Canadian Economic Tracker

Monthly analysis – June 13, 2024

Real gross domestic product expands in the first quarter

Real gross domestic product (GDP) rose 0.4% in the first quarter after remaining basically unchanged in the final quarter of 2023. Higher household spending on services supported the headline gain, while a slower pace of inventory accumulation weighed on growth. Non-residential business investment rose for the first time in three quarters, supported by higher outlays on engineering structures and industrial machinery and equipment. Investment in housing also increased, buoyed by stronger activity in resale markets. Business labour productivity fell 0.3% as the increase in hours worked outpaced the growth in business sector GDP.

Household disposable income rose 1.8% in the first quarter, supported by higher wages and investment incomes. The household saving rate rose to 6.9%, its highest level in two years. Nominal GDP edged up 0.1% after advancing 1.5% in late 2023.

Economy-wide output was basically unchanged in March

Real gross domestic product was basically unchanged in March after increasing 0.2% in February. Increases in construction and public sector activity were offset by lower factory output and declines in wholesaling activity. Output expanded in 11 of 20 industrial sectors.

Construction activity rose 1.1% in March, the largest monthly increase since January 2022 as residential, non-residential, and engineering activity all advanced. Engineering construction expanded for the third consecutive month, following steady declines during the second half of 2023 as construction at the Kitimat liquified natural gas project was winding down. Residential building construction rose 1.4%, driven largely by increases in single detached homes. Residential activity remained 21% below peak levels reported in the spring of 2021. Non-residential building construction increased 1.6% following two consecutive declines.

Oil and gas extraction rose 0.4% in March, the fifth increase in six months. Output in the oil sands rose 2.4%, led by higher crude bitumen extraction and synthetic oil production. Conventional oil and gas extraction fell 1.6%, while mining and quarrying posted its largest monthly decrease (-3.9%) in over two years.

Manufacturing output declined 0.8% in March as shutdowns for retooling continued to impact auto production. Output at auto assembly plants fell 8.2%, the sixth decline in seven months. Food manufacturing contracted 2.1% while chemical producers posted their second decline in three months. Total factory volumes in March were 3.2% below their recent peak in March 2023.

Activity at real estate agents and brokers declined 0.9% in March after falling 3.1% in February. Activity was about one-third below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, edged higher following two months of little growth.

Retail volumes declined 0.3% in March as activity at clothing and clothing accessories stores and gas stations contracted. Activity at motor vehicle and parts dealers increased for the second consecutive month, while building material and garden equipment suppliers posted their third consecutive gain.

Wholesaling activity fell 0.9% in March, the second decline in three months.  Lower activity at motor vehicle and parts wholesalers (-5.3%) contributed substantially to the decrease. Higher activity at machinery, equipment and supplies wholesalers tempered the decline.

Accommodation and food services contracted by 0.3% in March as activity at food services and drinking places fell for the first time in seven months.

Statistics Canada's advance estimate points to a 0.3% increase in real gross domestic product in April.

Business openings slow in February

The number of active businesses edged down 0.1% in February, the first monthly decline since September 2023.  The business opening rate fell 0.2  percentage points to 4.5%, while the closure rate edged up 0.1 percentage points to 4.7%. In the first quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline consumer inflation eases in April

Headline consumer inflation slowed to 2.7% in April, down from 2.9% in March. April's deceleration marked the fourth consecutive month that the all-items rate has been below three percent. The headline deceleration was broad-based, led by food prices, services, and durable goods. Higher gasoline prices tempered the slower pace of price growth, while mortgage interest costs and rental prices continued to put upward pressure on the headline rate. Annual price growth excluding gasoline eased to 2.5%, its slowest pace since June 2021.

Food price inflation continued to ease. April marked the second month in a row that the annual increase in grocery prices has been under the two percent mark. Grocery prices were up 1.4% in the twelve months to April, down from 1.9% in March. Meat prices were 1.8% higher than in April of last year, while prices for fresh vegetables rose 3.1%. Fresh fruit prices fell 4.4% year-over-year, their third consecutive month in negative territory, while prices for pasta products rose 1.3%.  Yearly price increases at restaurants eased to 4.3% after holding steady at 5.1% for three consecutive months.

Shelter inflation eased slightly in April. Shelter costs, measured year-over-year, were up 6.4%, after holding at 6.5% for two consecutive months. Mortgage interest costs were up 24.5% year-over-year, while price growth for rented accommodation, which reflects both new and existing rental contracts, slowed to 8.2%. In contrast, yearly price changes for homeowners' replacement costs remained in negative territory for the twelfth consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, rose 1.4% on a year-over-year basis in April, edging back into positive territory for the first time in seven months. Excluding energy and petroleum products, factory gate prices were 1.1% higher than in April of last year.

Employment little changed in May as the unemployment rate increases

Headline employment was little changed in May (+27,000) as gains in part-time work were partly offset by lower full-time employment.  Employment rose in health care and social assistance (+30,000) and in finance, insurance and real estate (+29,000) while construction (-30,000) and transportation and warehousing (-21,000) posted declines.

From February to May, total employment has risen by 115,000 with gains in health care and social assistance accounting for three-quarters of the net increase.

The unemployment rate edged up to 6.2% in May. There were 1,365,000 unemployed persons in that month, an increase of 250,000, or 22.4%, from May 2023.

The overall employment rate—the percentage of working-age people who are employed—edged down to 61.3% in May as the working-age population continued to expand at a brisk pace (+98,000). Total employment in the twelve months to May has risen by 402,000 while the working-age population has expanded by 1.1 million.

Average hourly wages rose 5.1% in the twelve months to May, up from 4.7% in April. Total hours worked were unchanged from April to May.

Job vacancies decline in March as payrolls increase

Payroll employment and job vacancies, currently available for reference month March, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, increased by 51,400 in March with gains in 11 out of 20 industrial sectors. March's increase was led by gains in health care and social assistance, educational services and manufacturing.

The number of job vacancies fell by 40,600 in March, the largest monthly decline since September 2023. Unfilled positions (adjusted for seasonality) totaled 610,700, down 24% from March 2023.  The unemployment-to-job vacancy ratio was 2.2, up from 1.9 in February. The job vacancy rate declined 0.2 percentage points to 3.4%, while total labour demand, the sum of filled and unfilled positions, declined by 0.3%.

Monthly analysis – May 16, 2024

Economy-wide output rises in February

Real gross domestic product increased 0.2% in February after expanding 0.5% in January. Higher output in mining and oil and gas extraction and in transportation and warehousing contributed to the headline gain. Activity rose in 12 of 20 industrial sectors.

Oil and gas extraction rose 3.3% in February, partially offsetting the decline in January when extreme cold across Western Canada impacted production. Oil and gas production, excluding the oil sands, expanded 4.4%, while output in the oil sands rose 2.1%.

Transportation and warehousing expanded 1.4% in February, the largest monthly increase since January 2023. Rail transportation was the largest contributor to the increase, rebounding as activity returned to normal following January's cold snap in Western Canada. Air transportation rose for the seventh consecutive month.

Utilities contracted 2.6% percent in February, after increasing sharply in January when the demand for electric power generation, transmission and distribution surged in Western Canada amid severe winter conditions.

Manufacturing declined 0.4% as shutdowns for retooling continued to impact auto production. Output at auto assembly plants fell 5.1%, the fifth decline in six months. Chemical producers posted their second consecutive decrease, while output rose at machinery manufacturers and computer and electronic product producers. Total factory volumes in February were 2.5% below their recent peak in May 2023.

Construction contracted for the fifth consecutive month in February.  Residential building construction fell for the fourth month in a row after expanding from July to October. Residential activity in February was 24% below peak levels reported in the spring of 2021. Engineering construction posted its first increase since May 2023, while non-residential building construction rose for the third time in four months.

Activity at real estate agents and brokers declined 1.9% in February after gains in each of the previous two months. Activity at agents and brokers was about one-third below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, was flat following two consecutive increases.

Retail volumes edged lower (-0.2%) in February as activity at gas stations fell for the first time since August. Activity at food and beverage stores declined for the fifth time in eight months while general merchandise stores posted their seventh gain in eight months.  Activity at motor vehicle and parts dealers increased following declines in December and January.

Accommodation and food services posted their sixth consecutive increase in February, while arts, entertainment and recreation declined for the second time in three months.

Statistics Canada's advance estimate points to little change in real gross domestic product in March.

Business openings and closures slow in January

In January 2024, the number of active businesses edged up 0.1%, the second increase in three months.  The business opening rate edged down 0.1 percentage points to 4.6%, while the closure rate declined 0.2 percentage points to 4.6%. In the first quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline inflation edges higher in March

Headline consumer inflation edged up to 2.9% in March, the third consecutive month that the all-items rate has been below the three percent mark. Higher gasoline prices contributed to March's acceleration, while mortgage interest costs and rental prices continued to put upward pressure on the headline rate. Annual price growth excluding gasoline eased to 2.8%, its slowest pace since July 2021.

Food price inflation continued to ease. March marked the first time since July 2021 that the annual increase in grocery prices has been under the two percent mark. Grocery prices were up 1.9% in the twelve months to March, down from 2.4% in February. Meat prices were 3.4% higher than in March of last year, while prices for fresh vegetables rose 2.5%. Fresh fruit prices fell 2.5% year-over-year, while prices for pasta products were unchanged.  Yearly price increases at restaurants held steady at 5.1% for the third consecutive month.

Shelter inflation held steady in March. Shelter costs, measured year-over-year, were up 6.5% for the second consecutive month. Mortgage interest costs rose 25.4% year-over-year, while price growth for rented accommodation, which reflects both new and existing rental contracts, accelerated to 8.3%. In contrast, yearly price changes for homeowners' replacement costs remained in negative territory for the eleventh consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, declined 0.5% on a year-over-year basis in March, their sixth consecutive month in negative territory. Excluding energy and petroleum products, factory gate prices were 0.2% lower than in March of last year.

Employment surges in April as the unemployment rate holds steady

Headline employment rose 90,000 in April, supported by gains among private sector employees after four months of little change. Over half of April's headline gain was in part-time work. Employment rose among core-age workers and young men. Employment increased in professional, scientific, and technical services (+26,000), accommodation and food services (+24,000) and health care and social assistance (+17,000).

The unemployment rate held steady at 6.1%. There were 1.3 million unemployed persons in April, an increase of 256,000, or 23.7%, from April 2023.

The overall employment rate—the percentage of working-age people who are employed—held steady at 61.4% as a strong increase in the working-age population (+112,000) was matched with robust employment gains. This followed sixth consecutive monthly declines in the employment rate. Total employment in the twelve months to April has risen by 377,000 while the working-age population has expanded by 1.1 million.

Average hourly wages rose 4.7% in the twelve months to April, down from 5.1% in March. Total hours worked increased 0.8% from March to April.

Job vacancies rise in February as payrolls edge lower

Payroll employment and job vacancies, currently available for reference month February, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, decreased by 17,700 in February with declines in 7 out of 20 industrial sectors. February's decrease reflected losses in accommodation and food services, manufacturing, and retail trade, while payrolls rose in public administration and finance and insurance.

Job vacancies increased by 3.4% in February. Unfilled positions (adjusted for seasonality) totaled 656,700, down over one third from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio held steady at 1.9 while the job vacancy rate was little changed at 3.7%.

Monthly analysis – April 11, 2024

Economy-wide output expands in January

Real gross domestic product grew 0.6% in January, the largest gain in twelve months. Activity rose in 18 of 20 industrial sectors. The resolution of public sector strike action in Quebec contributed substantially to the headline gain, supported by higher output in manufacturing and utilities.

Educational services rose 6.0% in January, rebounding from declines in November and December. Elementary and secondary schools were the largest contributor to the increase. Growth was tempered by the beginning of a strike by the Saskatchewan Teachers' Federation.

Manufacturing output expanded 0.9% as production resumed at some auto assembly plants after several months of retooling. After five consecutive declines, production at auto assembly plants expanded 4.9% while exports of motor vehicles and parts also rose. Total manufacturing volumes in January were 1.4% below their recent peak in May 2023.

Utilities posted its largest increase in two years (+3.2%) as the demand for electric power generation, transmission and distribution surged in Western Canada amid severe winter conditions.

Construction output contracted for the fourth consecutive month in January. Residential building construction fell for the third month in a row after expanding from July to October. Residential activity in January was 23% below peak levels reported in the spring of 2021. Engineering construction posted its eighth consecutive decline, while non-residential building construction fell for the first time in three months.

Activity at real estate agents and brokers rose 4.0% in January after advancing 8.6% at the end of 2023. Activity at agents and brokers was still 31% below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, also rose for the second consecutive month.

Oil and gas extraction fell 4.4% in January after reaching a record high in December. Frigid winter temperatures in Western Canada impacted production as output in the oil sands fell 5.2%. Oil and gas production, excluding the oil sands, contracted 3.6%.

Retail volumes edged higher in January, their fifth consecutive monthly increase, despite lower activity at motor vehicles and parts dealers. Activity expanded at gas stations, electronics and appliance stores, and furniture and home furnishing stores.

Accommodation and food services posted their fifth consecutive increase in January, while arts, entertainment and recreation rose for the second time in three months.

Statistics Canada's advance estimate suggests that real gross domestic product rose 0.4% in February.

Business closures outpace openings in December

In December 2023, the number of active businesses fell 0.2%, the fourth consecutive monthly decrease. The business opening rate edged down 0.1 percentage points to 4.5%, while the closure rate edged up 0.4 percentage points to 4.9%. In the fourth quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline inflation continues to ease in February

Headline consumer inflation slowed to 2.8% in February, the second consecutive month that the all-items rate has been below the three percent mark. Notable contributors to February's deceleration included the indexes for cellular services, food purchased from stores, and Internet access services. Higher mortgage interest costs and rental prices continued to put upward pressure on the headline rate. Annual price growth excluding gasoline eased to 2.9%, its slowest pace since July 2021.

Food price inflation continued to ease. February marked the first time since October 2021 that grocery prices, measured year-over-year, have risen at a slower pace than the headline rate. Grocery prices rose 2.4% in the twelve months to February, down from 3.4% in January. Meat prices were 2.6% higher than in February 2023, while prices for fresh vegetables rose 3.4%. Fresh fruit prices fell 2.6% year-over-year, while prices for pasta products were little changed (-0.1%). Yearly price increases at restaurants held steady at 5.1%, their fifth consecutive month under the six percent mark.

Shelter inflation continued to accelerate in February. Shelter costs, measured year-over-year, rose 6.5%, up from 6.2% in January. Mortgage interest costs were up 26.3% year-over-year, while price growth for rented accommodation, which reflects both new and existing rental contracts, edged up to 7.9%. In contrast, yearly price changes for homeowners' replacement costs remained in negative territory for the tenth consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, declined 1.7% on a year-over-year basis in February, their fifth consecutive month in negative territory. Excluding energy and petroleum products, factory gate prices were 1.0% lower than in February of last year.

Employment holds steady as unemployment rises in March

Headline employment was little changed in March (-2,200) following cumulative gains of 78,000 during the first two months of the year. Employment rose in March among core-age men and fell among youth. Employment increased in health care and social assistance (+40,000) and declined in accommodation and food services (-27,000) and wholesale and retail trade (-23,000). The number of private sector employees remained little changed for the fourth month in a row and has held steady for eight of the past nine months.

The unemployment rate rose 0.3 percentage points to 6.1% as more people searched for work. There were 1,320,000 unemployed persons in March, an increase of 247,000, or 23.0%, from March 2023.

The overall employment rate—the percentage of working-age people who are employed—declined to 61.4% in March as the working-age population continued to expand at a robust pace (+91,000). This was the sixth consecutive monthly decrease in the employment rate, the longest period of consecutive declines since the sixth-month period ending in April 2009. Over the past year, total employment has risen by 324,000 while the working-age population has expanded by over one million.

Average hourly wages rose 5.1% in the twelve months to March, up from 5.0% in February. Total hours worked was little changed from February to March.

Job vacancies hold steady in January as payrolls rise

Payroll employment and job vacancies, currently available for reference month January, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, rose by 39,800 in January with gains in 13 out of 20 industrial sectors. January's increase was led by gains in retail trade and manufacturing while payrolls fell in construction.

Job vacancies held steady in January. Unfilled positions (adjusted for seasonality) totaled 632,100, down 37% from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio held steady at 2.0 in January. In 2019, prior to the onset of the COVID‑19 pandemic, the unemployment-to-job vacancy ratio fluctuated between 2.0 and 2.3.

Monthly analysis – March 14, 2024

Real gross domestic product expands in the fourth quarter

Real gross domestic product (GDP) rose 0.2% in the fourth quarter after declining 0.1% in the third. Increases in exports and household spending supported the headline gain, while lower business investment and a slower pace of inventory accumulation weighed on growth. Business labour productivity rose 0.4%, the first increase in seven quarters.

Household disposable income rose 1.3% in the fourth quarter, buoyed by increases in property income as wage growth moderated. The household saving rate, at 6.2%, remained well above its pre-COVID‑19 pandemic benchmark. Nominal GDP rose 1.6% in the fourth quarter, matching the increase in the third.

Economy-wide output was basically unchanged in December

Real gross domestic product was basically unchanged in December after advancing in each of the previous two months. Increases in real estate activity and oil and gas extraction supported growth, while lower activity in educational services due to strike action in Quebec detracted from gains.

Activity at real estate agents and brokers rose 9.1% in December after decreasing for five consecutive months. At year end, activity at agents and brokers was still one third below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, increased for the first time since June.

Oil and gas extraction expanded for the third straight month in December. Crude oil production reached a record high as facilities continued to ramp up following maintenance activities and turnarounds in the summer and early fall. Oil sands extraction was up 3.5% after advancing 4.0% in November.

Manufacturing volumes fell 0.4% in December as activity at automakers and parts suppliers pulled back due to retooling at multiple assembly plants. Higher output at chemical producers tempered declines, increasing for the third consecutive month. Total factory volumes in December were 2.4% below their recent peak in May.

Construction output contracted for the third consecutive month in December.  Residential building construction fell for the second month in a row after expanding from July to October. At year end, residential activity was 22% below peak levels reported in the spring of 2021. Engineering construction posted its seventh consecutive decrease, while non-residential building construction rose for the third time in four months.

Retail volumes rose in December (+0.7%) for the fourth consecutive month, buoyed by higher activity at motor vehicles and parts dealers and gas stations.  Activity expanded at food and beverage stores and general merchandise stores following declines in November.

Accommodation and food services posted their fourth consecutive increase in December, while arts, entertainment and recreation was basically unchanged after advancing in October and November.

Educational services fell 3.8% in December, reflecting strike action by public sector workers in Quebec. Elementary and secondary schools were the largest contributor to the decline.

Statistics Canada's advance estimate suggests that real gross domestic product rose 0.4% in January 2024.

Business closures outpace openings in November

In November, the number of active businesses fell 0.1%, the third consecutive decrease. The business opening rate fell 0.4 percentage points to 4.1%, while the closure rate edged down 0.2 percentage points to 4.5%. In the fourth quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline inflation edges below the three percent mark in January

Headline consumer inflation slowed to 2.9% in January, down from 3.4% in December.  January's headline print marked the second time in thirty-four months that the all-items rate has been below three percent. Annual price growth excluding gasoline slowed to 3.2%.

Food price inflation continued to ease while prices for many items remained elevated. Grocery prices were up 3.4% in the twelve months to January, down from 4.7% in December. Meat prices were 2.8% higher than in January of last year, while prices for fresh vegetables edged up 0.7%. Fresh fruit prices were up 1.9% on a year-over-year basis, while pasta products rose by 8.9%. Yearly price increases at restaurants eased to 5.1%, their fourth consecutive month under the six percent mark.

Shelter costs, measured year-over-year, were up 6.2% in January. Both mortgage interest costs and higher rental prices continued to put upward pressure on headline inflation. Mortgage interest costs were up 27.4% year-over-year as homeowners continue to adjust to the higher interest rate environment. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 7.8% in January, up from 7.5% in December. Yearly price changes for homeowners' replacement costs remained in negative territory for the ninth consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, declined 2.9% on a year-over-year basis in January, due largely to a sizable decline in energy prices. Excluding energy and petroleum products, factory gate prices were 1.0% lower than in January of last year.

Employment increases in February as the unemployment rate edges up

Headline employment rose 41,000 in February following a similar gain at the start of the year.  All of the headline increase reflected gains in full-time work and higher employment among core-age workers. Self-employment also rose in February.

Employment increased in accommodation and food services and in professional, scientific, and technical services, while educational services and manufacturing posted declines.

The unemployment rate edged up to 5.8% in February, reflecting increases among both core-age men and young men. There were 1,260,000 unemployed persons in February, an increase of 186,000, or 17.3%, from February 2023.

The overall employment rate—the percentage of working-age people who are employed—declined to 61.5% in February as the working-age population continued to expand at a robust pace (+83,000). This was the fifth consecutive monthly decrease in the employment rate, the longest period of consecutive declines since 2009. Over the past year, total employment has risen by 368,000 while the working-age population has expanded by over one million.

Average hourly wages rose 5.0% in the twelve months to February, down from 5.3% in January. Total hours worked were little changed (+0.3%) from January to February.

Job vacancies hold steady in December as payrolls rise

Payroll employment and job vacancies, currently available for reference month December, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, rose by 31,600, following a decline of 67,500 in November. Most of December's increase reflected higher employment in elementary and secondary schools associated with the resolution of public sector strike action in Quebec. Excluding this industry, overall payrolls fell by 25,200 at year end, largely reflecting losses in retail trade.

Job vacancies held steady in December for the third consecutive month. Vacancies (adjusted for seasonality) totaled 637,400, down 36% from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio edged up to 2.0 at year end after holding steady at 1.9 from September to November. In 2019, prior to the onset of the pandemic, the unemployment-to-job vacancy ratio fluctuated between 2.0 and 2.3.

Monthly analysis – February 15, 2024

Economy-wide output expands in November

Real gross domestic product rose 0.2% in November, the first headline increase since May. Higher factory output along with increases in transportation and wholesaling activity supported the headline increase, while lower activity in construction, finance industries, and retail trade weighed on gains. Economy-wide output, measured year-over-year, rose above the one percent mark for the first time in four months.

Manufacturing volumes expanded 0.9% in November, the second increase in three months.  Higher production at chemical producers supported the gain as output continued to ramp up following maintenance-related shutdowns in the third quarter. Primary metal producers also posted a notable increase after shutdowns weighed on production in October. Total factory volumes in November were 2.0% below their recent peak in May.

Transportation and warehousing rose 0.8% in November, the third gain in the past four months. Higher carloadings of coal and forestry products bolstered rail output, while water and truck transportation rebounded following the strike by St. Lawrence seaway employees.

Construction output edged down in November for the second consecutive month. Declines in engineering activity weighed on output, while non-residential building construction rose for the second time in three months.  Residential building construction posted its fifth consecutive gain but was 18% below peak levels reported in the spring of 2021.

Activity at real estate agents and brokers contracted for the fifth month in a row following the resumption of interest rate hikes in June and July. Volumes in November were nearly 40% below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, also fell for the fourth time in five months.

Retail volumes edged down after a notable gain in October. Declines at food and beverage stores and general merchandise stores weighed on retail activity, offset by higher volumes at motor vehicle and parts dealers, which advanced for the fourth consecutive month.

Accommodation services expanded for the third month in a row, while activity at food services and drinking places edged down after increasing in October. Arts, entertainment and recreation increased for the second consecutive month but was 2.5% below levels observed in July.

Educational services fell 0.3% in November, reflecting strikes by Quebec workers. Elementary and secondary schools were the largest contributor to the decline. Output in the public sector was unchanged after increasing for six consecutive months.

Statistics Canada's advance estimate suggests that real gross domestic product rose 0.3% in December.

Business openings decline in October

In October, the number of active businesses fell 0.2%, the third decline in four months. The business opening rate fell 0.4 percentage points to 4.2%, while the closure rate remained unchanged at 4.8%. In the fourth quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline inflation accelerates in December as shelter costs edge higher

Headline consumer inflation rose to 3.4% in December, up from 3.1% in November. December's acceleration marked the thirty-second time in thirty-three months that the all-items rate has been above three percent. Annual price growth excluding gasoline edged down to 3.5%.

Food price inflation held steady while prices for many items remained elevated. Grocery prices were up 4.7% in the twelve months to December, matching the increase in November. Meat prices were 5.5% higher than in December of last year, while yearly price increases for fresh vegetables slowed to 0.5%. Fresh fruit prices were up 3.3% year-over-year, while increases for pasta products fell out of double-digit territory (+6.4%) for the second time in twenty-two months. Yearly price increases at restaurants edged up to 5.6%, their third consecutive month under the six percent mark.

Shelter costs, measured year-over-year, were up 6.0% in December. Both mortgage interest costs and higher rental prices continued to put upward pressure on headline inflation. Mortgage interest costs were up 28.6% year-over-year, their ninth consecutive month near or just above the thirty percent mark. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 7.5% in December, up from 7.3% in November. Yearly price changes for homeowners' replacement costs remained in negative territory for the eighth consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, were down 2.7% on a year-over-year basis in December, due largely to a sizable decline in energy prices. Excluding energy and petroleum products, factory gate prices were 1.1% lower than in December of last year.

Employment increases in January as the unemployment rate edges down

Headline employment rose by 37,000 in January after three months of little change.  All the headline increase reflected higher employment in service industries, supported by gains in wholesale and retail trade, finance and real estate, educational services, and transportation and warehousing. Headline gains were tempered by lower employment in accommodation and food services.

The unemployment rate edged down to 5.7% in January, the first decrease in thirteen months. The decline in January's unemployment rate reflected lower unemployment among youth and older workers. The unemployment rate among core-age workers rose to 5.1%, exceeding the five percent mark for the first time since January 2022. There were 1,225,000 unemployed persons in January, an increase of 169,000, or 13%, from January of last year.

The overall employment rate—the percentage of working-age people who are employed—declined to 61.6% in January as the working-age population continued to expand at a robust pace (+126,000). In the twelve months to January, total employment has risen by 345,000 while the working-age population has grown by one million. Over this period, the overall employment rate has declined by 0.8 percentage points.

Average hourly wages rose 5.3% in the twelve months to January, down from 5.4% in December. Wage gains during the past year have been stronger among women and high earners. Total hours worked were up 0.6% from December to January.

Job vacancies edge higher in November as payrolls decline

Payroll employment and job vacancies, currently available for reference month November, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, fell by 88,300 in November following a decline of 24,000 in October. Most of November's decrease reflected the strike action in Quebec's education sector. Excluding educational services, overall payrolls fell by 25,300 in November.

Job vacancies edged up in November, following little change in October and five consecutive declines from May to September. Vacancies (adjusted for seasonality) totaled 653,000, down 35% from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio held steady at 1.9% for the third consecutive month, almost twice the ratio observed when the labour market was experiencing historic levels of tightness in mid-2022. In 2019, prior to the onset of the COVID‑19 pandemic, the unemployment-to-job vacancy ratio fluctuated between 2.0 and 2.3.

Monthly analysis – January 15, 2024

Economy-wide output was basically unchanged in October

Real gross domestic product was basically unchanged in October for the third consecutive month. Lower factory output and wholesaling activity weighed on production while higher retail volumes and resource extraction supported growth. Real gross domestic product, measured month-over-month, has not increased since May, marking the longest period without a monthly increase since early 2015.

Manufacturing output fell 0.6% in October, the fourth decline in five months. Lower production at machinery and transport equipment manufacturers contributed to the decrease, while chemical producers posted their first increase since June. Total factory volumes were 2.3% below their recent peak in May.

Construction output edged down in October following gains in August and September. Engineering construction fell for the fourth month in a row, while non-residential building construction and repair construction both edged lower. Residential building construction rose for the fourth consecutive month but was 18% below peak levels reported in the spring of 2021.

Activity at real estate agents and brokers contracted for the fourth month in a row following the resumption of interest rate hikes in June and July. Activity at agents and brokers was down 6.8% in October and was 40% below levels reported in early 2022 before interest rates began to rise. Legal services, which derive much of their activity from real estate transactions, also fell for the third time in four months.

Retail volumes rose 1.2% in October, the largest monthly increase since January. Gains were broad-based, led by higher activity at clothing and clothing accessories stores, general merchandise stores, and health and personal care stores.  Activity at motor vehicle and parts dealers increased for the third consecutive month.

Activity at food services and drinking places rose 0.6% in October, the third increase in four months. Accommodation services grew 1.7% after advancing 2.4% in September. Arts, entertainment and recreation edged higher after declines in August and September.

Statistics Canada's advance estimate indicates that real GDP rose 0.1% in November.

Business openings decline in September as closures increase

In September, the number of active businesses fell 0.7%, marking the largest monthly decrease since the early stages of the COVID‑19 pandemic. The business opening rate fell to 4.3% while the closure rate rose to 5.0%. In the third quarter, many businesses continued to anticipate obstacles related to rising inflation, rising input costs, and higher interest rates and debt costs.

Headline inflation holds steady in November as food inflation continues to ease

Headline consumer inflation was 3.1% in November, matching the rate in October.  November's headline print marked the thirty-first time in thirty-two months that the all-items rate has been above three percent. Annual price growth excluding gasoline held steady at 3.6%.

Food price inflation continued to ease while prices for many items remained elevated. Grocery prices were up 4.7% in the twelve months to November, down from 5.4% in October. Meat prices were 5.0% higher than in November of last year, while yearly price increases for fresh vegetables slowed to 2.5%. Fresh fruit prices were up 4.5% year-over-year, while increases for pasta products remained in double-digit territory for the twentieth time in twenty-one months. Yearly price increases at restaurants eased to 5.5%, their slowest pace since March 2022.

Shelter costs, measured year-over-year, were up 5.9% in November, edging below the six percent mark for the first time in four months. Both mortgage interest costs and higher rental prices continued to put upward pressure on headline inflation. Mortgage interest costs were up 29.8% year-over-year, their eight consecutive month near or just above the thirty percent mark. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 7.3% in November, down from 8.1% in October. Yearly price changes for homeowners' replacement costs remained in negative territory for the seventh consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, were down 2.3% on a year-over-year basis in November, due largely to a sizable decline in energy prices. Excluding energy and petroleum products, factory gate prices were 0.2% lower than in November of last year and have followed a relatively flat trend in 2023.

Employment unchanged in December while the unemployment rate holds steady

Headline employment was virtually unchanged in December after little change in October and November. Employment rose in professional, scientific, and technical services and in health care and social assistance, while wholesale and retail trade and manufacturing posted declines. Monthly employment gains averaged 23,000 during the second half of 2023, down from 48,000 in the first half of the year.

The unemployment rate held steady at 5.8% in December. The unemployment rate among core-age workers edged down to 4.8%, while the rate among youth fell to 11.3%. The unemployment rate among older workers rose to 5.0%, the highest rate since the spring of 2022. There were 1,245,000 unemployed persons in December, an increase of 187,000 since April.

The overall employment rate—the percentage of working-age people who are employed—decreased to 61.6% in December as the working-age population continued to expand at a brisk pace (+74,000).

Average hourly wages rose 5.4% in the twelve months to December, up from 4.8% in November. Total hours worked were up 0.4% from November to December.

Job vacancies level off in October as payrolls decline

Payroll employment and job vacancies, currently available for reference month October, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, was down 44,600 in October, offsetting an increase in September. Payroll employment, measured on trend, has been relatively flat since June (-0.1%). Total labour demand—the sum of payroll employment and vacant positions—has edged lower during this period as businesses scaled back their demand for workers.

Job vacancies levelled off in October, following five consecutive monthly decreases. Vacancies (adjusted for seasonality) totaled 633,400, down 37% from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio remained at 1.9%, almost twice the ratio observed when the labour market was experiencing historic levels of tightness in mid-2022. In 2019, prior to the onset of the COVID‑19 pandemic, the unemployment-to-job vacancy ratio fluctuated between 2.0 and 2.3.

Monthly analysis – December 7, 2023

Real GDP contracts as exports and business investment decline

Real gross domestic product fell 0.3% in the third quarter following a revised 0.3% gain in the second.  Lower exports, slower inventory accumulation, and lower business outlays on non-residential structures and machinery and equipment weighed on economic activity, while increases in government spending and residential investment mitigated declines.  Economic growth, measured on a year-over-year basis, slowed to 0.5% in the third quarter, the slowest pace since early 2021.

Household disposable income, measured in current dollars, rose 1.0% in the third quarter, buoyed by increases in wages and salaries and government transfers. The household savings rate increased to 5.1% and remains well above pre-pandemic levels.

Data on openings and closures, currently available for reference month August, provide some insight into how businesses are adjusting to a weaker economic outlook. After contracting in June and July, the business opening rate increased to 4.4% in August but remained 0.3 percentage points below its 2015 to 2019 historical average. The business closure rate edged up to 4.7%, the first increase since March. August's closure rate was slightly above its historical average prior to the pandemic. The number of active businesses remained relatively unchanged in August for the third consecutive month.

Economy-wide output edges higher in September

Real gross domestic product edged up 0.1% in September, the first monthly gain since May. Higher factory output and construction activity supported the headline increase while lower mining and oil and gas extraction weighed on production.

Factory output was up 0.9% in September following three consecutive declines. Output rose at food producers and machinery manufacturers, while production was down at petroleum refineries and auto assembly plants. Total factory volumes in September were 1.7% below their recent peak in May.

Construction output rose for the second consecutive month. After pulling back steadily during the first half of 2023, residential building construction rose for the third month in a row in September but remained nearly 20% below peak levels reported in the spring of 2021. Non-residential building construction also rose for the third consecutive month, while repair construction posted its fifth straight decline. Engineering construction fell for the third month in a row after trending higher since late 2020.

Activity at real estate agents and brokers contracted for the third consecutive month following the resumption of interest rate hikes in June and July. Activity at agents and brokers was down 4.1% in September and was over one-third below levels reported in early 2022 before interest rates began to rise.

Retail volumes rose 0.3% in September, supported by higher activity at motor vehicle and parts dealers. Activity at furniture and home furnishing stores was down for the second consecutive month, as was activity at food and beverage stores and clothing and clothing accessories stores. Total retail volumes in September were 0.3% below their recent peak in May.

Many discretionary activities have moderated in recent months. Activity at food services and drinking places edged down in September, the third decline in four months. Arts, recreation and entertainment also posted its third decrease since May.

Statistics Canada's advance estimate indicates that real GDP rose 0.2% in October.

Headline inflation slows as food inflation continues to ease

Headline consumer inflation slowed to 3.1% in October, down from 3.8% in September.  October's deceleration marked the thirtieth time in thirty-one months that the headline rate has been above three percent. Annual price growth excluding gasoline edged down to 3.6%.

Food price inflation continued to ease while prices for many food items remained elevated. Grocery prices were up 5.6% in the twelve months to October, their second consecutive month under the six percent mark. Meat prices were 4.5% higher than in October of last year, while yearly price increases for fresh vegetables eased to 5.0%. Fresh fruit prices were up 4.8% year-over-year, while increases for pasta products remained in double-digit territory for the nineteenth time in twenty months. Yearly price increases at restaurants eased to 5.7%, their slowest pace since March 2022.

Shelter costs, measured year-over-year, rose 6.1% in October, up slightly from September. Both mortgage interest costs and higher rental prices continued to put upward pressure on headline inflation. Mortgage interest costs were up 30.5% year-over-year, their fifth consecutive month just above the thirty percent mark. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 8.1% in October, up from 7.1% in September. Yearly price changes for homeowners' replacement costs remained in negative territory for the sixth consecutive month.

Industrial product prices, which measure the prices that producers receive as products leave the factory gate, were down 2.7% on a year-over-year basis in October, due largely to a sizable decline in energy prices. Excluding energy and petroleum, factory gate prices were 0.4% lower than in October of last year and have followed a relatively flat trend in 2023.

Employment little changed while unemployment continues to rise

Headline employment was little changed in November (+25,000) as modest gains among private-sector employees were offset by lower self-employment. Employment rose in manufacturing and construction and declined in wholesale and retail trade, finance and insurance, real estate, rental and leasing. Monthly employment gains have averaged 28,000 from February to November.

The unemployment rate increased to 5.8% in November, the fifth increase in the past seven months. The unemployment rate among core-age workers edged up to 4.9%, while the rate among youth rose to 11.6%. There were 1.24 million unemployed persons in November, an increase of 182,000 since April.

The overall employment rate—the percentage of working-age persons who are employed—edged down to 61.8% in November as the working-age population continued to expand at a brisk pace (+78,000). The employment rate among 25-to-54-year-olds edged down to 84.5%.

Average hourly wages rose 4.8% in the twelve months to November, matching the increase in October. Total hours worked were down 0.7% from October to November.

Businesses continue to scale back their unmet demand for workers

Payroll employment and job vacancies, currently available for reference month September, provide additional insight into how labour market conditions have evolved in recent months. Payroll employment, the number of employees receiving pay and benefits from their employer, was virtually unchanged from June to September, after sizable net additions to payrolls during the spring months. Total labour demand—the sum of payroll employment and vacant positions—edged lower throughout the third quarter as businesses continue to scale back their demand for workers.

Job vacancies were down 40,700 in September, reflecting declines in accommodation and food services and construction. Vacancies (adjusted for seasonality) totaled 632,000, down 37% from the peak of just over one million in the spring of 2022. The unemployment-to-job vacancy ratio edged up to 1.9%, almost twice the ratio observed when the labour market was experiencing historic levels of tightness in mid-2022. September's unemployment-to-job vacancy ratio was similar to pre-pandemic levels.

Monthly update – November 9, 2023

Economy-wide output unchanged in August

Real gross domestic product was basically unchanged in August for the second consecutive month. Lower factory output was a large drag on activity, down for the third month in a row. Accommodation and food services and retail activity also contracted in August, while higher wholesaling activity and mining, quarrying, and oil and gas extraction offset declines.

Economy-wide output, measured on trend, has been largely unchanged since February, and in August, was 3.4% above pre-COVID levels.

Mining, quarrying, and oil and gas extraction rose 1.2% in August, the third consecutive increase as output rose above levels observed in April, before wildfires weighed on production in late spring. Stronger wholesaling activity in August reflected increases in machinery, equipment and supplies, and coincided with higher import activity.

Factory output was down 0.6% in August, following a 1.1% decrease in July. Food manufacturers, chemical producers and pharmaceutical manufacturers all posted declines while output at auto assembly plants rose for the sixth month in a row. Total factory volumes in August were similar to pre-pandemic levels.

Activity at real estate agents and brokers contracted in August for the second consecutive month following the resumption of interest rate hikes in June and July. Activity at agents and brokers was down 3.8% and was 9% below pre-pandemic levels.

Construction output was unchanged in August after contracting for three consecutive months. After pulling back steadily during the first half of 2023, residential building construction increased for the second month in a row and, in August, was 8% below its pre-COVID benchmark. Repair construction fell for the fourth time in five months, while non-residential building construction was unchanged. Engineering construction declined for the second month in a row after advancing steadily for eleven months.

Retail volumes fell for the third consecutive month in August. Lower activity at motor vehicle and parts dealers contributed to the pullback, while activity also fell at building material and garden equipment and supplies stores, and furniture and home furnishing stores. Volumes in August remained over 3% above pre-pandemic levels.

Accommodation and food services fell 1.8%, offsetting the increase in July. Activity in this sector has trended lower since February and, in August, was 7% below pre-COVID levels.

Air transportation rebounded in August after poor weather conditions impacted activity in June and July. Activity in August was almost one quarter below pre-COVID levels.

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

Headline inflation slows as food inflation continues to ease

Headline consumer inflation slowed to 3.8% in September, down from 4.0% in August. September's deceleration marked the twenty-ninth time in thirty months that the headline rate has been above three percent. Annual price growth excluding gasoline slowed to 3.7%.

Food price inflation continued to ease while prices for many food items remained elevated. Grocery prices were up 5.8% in the twelve months to September, edging below the six percent mark for the first time in 21 months. Meat prices were 4.4% higher than in September of last year, while yearly price increases for fresh vegetables remained below the double-digit mark for the sixth consecutive month. Fresh fruit prices were up 3.0% year-over-year, while increases for pasta products remained in double-digit territory for the eighteenth time in nineteen months. Yearly price increases at restaurants held steady at 6.1%.

Shelter costs, measured year-over-year, rose 6.0% in September, matching the increase in August. Both mortgage interest costs and higher rental prices continued to put upward pressure on inflation. Mortgage interest costs were up 30.6% year-over-year, their fourth consecutive month at or just above the thirty percent mark. Annual price growth for rented accommodation, which reflects both new and existing rental contracts, was 7.1% in September, up from 6.4% in August. Yearly price changes for homeowners' replacement costs remained in negative territory for the fifth consecutive month.

Employment little changed while the unemployment rate rises

Headline employment was little changed in October (+18,000) as both full-time and part-time employment held steady. Employment increased in construction and in information, culture and recreation, and declined in wholesale and retail trade and manufacturing. Monthly employment gains have averaged 28,000 from February to October.

The unemployment rate increased to 5.7% in October, the fourth monthly increase in the past six months. The unemployment rate among core-age workers edged up to 4.8%, while the rate among youth rose to 11.4%. There were 1.2 million unemployed persons in October, an increase of 171,000 since April.

The overall employment rate—the percentage of working-age persons who are employed—edged down to 61.9% in October as the working-age population continued to expand at a brisk pace (+85,000). The employment rate among 25-to-54-year-olds declined to 84.6% in October.

Average hourly wages rose 4.8% in the twelve months to October, down from 5.0% in September. Total hours worked were unchanged from September to October.

In October 2023, one in three Canadians aged 15 and older was living in a household that had found it difficult or very difficult over the previous four weeks to meet its financial needs in terms of transportation, housing, food, clothing and other necessary expenses.

People living in a rented dwelling were more likely to be in a household experiencing difficulties meeting financial needs (41.3%), compared with those living in a dwelling owned by a household member with a mortgage (36.1%) or without a mortgage (20.0%).

Among Canadians living in dual-earner households with children, 36.1% experienced difficulties meeting financial needs in October. Among single-earner households with children, this proportion rose to 45.5%.

Beginning in December 2023, the monthly commentary on current economic developments featured in the Canadian Economic Dashboard and COVID-19 will migrate to the Canadian Economic Tracker.