OTTAWA—The Canadian economy is showing green shoots with reports on home sales, consumer spending, and new job postings trending upwards after the coronavirus pandemic forced shutdowns and caused a record plunge in economic activity.
The Bank of Canada held its key interest rate steady on Wednesday, noting the impact of COVID-19 appears to have peaked and saying it now expects the Canadian economy to resume growth in the third quarter.
The bank’s more positive tone boosted the Canadian dollar to a three-month high against its U.S. counterpart on Wednesday, while Canada’s main stock index has rebounded nearly 40 percent from its March low as investors bet on economic recovery.
Canada’s 13 provinces and territories have been gradually reopening their economies in recent weeks, and while the pandemic continues to weigh heavily on economic activity, the picture is not as dire as it was even a few weeks ago.
Housing sales in Toronto, Canada’s biggest city, jumped by 55 percent in May from April and the average selling price gained 4.6 percent, though sales and listings remained well below last year’s levels. Bidding wars, too, have returned to hot neighbourhoods.
Home buyer Ashleigh Patterson lost out on one Toronto home in a bidding war in late May. Two days later she snapped up another. Now she is preparing to sell her townhouse and hoping the economic rebound means it too will have multiple offers.
“If you had told me two months ago you’re going to sell your home during a pandemic, I would have told you you were absolutely bonkers,” said Patterson.
Compared with late March, Canadians started spending again in May on things like a round of golf and clothes, and they began driving more, according to an RBC economics report released this week.
There have been huge line-ups outside stores like TJX-owned Winners and Inditex-owned Zara, which recently reopened in Canada’s most populous province of Ontario, according to social media posts.
And spending on home and lifestyle products has boomed, said Karl Littler, Senior VP, Public Affairs at the Retail Council of Canada.
“Consumers have not been on vacation. They’re not paying commuting costs … And so for quite a number of Canadians there is some more disposable income in play,” he said.
Commercial transport trucks crossing into Canada from the United States each week jumped 15.6 percent in the third week of May from a low in early April, though volumes are still down 25 percent from a year earlier, according to Canadian Border Services Agency data.
New job postings were up 20 percent on May 29 compared with May 3, according to Indeed Hiring Lab Canada, though trends are subdued compared with last year.
The country lost a record-breaking 2 million jobs in April and the unemployment rate surged to 13 percent amid coronavirus shutdowns. The May jobs report is due on Friday.
And while manufacturing activity contracted for the third straight month in May, the pace of decline was less severe than in April, according to PMI data released this week.