Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
The Canadian real estate market is back to cooling after a brief jump in activity post-rate pause. Existing home sales fell, and new listings have been climbing to the point the market is now considered “balanced.” Despite getting another rate pause a few days ago, BMO says it’s unlikely to reignite the market the way the January pause did. The economy is much weaker, record building will supply even more inventory, and most importantly—the mortgage market is much tighter, and won’t provide any relief.
Canada’s unemployment is just off the record low, and by all technical measures—means we’re facing a very robust market. Yet social media is filled with videos of hundreds of people lining up for low paid, entry level jobs. The reason for this is the methodology used to calculate the rate, which is vastly overstating market strength. We walk through three factors that reveal the job market is worse than it appears.
Canada’s nice, but who wants to live there forever? That’s the message from the country’s permanent resident applications in July, which came in much lower than last year. Deceleration of growth has become the general trend, despite the country smashing population growth records—which appear to be largely temporary visas. High population growth but falling permanent residency applications means Canada is better at selling the Canadian experience than delivering it. People are arriving, and leaving—which is why the country is so aggressively pursuing temporary residents.
Canadians are pulling back on consumer spending, much more than their economic peers. TransUnion found just 11% of households plan to make large purchases in the next quarter, the lowest of any major economy surveyed. Canada came in last for most categories when it came to spending intentions. Consumers see themselves spending less as they perceive the economy to slow, ironically amplifying a slowdown.
Despite claims of a robust economy, many part-time workers just can’t find full-time hours. These are called involuntary part-time workers, and nearly 1 in 5 people with part-time employment are now in this area. The share of these workers is now at the highest level in almost two years, indicating the labor market has made a big shift recently.