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Economic growth during uncertain times
From the Bank of Canada
In June, we began lowering our policy interest rate. We cut the policy rate at our last three decisions, for a cumulative decline of 75 basis points to 4.25%.
Our most recent decision on September 4th reflected two main considerations.
First, we noted that headline and core inflation had continued to ease as expected. Second, we said that as inflation gets closer to target, we want to see economic growth pick up to absorb the slack in the economy.
Since then, weve been pleased to see inflation come all the way back to the 2% target. It has been a long journey. Now we want to keep inflation close to the centre of the 1%3% inflation-control band. We need to stick the landing.
What does this mean for interest rates? With the continued progress weve seen on inflation, it is reasonable to expect further cuts in our policy rate. The timing and pace will be determined by incoming data and our assessment of what those data mean for future inflation.
As always, we try to be as clear as we can about what we are watching as we chart the course for monetary policy.
Economic growth picked up in the first half of this year, and we want to see it strengthen further so that inflation stays close to the 2% target. Some recent indicators suggest growth may not be as strong as we expected. We will be closely watching consumer spending, as well as business hiring and investment.
We will also be looking for continued easing in core inflation, which is still a little above 2%. Shelter cost inflation remains elevated but has started to come down, and we are looking for it to moderate further.
Our next decision is October 23rd. And we will have a revised economic outlook at that time.
https://www.bankofcanada.ca/2024/09/economic-growth-during-uncertain-times/
TD Provincial Economic Forecast: Rate Cuts Heal With Time
Report by TD Economics
Were most of the way through 2024, and the data seems to be adhering to our long-held view that the Atlantic Region and Prairies would outperform, in terms of GDP growth, this year. We continue to expect Ontario, Quebec, and B.C. to trail the pack. However, the former two provinces have benefitted from growth upgrades for 2024, leaving B.C. as the laggard.
Consumption has held up well across Canada so far this year, supported by resilience in Ontario and Quebec and relative strength in the Atlantic. Going forward, a downgraded profile for borrowing costs will offer more of a boost to household spending across Canada than wed previously thought. However, a chunk of highly indebted households in regions like Ontario and B.C. will have to contend with mortgage renewals at (likely much) higher rates.
Housing markets are also poised to receive a lift from lower-than-expected interest rates. Indeed, weve notably upgraded our 2024 and 2025 home price forecasts across nearly all provinces except Ontario, where strained affordability and problems in the condo sector will likely weigh. Lower rates are a benefit to homebuilding as well, although we still see Canadian housing starts cooling through 2025 given low home sales levels in the past few years.
At last count (Q2-2024), Canadian population growth continued to surge. Specifically, Canadas Big 4 provinces have yet to see any meaningful impact from recently announced federal policies to reduce the pool of non-permanent residents. We expect the effect of these policies to be significant and become evident beginning in Q4-2024, providing an impetus for a meaningful slowdown in population growth across the nation.
Population-fueled labour force gains have outpaced employment for most of this year, driving the national unemployment rate to its highest point since mid-2021. Notably, Ontario, Alberta and Quebec have seen the most material increases in their unemployment rates. With population gains expected to cool, the jobless rate is projected to peak at the turn of the year before gently pulling back in 2025.
https://economics.td.com/provincial-economic-forecast
NBC Housing Market Monitor: Housing market remained sluggish in August
Summary
Home sales edged up 1.3% between July and August, following a 0.6% decrease the previous month.
On the supply side, new listings edged up 1.1% from July to August, the seventh advance in eight months. They are now at their highest level since June 2022.
Active listings edged down 1.1% in August from their highest level since March 2020, the second decrease in six months. Meanwhile, the number of months of inventory (active listings-to-sales) edged down from 4.2 to 4.1 during the month, a level roughly back in line with its pre-pandemic level.
Market conditions tightened marginally in August and remained tighter than their historical average in most provinces. They were balanced in Manitoba and softer than average in B.C. and Ontario.
After a surge in July, housing starts dropped 62.4K in August to 217.4K (seasonally adjusted and annualized), a result well below the median economist forecast calling for a 250.0K print and its lowest level since November 2023. Urban starts decreased by 61.6K (to 199.5K) on an important drop in the multi-family segment (-62.8K to 154.3K) while the single-family segment was up marginally (+1.2K to 45.2K). Starts were down by more than half in Toronto (-40.4K to 24.6K) and decreased more modestly in Vancouver (-9.6K to 20.5K) and Calgary (-9.2K to 19.9K). On the other hand, they increased by 6.0K in Montreal (to 15.2K) after reaching their lowest level since February 2015 (excluding April 2020) the previous month.
The TeranetNational Bank Composite National House Price Index rose by 0.6% from July to August after adjustment for seasonal effects. Six of the 11 markets in the composite index were up over the month: Quebec City (+3.9%), Halifax (+3.2%), Ottawa-Gatineau (+1.9%), Vancouver (+1.7%), Montreal (+1.0%) and Toronto (+0.2%). Conversely, declines occurred in Hamilton (-0.1%), Winnipeg (-0.7%), Calgary (-1.1%) and Edmonton (-2.6%), while prices remained stable in Victoria during the month.
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf
