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Briefing highlights

  • Housing markets perk up
  • Stocks, loonie, oil at a glance
  • Annual inflation at 2 per cent
  • U.S. retail sales slip
  • Tim Hortons parent to expand
  • Required reading

Housing perks up

Canadian housing markets perked up in April, but not everyone’s sharing the wealth.

Sales of existing homes rose 3.6 per cent from March, and 4.2 per cent from a year earlier, the Canadian Real Estate Association said Wednesday.

The annual increase was the first since December, 2017, and the biggest in more than two years, CREA said, noting that April, 2018, had marked a seven-year low.

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“The increase reflects gains in the [Greater Toronto Area] and Montreal that outweighed declines in the B.C. lower mainland,” the real estate group added.

Of course, there are widespread differences among local markets, which April’s reading highlighted.

“Housing market trends are improving in some places and not so much in others,” CREA president Jason Stephen said in releasing the numbers.

Indeed, sales rose in about 60 per cent of the regional markets, with the Greater Toronto Area driving half of the national increase, the real-estate group said.

Notably, the Vancouver area is suffering.

“Sales activity is stabilizing among Canada’s five most active urban housing markets,” said CREA chief economist Gregory Klump.

“That list no longer includes Greater Vancouver, which fell out of the top-five list for the first time since the recession and is well into buyers’ market territory,” he added.

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“Sales there are still trending lower as buyers adjust to a cocktail of housing affordability challenges, reduced access to financing due to the mortgage stress test and housing policy changes implemented by British Columbia’s provincial government.”

Also in April, new listings rose 2.7 per cent from March.

The national average sale price rose 0.3 per cent from a year earlier to about $495,000 in April, while the MLS home price index, which is considered a better measure, dipped 0.3 per cent.

Benchmark prices, or those from the MLS home price index, fell 8.5 per cent in the Greater Vancouver Area from a year earlier, slipping 4.6 per cent in the Fraser Valley, gaining 1 per cent in the Okanagan and 0.7 per cent in Victoria.

In Southern Ontario, benchmark prices rose 3.2 per cent in the GTA, 6.2 per cent in Niagara Region, 5.1 per cent in Guelph, 4.6 per cent in Hamilton-Burlington and 2.5 per cent in Oakville-Milton.

The Barrie area, though, saw a drop of 5.3 per cent.

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Prices slipped 4.6 per cent in Calgary, 4 per cent in Edmonton, 4.3 per cent in Regina and 1.7 per cent in Saskatoon.

Ottawa marked a gain of 7.8 per cent, Montreal of 6.3 per cent, and Moncton of 1.8 per cent.

“Canadian housing activity appears to be broadly stabilizing, as there are signs that the market has largely digested the many policy changes,” said Bank of Montreal chief economist Douglas Porter.

“And while the regional divide is wide, fundamentals look to be a bit more supportive in the year ahead, with the policy tightening likely having run its course, job growth surprisingly solid and borrowing costs ebbing,” he added.

“We continue to contend that prices, sales and starts are likely to hold broadly stable nationally in 2019 amid the many moving parts for the market.”

Thursday’s report was better than expected, noted Benjamin Reitzes, BMO’s Canadian rates and macro strategist.

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“Better weather and lower mortgage rates probably helped,” he said. “The better report should ease the [Bank of Canada’s] concerns on this front, at least a bit.”

Read more

Markets at a glance

Read more

Inflation ticks up

Annual inflation in Canada ticked up to 2 per cent in April as prices at the pump eased from a year earlier.

But on a monthly basis, pump prices shot up 10 per cent from March “as refineries switched to summer-blend fuels, global oil prices continued to rise due to production cuts, and carbon levies were introduced or increased in six provinces,” Statistics Canada said.

That 2 per cent, up from 1.9 per cent in March, is right at the Bank of Canada’s target.

If you strip out gasoline, annual inflation would be 2.3 per cent.

“Ex-gasoline inflation is at 2.3 per cent, underscoring our view that in upcoming quarters we're likely to see a period in which inflation runs above 2 per cent for a while when we move past year-on-year declines in pump prices,” said CIBC World Markets chief economist Avery Shenfeld.

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“Recent seasonally adjusted monthly data are showing a bit of momentum, but a lot of that is gasoline, so we don’t see a material threat to inflation running within the Bank of Canada’s tolerance for divergences from the 2-per-cent target.”

Read more


Retail sales slip

From Reuters: U.S. retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, which could temper expectations for a sharp rebound in consumer spending after it slowed in the first quarter.

RBI to expand

From Reuters: Restaurant Brands International Inc., the parent company of Tim Hortons, Burger King and Popeyes, plans to expand all three of its brands to more than 40,000 restaurants globally in the next eight to 10 years, making it one of the largest restaurant companies in the world.

China numbers weaker

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From Reuters: China reported surprisingly weaker growth in retail sales and industrial output for April, adding pressure on Beijing to roll out more stimulus as the trade war with the United States escalates.

Required reading

WeWork raises $1-billion

WeWork is expanding into property acquisition and management, raising US$1-billion from Canada’s Ivanhoé Cambridge to buy real estate in major cities around the world. Rachelle Younglai reports.

Shareholder dissatisfaction

The Desmarais family’s Power Corp. of Canada is facing increasing shareholder dissatisfaction with its governance, with a large minority of public shareholders voting against reappointing co-CEOs Paul Desmarais Jr. and André Desmarais to the board. Institutional investment reporter David Milstead reports.

Shaw unloads Corus stake

Shaw Communications Inc. is unloading its 38.6-per-cent stake in Corus Entertainment Inc. in a $548-million share sale, after struggling to sell the position to a single buyer last year, Tim Kiladze and Andrew Willis write.

Employee concerns

WestJet Airlines Ltd. is taking steps to assure its 14,000 employees their jobs are safe in a $3.5-billion takeover by private-equity investor Onex Corp., Eric Atkins and Jeffrey Jones write. But there are questions about the employees’ profit-sharing and stock plans, which the airline has long said is key to its ownership culture.

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