by more than one-third in March, output in accommodation and food services fell by over 40% in April as many operators remained closed.

Statistics Canada also released an advance estimate of real gross domestic product for reference month May. Preliminary information for that month points to a 3% increase in real GDP. New data on building permits and international trade for May, released on June 29^th and July 2^nd, also suggest a partial rebound in economic activity.

The total value of building permits rose by about 20% in May, after falling 27% from February to April. May’s increase coincided with the easing of restrictions on construction activity in Ontario, Quebec and Prince Edward Island.

Following a historic decline in April, exports rose 6.7% in May, led by higher shipments of motor vehicles and parts as auto manufacturers and parts suppliers gradually began to resume production. Higher exports of crude oil also supported the headline increase in May.

While overall exports rose, imports continued to fall in May. Following April’s historic decline, imports in May fell an additional 3.9%, reflecting continued supply challenges as various economies around the world were progressively re-opening.

On June 30^th, Statistics Canada also released a summary of tourism-related spending in Canada during the first quarter of 2020. Overall spending on tourism fell 14.2% in the first quarter—the largest decline on record. Spending by international visitors to Canada fell by a record 18.8%, as the number of travellers to Canada fell sharply due to border closures and travel restrictions implemented in mid-March. Tourism-related gross domestic product was down by nearly 15% in the first quarter, while the number of jobs attributable to tourism fell by 6.5%, both the largest quarterly declines since the data series began in 1986.

Weekly update - Friday, June 26, 2020

Over the last week, agency releases painted a grim portrait of COVID‑19’s impact on the Canadian economy during April. Public health measures put in place to contain the virus severely impacted industries such as food services and construction, with restaurants and work sites closed. After falling by over one-third in March, sales at food services and drinking places fell by about 40% in April (seasonally adjusted), with more than one half of operators reporting being closed at some point during April, and about four in ten reporting that they were closed for the entire month. With Ontario and Quebec shutting down all non-essential construction sites, investment in building construction plunged 45.9% to $8.4 billion in April, by far eclipsing the largest monthly decline on record. Both the residential (-49.2%) and non-residential (-38.8%) sectors reported record declines as investment decreased across the country. Ontario and Quebec reported a combined decline of $5.7 billion.

April also marked the first full month of border closures and flight restrictions which brought international travel to and from Canada to a virtual stop. Compared with April 2019, the number of arrivals from overseas countries (those other than the United States) fell by 96.6% while the number of Canadian residents returning from overseas was down 97.5%. With the Canada-U.S. border restricted to essential travel, total crossings fell 96% in both directions from 5.4 million trips in April 2019 to 203,000 in April 2020, the lowest number of monthly border crossings since record keeping began in 1972. This decline in international travel was felt at Canada’s major airports. In April, the number of take-offs and landings at airports with NAV CANADA towers were down 73.5% from April of 2019 with an almost 90% drop in transborder (with the U.S.) and other international movements.

Although the movement of goods was deemed an essential service during the shutdowns and border closures, Canadian railways have been impacted nevertheless by factory closures and disruptions to supply chains. In April, Canadian railways moved a total of 30.0 million tonnes of freight, a 10% decline from April of 2019. With the exception of a railway strike in November 2019, this was the largest monthly year-over-year decrease in over 5 years. Notable declines in the tonnes of commodities shipped included Automobiles and minivans (-91.3%), Fuel oils and crude petroleum (-33.6%), Lumber (-25.0%) and Iron ore and concentrates (-20.0%).

Data on payroll employment, earnings and hours for April underscored the unprecedented impact of physical distancing measures and non-essential business closures on Canada’s labour market. Following a decline of almost one million payroll jobs in March, payroll employment fell by over 1.8 million in April, led by severe losses in food and accommodation services, retail trade, construction, and manufacturing. Total payroll jobs decreased by 16.3% from February to April, with the largest relative declines occurring in Quebec, British Columbia, Newfoundland and Labrador, and Alberta.

The April payroll data also highlighted the differential impacts of COVID‑19 on Canada’s workforce, as job losses were concentrated among hourly-paid workers and in lower-paying service industries. Average weekly earnings rose by 6.1% from March to April, which partly reflected the large number of job losses in lower-paying sectors.

Upcoming releases: On June 29^th, Statistics Canada will release Industrial product and raw materials price indexes as well as Building permits, both for May. On June 30^th, National tourism indicators will be available for the first quarter of 2020 and Gross domestic product by industry for April. Canada’s international merchandise trade for May will be released on July 2^nd.

Weekly update - Friday, June 19, 2020

After declining in March to the lowest level in almost four years, manufacturing sales fell by nearly 30% in April as over four in five establishments reported that COVID‑19 impacted their activities. Total manufacturing sales in April were $36.4 billion, well below the lowest monthly level of $38.3 billion observed during the 2008-2009 recession. About one-third of April’s decline reflected lower sales of motor vehicles and parts, which fell by over 90% as all Canadian assembly plants and many parts suppliers ceased operations. Sales of petroleum and coal products fell by 46% in April as refineries curtailed production in response to weak demand. After strengthening in March, sales of food manufacturers fell by 13% in April as operations at meat processing plants were impacted by COVID‑19.

Wholesale sales fell by an unprecedented 21.6% in April as four out of five wholesalers reported that COVID‑19 impacted their activities. Total sales in April were $49.8 billion, the lowest level since mid-2013. While all subsectors reported declines, lower auto-related sales accounted for over 40% of the total decrease in wholesale sales. Sales of motor vehicles, parts and accessories fell by 65% as shutdowns and weaker consumer demand severely impacted activity.

Retail spending fell by over one-quarter (-26.4%) in April to $34.7 billion. Sales at motor vehicles and parts dealers fell 44% and accounted for one-third of the overall decline in retail spending. Lower sales at food and beverage stores and gasoline stations also contributed to April’s decline. Based on respondent feedback, about one-third of retailers were closed during April, on average, for eight business days. E-commerce sales strengthened in April as many retailers started or expanded their online presence and curbside pick-up services in response to storefront closures. Online orders in April represented about 10% of the total retail sales.

Headline consumer inflation remained in negative territory in May for the second consecutive month. Consumer prices in May were down 0.4% on a year-over-year basis, after decreasing 0.2% in April. While prices at the pump rose from April to May as many countries began easing restrictions related to COVID‑19, gas prices in May remained 30% lower than in May of 2019. Excluding gasoline prices, consumer inflation slowed to 0.7% in May, the smallest year-over-year increase since early 2013.

Upcoming releases: Data on travel between Canada and other countries for reference month April will be released on June 23^rd. Data on aircraft movements and railway carloadings, also for April, will be released on June 26^th. Estimates of payroll employment, earnings and hours for April will be released on June 25^th.

Weekly update - Friday, June 12, 2020

Declines in the value of financial assets pushed household net worth lower in the first quarter of 2020 as equities fell sharply in March in light of investor concerns over COVID‑19. Household net worth declined 3.8% in the first quarter as the value of equity and investment funds fell 15.5%. The ratio of household credit market debt to disposable income rose to 176.9% in the first quarter, while the household debt-to-asset ratio increased to 17.3%.

Severe reductions in auto-related spending contributed substantially to overall declines in economic activity as the COVID‑19 related shutdowns took effect. Lower spending on motor vehicles and parts weighed heavily on manufacturing, wholesale and retail sales in March, and on merchandise trade flows in March and April. Data from the New Motor Vehicle Sales Survey, released on June 12^th, underscore the impact of COVID‑19 on auto sales. Measured on a year-over-year basis, new motor vehicle sales fell by 48.5% in March, and then by 74.6% in April, the two largest year-over-year decreases on record.

On June 10^th, Statistics Canada released the leading indicator of cross-border traveller volume for May. The number of US and Canadian residents crossing the border from the United States by automobile remained at a virtual standstill in May as restrictions on non-essential travel remained in effect throughout the month. The number of U.S. travellers entering Canada by automobile through land ports was down 96% compared to May of last year, while the number of Canadians returning from the United States by automobile was down 95%.

In April, Canada’s international merchandise trade declined to the lowest level in almost a decade as economic shutdowns severely impacted trade flows. On June 9^th, Statistics Canada released Canadian merchandise import transaction counts for May. Import transactions data tend to move in the same direction as monthly merchandise trade flows, and may provide a useful indicator of changes in merchandise trade activity. The transactions data for May point to a partial rebound in trade activity as restrictions on social and economic activity began to ease in Canada and abroad. The number of import transactions, measured month-over-month, increased by 15% in May, but remain about 18% below levels observed in May of last year. Merchandise trade values for May will be released on July 2^nd.

Upcoming releases: Manufacturing sales for April will be released on June 15^th. Wholesale and retail sales, both for April, will be released on June 18^th and 19^th, respectively. The consumer price index for May will be released on June 17^th.

Weekly update - Friday, June 5, 2020

Following losses of more than three million from February to April, employment rose by 290,000 in May as several provinces had begun to ease public health restrictions and allow some non-essential businesses to re-open. Three-quarters of the overall employment increase in May was in full-time work, while nearly 80% of overall gains were accounted for by higher employment in Quebec. About one-half of the overall increase in employment in May was in construction and manufacturing industries, led by gains in Quebec. Following employment losses of 582,000 from February to April, employment in wholesale and retail trade rose by 107,000 in May, with one-half these gains occurring in Quebec. Ontario was the only province where employment continued to fall in May. Most restrictions on economic activity remained in place in that province during the LFS reference week of May 10^th to May 16^th.

Higher employment among core-age workers accounted for over one-half of the overall employment increase in May as the employment rate among this group rose to 73.7%. After falling by almost twenty percentage points from February to April, the employment rate among young Canadians aged 15 to 24 remained below 40% in May.

Canada’s unemployment rate rose to 13.7% in May as more people began looking for work. However, the number of Canadians who wanted to work but did not look for a job remained high in May, falling from 1.5 million in April to 1.4 million. During the reference week for May’s Labour Force Survey, over 1 in 5 Canadians (22.5%) lived in a household reporting difficulty meeting immediate financial obligations, up slightly from April (21.1%).

April’s international trade report, released on June 4^th, underscored the severe impacts of COVID‑19 on Canadian trade flows, as shutdowns in manufacturing and consumer-oriented industries, coupled with sharp declines in energy prices, pushed total Canadian merchandise trade to its lowest monthly level in almost a decade. Merchandise exports fell by 30% in April to $32.7 billion, while merchandise imports declined by 25% to $35.9 billion. Almost all of the reduction in trade activity in April was due to lower trade flows between Canada and the United States, reflecting the high degree of economic integration between the two countries.

Severe declines in auto-related trade contributed substantially to lower trade activity in April. Exports of motor vehicles and parts were down over 80%, as widespread shutdowns impacted auto production on both sides of the Canada-U.S. border. Lower shipments of autos and auto parts accounted for more than one-third of the overall decline in Canadian exports. Similarly, imports of motor vehicles and parts, down almost 80%, accounted for more than one-half of the overall decline in Canadian imports.

Declines in energy-related trade were also an important factor in April. Energy exports fell by over 40% on steep price reductions and lower volumes, while energy imports fell by more than 50%. Lower exports and imports of consumer goods also contributed to April’s sharp reduction in trade activity, as economic shutdowns impacted the demand for consumer products.

Canada’s international trade in services also fell sharply in April, led by severe reductions in travel services due to COVID‑19 related border closures.

Economic shutdowns and work stoppages had a major impact on labour productivity in the business sector, released on June 3^rd. Labour productivity rose 3.4% in the first quarter of 2020, as hours worked fell at a faster pace than business output. Hours worked in the business sector was down 5.8%, twice the largest decline observed during the 2008-2009 financial crisis.

Upcoming releases: Information on merchandise import transaction counts for May will be released on June 9^th and the leading indicator of cross-border traveller volume for May will be released on June 10^th.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, with a focus on news related to the COVID‑19 pandemic, is now available.

Weekly update - Friday, May 29, 2020

March’s GDP report underscored the widespread impact of measures to contain the spread of COVID‑19 on all segments of Canada’s economy. Real gross domestic product fell 7.2% in March as 19 out of 20 industrial sectors declined. Output in accommodation and food services industries fell by 36.9% in March, the largest decline on record. Transportation and warehousing fell by 12.2% as travel restrictions and border closures affected the sector. In addition, the output of manufacturers fell 6.5% in March, led by severe declines in auto and auto parts manufacturing as producers shuttered operations on both sides of the Canada-U.S. border. Overall, goods industries declined 4.6% in March while service industries fell 8.1%.

Real gross domestic product fell 2.1% in the first quarter, led by broad-based declines in household spending. Outlays on durable goods were down 6.4%, the largest decline since the first quarter of 1982, as spending on autos contracted sharply. Lower exports also contributed substantially to the overall decline in real GDP during the first quarter.

Statistics Canada also released an advance estimate of real gross domestic product in April. Preliminary information for April points to an 11% decline in real GDP.

During the last week in May, the agency released data confirming the devastating impacts of COVID‑19 on travel and tourism. With the border partially closed on March 18, travel from overseas was down by 52.7% in March. Then on March 21, the Canada-U.S. border was closed to non-essential travel, pushing border crossings down by 2.8 million trips for the month, the lowest number in almost 50 years. Leading indicators of international travel provided a glimpse into April with cross-border travel between the U.S. and Canada at a near standstill. The number of Americans entering Canada by automobile was down 97% from April of 2019. And at the four major Canadian airports still accepting international flights, the number of US and overseas residents entering Canada was down by 99.5% and 97.7% respectively, from April 2019.

The pain of travel restrictions, along with economic closings and physical distancing, was felt by both tourism and travel operators. From February to April, employment in accommodation and food services industries declined by half (50.0%) while hours worked decreased by almost two-thirds (63.8%). The Canadian airline industry hit financial turbulence in March with major carriers reporting a 41% decline in revenues, driven by the largest (44.1%) year-over-year drop ever recorded in the number of scheduled and charter passengers carried. The damage will continue into April as aircraft itinerant movements (take-offs and landings) at major airports fell by almost 70% from the week ending March 14 until the week ending April 24. Some airlines have ceased operations entirely while others continue to scale back services drastically.

To off-set lost revenue, some airlines are bolstering air cargo delivery for essential medical supplies and the growing volume of parcels, pointing to a shift in goods movement during the pandemic. In March, despite manufacturing sales falling to their lowest level in four years and a decline in both exports and imports, the tonnage of freight handled by Canadian railways was up 4.7% from the same month in 2019. This increase was driven by commodities such as potash, canola, wheat and crude petroleum. However, year-over-year drops in other products shipped by rail point clearly to COVID‑19, including lower volumes of automobiles (-48.1%), motor vehicle parts & accessories (-36.2%) and gasoline & aviation fuels (-35.4%). These declines are echoed by manufacturing as well as retail and wholesale trade reports.

Upcoming releases: On June 4 Statistics Canada will release Canadian international merchandise trade for April and then on June 5, the Labour Force Survey for May.

Weekly update - Friday, May 22, 2020

The Consumer Price Index declined 0.2% on a year-over-year basis in April as lower energy prices pushed the headline rate into negative territory for the first time since September 2009. Energy prices continued to fall sharply as a result of the COVID‑19 pandemic, and were down 23.7% on a year-over-year basis in April. Gasoline prices in April were down 39.3%, the largest year-over-year decline on record. Excluding energy prices, consumer price inflation in April was 1.6%.

Food prices rose 3.4% on a year-over-year basis in April, as strong demand coupled with supply-related issues bolstered prices for pork and beef. Prices for household cleaning products, measured on a monthly basis, rose sharply in April, as the demand for these products has strengthened as a result of COVID‑19. The pandemic also affected prices for clothing and footwear, which fell 5.9% on a monthly basis in April, the largest monthly decline on record. Many retailers applied large discounts to on-line prices in April to reduce inventories of seasonal stock in light of mandatory restrictions on in-store shopping.

Storefront closures had a substantial impact on retailers in March, as sales plunged 10.0% to $47.1 billion, the largest monthly decline on record. Lower sales among motor vehicle and parts dealers, clothing and clothing accessories stores, and gasoline stations contributed to the record decline. In contrast, sales at food and beverage stores rose by 22.8% in March. The on-line sales of Canadian retailers also strengthened, as many businesses opened or expanded their on-line platforms. Before adjusting for seasonality, retail e-commerce in March was up 40% on a year-over-year basis.

About 40% of retailers closed their doors in March as a result of COVID‑19 with an average length of closure of about five business days. Statistics Canada has also provided an advance estimate of retail sales in April, with preliminary data pointing to a decline of about 15%.

Wholesale sales fell 2.2% to $63.9 billion in March, reflecting sharp declines among wholesalers of autos and auto parts. Sales in the auto subsector were down 21.2% to $9.3 billion. In contrast, sales among wholesalers in the food, beverage and tobacco subsector rose 8.1% to $13.3 billion in March, the largest gain on record.

Over three-quarters of wholesalers reported that their business activities in March were impacted by COVID‑19, with wholesalers of home furnishings and personal goods among the most affected.

Upcoming releases: On May 25^th, Statistics Canada will release Civil Aviation statistics for reference month March. Also for March, Railway Carloadings and Aircraft Movement statistics will be released on May 27^th and 28^th respectively. On May 29^th, Statistics Canada will release gross domestic product for the first quarter of 2020.

Weekly update - Friday, May 15, 2020

COVID‑19 had a substantial impact on manufacturing sales in March, which fell 9.2% to $50.8 billion, the lowest level since June of 2016. Over three quarters of manufacturing establishments reported that their activities in March were impacted by COVID‑19. Manufacturers of transportation equipment were among the most affected, as all Canadian auto assembly plants and several North American parts suppliers scaled down production due to the pandemic. Sales of auto manufacturers and parts suppliers were both down over 30% in March. In all, over one-half of the estimated COVID‑19 related decline in March sales reflected lower sales among makers of transportation equipment. In contrast, food manufacturers reported higher sales in March, due to an increased demand for meat and dairy products.

Overall manufacturing sales are expected to continue to decline in April in light of physical distancing measures and economic shutdowns.

On May 11^th, Statistics Canada released the leading indicator of cross-border traveller volume for April. The data showed that cross-border travel by automobile between Canada and the United States remained at a near standstill in April, following the sharp decline in March. The number of U.S. travellers entering Canada by automobile through land ports fell by nearly 97% compared to April of last year, while the number of Canadians returning from the United States by automobile was down 95%.

On May 13^th, Statistics Canada released Canadian merchandise import transaction counts for April. Import transactions data tend to move in the same direction as monthly merchandise trade flows, and may provide a useful indicator of the level of merchandise trade activity. The number of import transactions fell 22% in April, and was down 27% when compared to April of last year. Merchandise trade values for April 2020 will be released on June 4^th.

Upcoming releases: Wholesale sales and retail sales, both for reference month March, will be released on May 20^th and May 22^nd, respectively. The consumer price index for April will be released on May 20^th.

Weekly update - Friday, May 8, 2020

Following employment losses of over one million in March, employment fell by nearly two million in April as the impacts of physical distancing and economic shutdowns on labour market activity became more apparent. Over one half of the employment losses in April were among core-age workers aged 25 to 54, with losses among core-age men (-646,000) exceeding those among core-age women (-491,000). Employment among youth aged 15 to 24 was down 480,000 in April, while employment among workers aged 55 and over fell by 377,000.

While losses in March were heavily concentrated in services, employment fell sharply in April in both service industries (-1,373,000) and goods industries (-621,000). Wholesale and retail trade, accommodation and food services, construction and manufacturing posted the largest declines.

From February to April, total employment in Canada has declined by 15.7%. The official unemployment rate has risen from 5.6% to 13.0% over this two-month period. In April, the unemployment rate would be 17.8% if adjusted to include individuals who were not counted as unemployed due to reasons specific to the COVID‑19 shutdowns.

Canada’s employment rate – the portion of the working age population that is employed – has declined by 9.7 percentage points from February to April. The overall employment rate in April was 52.1%. Among core-age workers, the employment rate in April was 72.6%, down from 80.2% in March. Among core-age men, the employment rate in April fell to 76.2%, while it declined to 68.9% among core-aged women. The employment rate among youth was 38.2% in April and has fallen almost 20 percentage points since February.

March’s international trade report, released on May 5^th, highlighted the initial impacts of COVID‑19 on North American producers, as lower trade flows between Canada and the United States pushed total Canadian merchandise trade to its lowest monthly level since January 2018. Exports fell 4.7% in March, with lower shipments to the U.S accounting for about 80% of the overall decline. Similarly, imports were down 3.5%, almost all on account of lower shipments from the U.S.

The declines in March reflected lower shipments of motor vehicles and parts as automakers and several parts suppliers began to shutdown production as public health measures to contain COVID‑19 were being implemented. Declines in aircraft and aircraft equipment also contributed to the reduction in trade as production in this sector was also impacted by work stoppages related to COVD-19. Production stoppages in the transportation sector continued during April and are expected to impact exports and import levels in that month.

A report on Canada’s international trade in medical and protective goods was also released on May 5^th. The analysis showed that exports of medical equipment and products, diagnostic products, and disinfectants and sterilization products were notably higher during the first three months of 2020 when compared to the same three-month period last year. By contrast, exports of personal protective equipment were down when compared to levels in the first quarter of 2019.

Imports of medical and protective equipment followed a different pattern. Imports of medical equipment and products, personal protective equipment, and disinfectants and sterilization products over the first three months of 2020 were lower than levels observed in the first quarter of 2019, while imports of diagnostic products rose substantially. The report is available on Statistics Canada’s website at COVID‑19: A data perspective.

The latest edition of Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, with a focus on news related to the COVID‑19 pandemic, is now available.

Weekly update - Friday, May 1, 2020

February’s GDP report, released on April 30^th, highlighted major developments in the economy prior to the introduction of widespread restrictions to contain the spread of COVID‑19. Real gross domestic product was essentially unchanged in February, following three months of growth. Educational services fell sharply, reflecting rotating strikes by elementary and secondary school teachers in Ontario. Transportation services also declined in February, as rail blockades across the country impeded the movement of people and goods, while accommodation and food services declined as global travel restrictions related to COVID‑19 expanded. At the same time, higher output in mining, conventional oil and gas extraction, and wholesale industries partly offset declines in other sectors.

On April 29^th, the agency released data for three transportation and travel related programs covering February. With the release of February data, the tonnage of freight carried by Canadian railways increased by almost 6% from the same month in 2019. This increase was due to an unusually low volume of rail freight moved in February 2019, caused by extreme cold weather, derailments and the cap imposed on oil sands production by Alberta. When measured on a year-over-year basis, the impacts of COVID‑19 were not yet discernible. Looking forward, Canada’s mainline railways are reducing costs and laying-off workers, anticipating volumes to plunge in a major way during the second quarter.

Itinerant aircraft take-offs and landings at Canadian airports in February were 9% higher than the same month in 2019. The growth was entirely driven by domestic traffic (up 11%) as transborder and international movements were essentially flat. Aircraft movements between Canada and China dropped by roughly 50% as Canada restricted flights between the two countries in late January. Consequently, the number of travellers from China declined by over one half, helping to push the total number of international arrivals to Canada from overseas countries down by 8.3% in February, the largest monthly decline in over twenty five years.

On April 29^th, Statistics Canada also released data from a special survey of business conditions in March that highlighted the extent to which business operations have been impacted by measures to contain the spread of COVID‑19. Nearly two thirds of businesses that responded to the survey reported being highly affected by lower demand for their products and services, while about one third of businesses reported that their revenues in the first quarter of 2020 were down by 40% or more from the first quarter of 2019.

Upcoming releases: On May 5^th, Statistics Canada will release international merchandise trade for March and then, on May 8^th, the Labour Force Survey for April.

Weekly update - Friday, April 24, 2020

March’s Consumer Price Index, released on April 22^nd, highlighted the impact of sharp declines in energy prices on headline consumer inflation. Lower demand for oil as the COVID‑19 pandemic escalated, coupled with tensions among oil-producing countries, pushed WTI benchmark crude prices from near USD $47 per barrel in early March to just over USD $20 per barrel at month’s end. Led by lower energy prices, the all-items CPI fell sharply from 2.2% in February to 0.9% in March, the largest year-over-year deceleration in the headline index since September 2006. Energy prices in March were 12% lower than in March of last year, reflecting the largest one-month decrease in energy prices since late 2008.

February’s wholesale and retail trade reports, released on April 20^th and 21^st, highlighted the impacts of COVID‑19 and the domestic rail blockades on business activity during the month. As expected, the effects of these events were not as severe as what is anticipated for March data. Wholesalers reported that for February, sales fell by about $760 million due to these disruptions, with machinery and equipment and food wholesalers among those most affected. Despite these disruptions, overall wholesale sales rose by 0.7% in February, the third consecutive monthly increase. Without the impacts of COVID‑19 and the rail blockades, wholesale sales in February would have risen by an estimated 1.5%.

In the case of retail sales, over one in ten retailers reported that both COVID‑19 and the rail blockades negatively affected their sales in February, but these disruptions had little impact on overall retail sales, which advanced for the fourth consecutive month. While negative impacts on sales were more frequently reported by electronics and appliance store retailers and gasoline stations, some retailers, including sporting goods, hobby, book and music stores, and building material and garden equipment dealers, more commonly reported that these disruptions had a positive impact on sales in February.

Upcoming releases: On April 29^th, Statistics Canada will release data for three transportation and travel related programs for reference month February: monthly railway carloadings, aircraft movement statistics, and travel between Canada and other countries.

Weekly update - Friday, April 17, 2020

On April 15^th, the agency released a flash estimate of gross domestic product in March, designed to inform early assessments of the impact that business shutdowns and restrictions on physical distancing are having on overall economic activity. The decline in real GDP in March was estimated at 9%, the largest monthly decrease observed for the current data series (which tracks movements back to 1961). March’s flash estimate yields an approximate 2.6% decline in real GDP for the first quarter of 2020.

Canadian manufacturers faced two major challenges in February: the effects of supply chain disruptions stemming from COVID‑19 related shutdowns in Asia, along with the impacts of domestic rail blockages that impeded the movement of many manufactured goods across the country.

Respondents to the Monthly Survey of Manufacturing reported that the combined impacts of the COVID‑19 disruptions and the rail blockades lowered total manufacturing sales in February by an estimated $465 million. Overall, nearly one out of every ten establishments reported that their activities were impacted by COVID‑19, with producers of textiles, petroleum and coal products, electrical appliances, and computers and electronic products being among the most affected. Similarly, just over one in ten establishments reported that their activities were affected by the rail blockades, led by producers of metals, chemicals and wood products.

Despite the impact of these events, overall manufacturing sales rose 0.5% in February, after declining for five consecutive months. Without these disruptions, total manufacturing sales would have risen by an estimated 1.3%.

Tourism was also greatly impacted by the pandemic. Two leading indicators were released that brought the immediate impact of COVID‑19 on international travel into sharper focus—estimates of cross-border traveler volumes by automobile, and estimates of international arrivals to Canada by air, both released on April 14^th. In March, the number of Americans entering Canada by automobile fell by 60% on a year-over-year basis, reflecting large declines in Quebec, Ontario and British Columbia. Similarly, the number of international visitors arriving in Canada by air in March was also down about 60% when compared to levels observed in March of last year. Both releases highlighted the rapid decline in travel volumes during the last half of the month.

Weekly update - Thursday, April 9, 2020

These articles provide commentary on data from major economic releases as they relate to the potential impacts of COVID‑19. Articles will be released on a weekly basis as new data and analysis become available.

The employment report for March provided an initial assessment of the extent to which labour market activity was impacted as the COVID‑19 pandemic was rapidly escalating. The reference week for March’s Labour Force Survey was the 15^th to the 21^st, a period in which many businesses and organizations were scaling-back or shutting down as states of emergency were being declared and restrictions on international travel were being put in place.

The reference week for the March survey basically overlaps the mid-month surge in the number of Employment Insurance applications, which reportedly totaled over 900,000 from the 16^th to the 22^nd. However, the reference week predates the mandated closures of non-essential businesses that several provinces, including Ontario and Quebec, enacted later in the month. Additional employment losses stemming from these mandated closures may not be fully reflected in the March survey data.

Employment fell by over one million in March (-1,011,000) with losses among private sector employees accounting for over 80% of the total decline. Overall losses were roughly split between full-time work (-474,000) and part-time work (-537,000). Employment among core-age persons, those aged 25 to 54, fell by 426,000.

The national unemployment rate increased by 2.2 percentage points in March to 7.8%. The employment rate, the percentage of the working age population that is employed, fell 3.3 percentage points to 58.5%. Among core-aged persons, the unemployment and employment rates in March were 6.6% and 80.2%, respectively.

The one-month decline in employment experienced in March is unprecedented, and is about two and a half times as large as the cumulative decline in employment experienced during the 2008-2009 recession. From September 2008 to June 2009, overall employment fell by 400,000, led by sharp declines in full-time work and private sector employees, as the unemployment rate rose from 6.1% to 8.7%. The employment rate over this nine-month period declined from 63.4% to 61.3%. Among core-aged persons, the unemployment rate rose to 7.6% while the employment rate remained at or above 80%.

Upcoming releases: Monthly Survey of Manufacturing, to be released April 16^th.

The manufacturing report for February will include supplementary information designed to evaluate the impact of the COVID‑19 pandemic and the rail blockades on manufacturing activity. The next weekly update will feature highlights from this report.

In addition, a leading indicator of cross-border travel for March as well as a leading indicator of international arrivals by air for the first quarter of 2020 will be released on April 14^th.

Weekly update - Friday, April 3, 2020

These articles provide commentary on data from major economic releases as they relate to the potential impacts of COVID‑19. Articles will be released on a weekly basis as new data and analysis become available.

The published economic data for January provide a baseline read on economic activity in Canada prior to the intensification of the COVID‑19 crisis in recent months and February’s rail blockades. Many of the headline numbers in January pointed to stronger economic conditions to begin the year. Real GDP rose for the third consecutive month in January as goods-producing industries, led by higher output in non-automotive manufacturing, posted their largest monthly gain since August of last year. The output of services industries continued to advance, albeit at a slower pace, despite declines in transportation and educational services. Both total employment and payroll employment rose in January, while average weekly earnings, measured on a year-over-year basis, accelerated to 4.0% as earnings strengthened in most provinces.

January’s merchandise trade report offered some early insight into the initial impacts of COVID‑19 on Canadian economic activity. Merchandise trade with China declined substantially in January as efforts to contain the virus in that country were intensifying and the impacts of factory shutdowns in China on global supply chains were being widely assessed. While much of the overall decrease in Canadian exports in January reflected lower shipments to the United States, exports to China declined 9.8%. At the same time, imports from China fell 12.7% as imports from the United States and South Korea increased.

The merchandise trade report for February, released on April 2^nd, highlighted further declines in Canada-China trade, as exports to China fell an additional 6.4% while imports from China decreased 6.8%. Lower imports from China in February reflected declines in computers and peripherals, cellphones, and clothing and accessories. The February trade report also highlighted a notable decline in imports from South Korea, as efforts to contain the spread of COVID‑19 in that country intensified.

Upcoming releases: Labour Force Survey for reference month March, to be released April 9^th.

The intensification of the COVID‑19 crisis and the rail blockades had no discernible impact on February’s employment report. Overall employment was little changed in February as total hours worked rose by 1.2%, supported by broad-based increases across industries. Data from March’s Labour Force Survey, to be released on April 9^th, will provide an initial assessment of changes in labour market activity as the scope and breadth of the COVID‑19 crisis in Canada were rapidly intensifying.

A special edition of the Canadian Economic News providing a concise summary of selected Canadian economic events, and international and financial market developments, with a focus on news related to the COVID‑19 pandemic is now available.

Real gross domestic product (chained (2012) dollars)

Gross domestic product at basic prices, all industries, chained (2012) dollars. Estimates of real GDP are seasonally adjusted at annual rates.
Statistics Canada table 36-10-0434-01.

Consumer Price Index (2002=100)

All-items consumer price index (2002=100), not adjusted for seasonality.
Statistics Canada table 18-10-0004-01.

Employment (persons)

Employment, both sexes, ages 15 and over, seasonally adjusted.
Statistics Canada table 14-10-0287-01.

International merchandise trade, exports (dollars)

International merchandise exports, total of all products, measured on a balance of payments basis, current dollars, seasonally adjusted.
Statistics Canada table 12-10-0121-01.

International merchandise trade, imports (dollars)

International merchandise imports, total of all products, measured on a balance of payments basis, current dollars, seasonally adjusted.
Statistics Canada table 12-10-0121-01.

Retail trade sales (dollars)

Retail sales, current dollars, seasonally adjusted.
Statistics Canada table 20-10-0008-01.

Actual hours worked at main job (hours)

Total actual hours worked, all industries, seasonally adjusted.
Statistics Canada table 14-10-0289-01.

Manufacturers' sales (dollars)

Sales of goods manufactured, current dollars, seasonally adjusted.
Statistics Canada table 16-10-0047-01.

Aircraft itinerant movements, domestic (number of flights)

Arrival and departure within Canada at airports with NAV CANADA towers.
Statistics Canada table 23-10-0008-01.

Aircraft itinerant movements, transborder (number of flights)

Arrival and/or departure between Canada and the United States at airports with NAV CANADA towers.
Statistics Canada table 23-10-0008-01.

Aircraft itinerant movements, other international (number of flights)

Arrival and/or departure between Canada and a country other than the United States at airports with NAV CANADA towers.
Statistics Canada table 23-10-0008-01.

Railway carloadings (tonnes)

Total freight traffic carried (intermodal, non-intermodal and from U.S. connections).
Statistics Canada table 23-10-0216-01.

Travellers from the United States (persons)

Travellers from the United States, seasonally adjusted.
Statistics Canada table 24-10-0005-01.

Travellers from other countries (persons)

Travellers from countries other than the United States, seasonally adjusted.
Statistics Canada table 24-10-0005-01.

Canadian residents returning from United States (persons)

Canadian travellers returning from the United States, seasonally adjusted.
Statistics Canada table 24-10-0005-01.

Canadian residents returning from other countries (persons)

Canadian travellers returning from countries other than the United States, seasonally adjusted.
Statistics Canada table 24-10-0005-01.

Sales at full-service restaurants

Receipts, current dollars, seasonally adjusted.
Statistics Canada table 21-10-0019-01.

Sales at limited-service eating places

Receipts, current dollars, seasonally adjusted.
Statistics Canada table 21-10-0019-01.