CHHMA - EYE ON OUR INDUSTRY
Volume 14, Issue 35, September 17, 2014
Inside This Issue:
• Join Us in Remembering Home Hardware’s Bruce Webster and the Other Honourees
at this Year’s Industry Memorial Golf Classic – October 1st
• Hudson’s Bay Lowers Losses in Q2 with Help from Saks
• Dollarama Profit and Sales Increase in Latest Quarter as It Sticks to a
Winning Formula
• Ontario Court Green-Lights Sears Class-Action Lawsuit
• Software Used by Home Depot Hackers Different from Target Attack
• Why the Boomers May Not Leave Home as Fast as We Think
• OECD Cuts Canadian and Global Economic Forecasts
• Canadian Home Resales Surge in August, CREA Boosts Annual Forecast
• Canadian Housing Market Momentum Continues as Home Prices Rise
• New Home Prices in Canada Unchanged, Toronto Sees Drop
• Latest U.S. Economic News
Association News
Join Us in Remembering Home Hardware's Bruce Webster and Other Honourees at this Year's Industry Memorial Golf Classic - October 1st
Terry Davis, Ray Gabel, Joel Marks, John Dyksterhuis and several of the buyers from Home Hardware will be in attendance at the 13th Annual Industry Memorial Golf Classic taking place on Wednesday, October 1st at the Blue Springs Golf Club in Acton, Ontario.
The Home Hardware executives will be on hand to help honour their former colleague who passed away just prior to last year’s event.
Bruce Webster spent most of his career in the home improvement industry. He worked at many companies, including being a buyer at Homecare and Cashway. He then joined TSC Stores as a senior category manager, and finished his career as a product manager at Home Hardware Stores.
The Industry Memorial Golf Classic is held on behalf of the hardware and housewares industry and honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend.
The other honourees this year are:
Tom Ross - Served for 33 years as the Executive Director of the Canadian Retail Hardware Association (CRHA). Tom passed away on June 26 of this year.
Ray Ceolin – Over his 40 year career, was an active member of the hardware and housewares community. Together with his brother Leo, they built a successful sales agency, Phaeton Limited, representing varied lines through many classes of trade. Ray passed away in October of 2012.
Past honourees include: Chris Hrushowy, Mike Pullen, Jim Ypma, Bill Caldwell, Brayl Copp, Ed Hardison, Stuart North, Joseph Kuchar, Shelly Lush, Jack Pountney, Christof Vanooteghem, Ian Hay, Trygve Husebye, Bernie Carpenter, Don McDonald, Les Groves, Bob Hilton, Doug Straus, Mel Boshart, George Giles and Ed Barnes.
The day allows family, friends and colleagues to honour these gentlemen while enjoying a fun day out on the golf course followed by a dinner and silent auction.
Registration and lunch starts at 10:30 a.m. with a shotgun start at noon. Dinner will commence at around 6:00 p.m.
For further details and to register now, click here.
Money raised from hole sponsorships and the silent auction will go towards the CHHMA Scholarship Program which provides support for children of CHHMA member company employees to attend university or college.
Consider donating an item or items for the silent auction. Housewares or hardware products, golf items or any item interesting and/or unique would be sincerely appreciated. Whether or not you can attend the event, your donation will contribute to the Scholarship Program which has benefited 70 young people since 2001.
Click here for a silent auction pledge form.
Industry News
Hudson’s Bay Lowers Losses in Q2 with Help from Saks
The Hudson’s Bay Company reported last Friday an 87% jump in retail sales and a much smaller loss in the second quarter ended Aug. 2, helped by its purchase of U.S. luxury chain Saks Inc. last year.
Hudson’s Bay acquired Saks for $2.4-billion last year to revive big-name department stores.
The company, which affirmed its outlook for 2014, said consolidated same-store sales increased by 1.9% in the second quarter.
Same-store sales at Saks Fifth Avenue rose 2.2%. OFF 5th, Saks’ outlet business, posted a 14.9% growth in same-store sales, helped by strong growth in e-commerce sales.
Same store sales at Hudson’s Bay’s department store business, which includes the namesake stores and the struggling U.S.-based Lord & Taylor chain, rose 1.1%.
Retail sales jumped to C$1.77-billion ($1.60-billion) from $948-million, due to the addition of Sak’s business.
Online sales were $162-million, including $116-million from Saks and grew 82.2% at Hudson’s Bay and Lord & Taylor.
The company’s net loss more than halved to C$36-million, or 20 Canadian cents per share, in the second quarter from $81-million, or 68 cents, a year earlier.
“HBC’s quarter was characterized by strong performance from the higher end of our businesses, demonstrating the sustained strength of affluent consumers, and softer performance from our more moderate businesses,” said Richard Baker, HBC’s chief executive.
During the second quarter, HBC began the integration of the Home Outfitters business with the Home business of the Hudson's Bay banner. "Joining our two Home businesses not only allows us to create a more powerful Home destination, but also drives efficiency by combining our merchandising and marketing efforts and organizations," stated Donald Watros, HBC's President. HBC is currently in the process of assessing its Home Outfitters locations and previously announced the closing of locations in Mississauga, Ontario and Abbotsford, British Columbia in December 2014 and January 2015, respectively. Beginning with this year's third quarter results, Home Outfitters will be included in HBC's Department Store segment.
The retailer reiterated its 2014 guidance of $7.8-billion to $8.1-billion in sales driven by low-to-mid single-digit consolidated same store sales growth, and operating earnings of $580-million to $620-million.
HBC is on track to save $50-million in synergies this year from the deal with Saks, management said.
The company announced that it will open its first U.S. luxury Saks Fifth Avenue and sister discount Saks Off Fifth stores in Canada in the spring of 2016, putting pressure on this country’s fast-expanding luxury retail market.
“The Canadian luxury market is growing and the competitive landscape continues to be underdeveloped,” Mr. Baker told an analyst conference call.
The so-called “off-price” or discount luxury segment, which HBC’s Off Fifth is part of, “is in the early stages in Canada and we have the opportunity to enter the market before some key competitors,” he added.
Mr. Baker is bringing the high-profile Saks to Canada just as the high-end fashion segment is heating up. This week, U.S. department-store rival Nordstrom Inc. is opening its first store in Canada, in Calgary’s Chinook Centre, the first of several in this country over the next several years. It will also introduce its discount Rack chain to Canada, although it has delayed the launch of Rack to an undetermined time as it focuses on its namesake stores.
Domestic incumbents Holt Renfrew & Co. and men’s specialist Harry Rosen are rapidly investing in expanding their stores here, while the smaller Simons is beginning a major push to branch out beyond its Quebec base.
Source: HBC, Reuters, The Financial Post, The Globe and Mail
Dollarama Profit and Sales Increase in Latest Quarter as It Sticks to a Winning Formula
Canadian dollar-store operator Dollarama Inc. reported a 15% rise in quarterly profit last Thursday as its number of stores increased and customers spent more per visit.
The company, which sells items priced up to $3, said same-store sales rose 4.2% in the second quarter, ended Aug.3. The number of transactions increased 1.1%.
Dollarama said the average spending by customers per trip rose 3.1% as it sold more products priced higher than $1.
Its number of stores increased to 917 as of Aug. 3 from 828, a year earlier.
The chain said 18 net new stores were opened during the second quarter of fiscal 2015 and 43 so far this fiscal year. It remains on target to expand its Canadian store network by 70 to 80 stores this year.
Dollarama also said it would issue as dividend one share for each share held. The company had 66.9 million shares outstanding as of Aug. 3, according to a regulatory filing.
Dollarama reported a net income of $68.9 million ($62.6 million), or $1.03 per share, for the quarter, in line with the average analyst estimate.
Revenue rose 12% to $572.6 million.
Analysts on average had expected revenue of $578.9 million, according to Thomson Reuters.
Dollarama says it plans to stick with its winning formula as its expands to 1,200 stores over the coming years by not offering more lower margin grocery or pharmaceutical items.
"For me the future is the present. I'm very happy with our offering today," CEO Larry Rossy said last Thursday during a conference call to discuss the second-quarter results.
Nearly two-thirds of sales came from products priced higher than $1, up from 61.7% a year ago. The use of debit cards increased 2.1 percentage points to 42.7%.
The retailer sells a small assortment of over-the-counter drugs like pain killers, clothes and non-perishable food, but has no intention of following its American dollar store rivals by expanding these categories, especially food.
"I think that the offering that we have today and the categories that we have are exactly what the customers expect and we don't want to transition our store into a grocery store — absolutely not because we like the margins we're making and we're not favourable to the margins of the grocery industry."
About half of Dollarama's products are general merchandise, 13 to 14% seasonal products and about 36% consumables.
Meanwhile, the company said the January increase in duties on goods imported from China won't have a material impact on its results.
"It's an extra cost to doing business as the dollar is and we're going to handle it the same way," Rossy told analysts.
Chief financial officer Michael Ross said the company has had enough lead time to deal with the one-time increase in costs caused by Ottawa's decision to end general preferential tariff treatment for 72 countries, most notably China, Brazil, Hong Kong and India.
"It's less significant than the currency impact and we're treating it the same way we've been treating forever inflation, wage increases, currency fluctuations and so on."
Analysts welcomed both the results and Dollarama's bullish outlook for continued sales and profit increases.
"Based on commentary we remain confident in Dollarama's ability to continue to deliver industry-leading performance metrics," wrote Irene Nattel of RBC Capital Markets.
Keith Howlett of Desjardins Capital Markets said the results are evidence that consumer response to the chain remains strong and that lower same-store sales in the two preceding quarters was largely weather-related.
"The dollar store segment is consolidating into the hands of the strongest players, with Dollarama and Dollar Tree gaining market share," he said, pointing to more than 200 stores in Canada by the U.S. company.
Source: Reuters, The Canadian Press
Ontario Court Green-Lights Sears Class-Action Lawsuit
A lawsuit against Sears Canada Inc. and its U.S. counterpart by its Hometown Store dealers has been granted class action status by an Ontario court.
The lawsuit by more than 250 current and former operators of Sears Hometown Stores allege Sears Canada and Sears Roebuck and Co. made it “virtually impossible” for them to operate their Hometown Stores profitably.
The dealers allege that Sears lowered commissions, reduced advertising for local stores and bypassed the franchises by selling directly to customers who are located within their markets.
They also claim that Sears set their compensation and work conditions, without abiding by labour laws or franchise protection laws.
The allegations have not been proven in court.
Sears Canada said last Thursday it has reviewed the claims and believes they are without merit.
The retailer has argued the Hometown Store operators are not franchisees and denied dealer commissions have been reduced.
Sears has also denied that any changes to the dealer compensation structure and advertising subsidies hurt dealers.
Source: The Canadian Press
Software Used by Home Depot Hackers Different from Target Attack
(Article by Dune Lawrence The Associated Press, Michael Riley Bloomberg News)
Home Depot Inc. was hacked with a malicious software program that plunders store registers while disguising itself as antivirus software, according to two security researchers.
The credit card-stealing program used in the attack on the Atlanta-based retailer is being dubbed FrameworkPOS, and differs significantly from the software used last year to hack Target Corp., said Dan Guido, chief executive officer of Trail of Bits, an information security company. Guido, who reviewed technical information about the Home Depot incident, said the differences in the malware are strong indicators that the hacks are probably the work of two different groups.
A second cyber security researcher familiar with the investigation confirmed that the malware used is a different family and said its name, FrameworkPOS, is derived from the McAfee Inc. antivirus agent it impersonates. He asked not to be identified because the investigation is still under way. The malware’s disguise was meant to keep Home Depot’s security team from taking a deeper look even if the retailer wasn’t deploying McAfee products on its registers or elsewhere in its network.
Paula Drake, a Home Depot spokeswoman, said the company is continuing to investigate. “So at this point, we aren’t going to comment on any speculation,” she said in an e-mail.
McAfee spokesman Chris Palm said the company’s products are “able to detect and deflect this malware, so there is no risk to our companies.” The designers “simply named their malware to resemble a piece of McAfee software, hoping investigators would see it and simply move on,” a common tactic, he said.
The malware code is sprinkled with anti-American references, including a link to a Wikipedia entry on wars involving the U.S. and a website promoting a book on American imperialism. The references have no relation to the way the software functions and appear to be meant as a message from the hackers, the second researcher said.
Home Depot confirmed a breach of credit card information at its stores on Sept. 8, after the security blogger Brian Krebs reported signs of a hack on Sept. 2.
The retailer has not released details of how many cards may have been compromised. The hack follows a similar incident at Minneapolis-based Target last December, which exposed some 40 million cards.
POS stands for “point of sale” and in both cases, malware was designed to capture credit card numbers after customers swiped them at registers. Major differences between the two pieces of code from the Home Depot and Target cases include how and where the malware installs itself, how it interacts with the operating system, and how the software hides -- or scrambles -- credit card numbers as they sit on the company’s network before they’re exfiltrated, or sent outside the system. Also, the memory-scraping malware used against Target didn’t mimic antivirus software.
A screenshot of lines of code from the FrameworkPOS malware provided by the second security researcher shows some of the hidden messages, including a link to a blog post comparing U.S. military intervention in Libya with its support of the government in Ukraine against a rebellion in the Russian speaking east portion of the country.
Stolen Home Depot credit card numbers have turned up for sale on a major online emporium called Rescator.cc, which has been linked to a Ukrainian stolen credit-card dealer based in Odessa.
Rescator also sold stolen cards from the Target hack, and some researchers have cited that as evidence that the two retailers were breached by the same group of hackers.
Guido said the differences in the malware are pronounced enough to undermine that theory.
“The development of a new piece of malware is not something you take lightly -- this required some engineering,” he said. “It’s probably not the same group as hit Target.”
Lawmakers have begun probing how Home Depot was breached. U.S. Senators Jay Rockefeller, a West Virginia Democrat and chairman of the Senate Commerce Committee, and Claire McCaskill, a Missouri Democrat, sent the company a letter last Thursday requesting a briefing.
“We ask that Home Depot’s information-security officials provide a briefing to committee staff regarding your company’s investigation and latest findings on the circumstances that may have permitted unauthorized access to sensitive customer information,” the senators wrote in the letter to Francis Blake, Home Depot chairman and chief executive officer.
The senators sent a similar letter to Apple Inc.’s Chief Executive Officer Tim Cook. Hackers stole photos of nude celebrities from Apple’s iCloud service, although the company said its security wasn’t breached.
Source: The Associated Press, Bloomberg News
Marketplace Stats & Trends
Why the Boomers May Not Leave Home as Fast as We Think
(Article by Andy Holloway, The Financial Post)
A million-dollar home sure doesn’t look like it used to. In some cities, it can be downright dowdy. For example, $1 million — $1,012,172 to be precise — in April would have bought an average single-family home in Toronto. Not a mansion on the Bridal Path, not even a nice place in the tony Rosedale or Forest Hill neighbourhoods; just an average single-family detached home. And those places are selling like mad, with the Toronto Real Estate Board reporting 19.2% growth from a year earlier.
Fortunately, those numbers tailed off in subsequent months, hitting an average of $865,635 in mid-July, still up 8.8% year over year. The reason for such price appreciation is simple: There is a limited supply of detached homes because no one is building them anymore. Even the suburbs are being covered with semi-detached homes, a move by homebuilders to maximize the potential profits of their land holdings. The demand for stand-alone homes in the big cities simply outstrips the current supply and there won’t be much new stock added in the coming years.
But some market watchers expect that dynamic to change in the coming years as the baby boom generation starts unwinding. The argument, so it goes, is that a tsunami of boomers won’t need the larger homes they currently occupy now that their kids have moved out so they will downsize, mostly into condos in downtown cores, close to cultural amenities and health-care facilities.
A poll by condo developer Harmony Village found that six in 10 respondents 50 years or older plan to sell their existing home and buy or rent smaller accommodations within five years. The vast majority (88%) of them owned a detached home and another 6% had a semi-detached home. The top three reasons for moving were to reduce maintenance work (81%), lower the cost of living (80%) and live in a smaller home (62%). More than half said they would use the surplus cash from downsizing to help finance their retirement years.
It’s certainly a nice thought: the older generation making room for the echo generation that is entering the family building years. But perhaps it’s just that: a thought. Demographics, human nature and common sense suggest there won’t be a wave of downsizing so much as a series of ripples and there hasn’t been a lot of movement yet.
“With the uncertainty in the economy, people are a little unsure of what to do and may be holding back on making decisions,” says Doug Norris, senior vice-president and chief demographer at Environics Analytics. “The other thing is that, overall, if you ask people, the majority will say they want to stay in their homes as long as they can. That could push them well into their mid-70s.”
To read the full article, click here.
Source: The Financial Post
Economic News
OECD Cuts Canadian and Global Economic Forecasts
Canada’s economy will be among the top performers in the G7 this year, the OECD says in a new forecast on Monday. But hold that thought.
The Organization for Economic Co-operation and Development (OECD) trimmed its 2014 outlook for Canada, to economic growth of 2.3% from 2.5%, but that should be second only to Britain’s projected 3.1%.
The U.S. economy is forecast to grow by 2.1%, Germany by 1.5%, Japan by 0.9%, and France by 0.4%. Italy’s economy is projected to shrink by 0.4%.
While Canada may sit near the top of the G7, that’s still just moderate economic growth.
Next year, according to the group’s forecasts, economic growth in Canada will pick up to 2.7%, trailing America’s 3.1% and Britain’s 2.8%, but still outpacing the rest.
While painting a stronger picture for the United States, and arguing that the Federal Reserve should continue to pull back from its stimulus measures, the OECD warned of the challenges still facing continental Europe.
The euro zone economy is forecast to expand by just 0.8% this year and 1.1% next, though, of course, fortunes diverge across the countries of the monetary union.
That marked a sizeable downgrade from its May Economic Outlook for the eurozone, when the Paris-based organization forecast growth of 1.2% in 2014 and 1.7% in 2015.
The OECD called for more action from individual countries and the European Central Bank, which has recently cut interest rates twice.
“Given the low-growth outlook and the risk that demand could be further sapped if inflation remains near zero, or even turns negative, the OECD recommends more monetary support for the euro area,” it said.
“Recent actions by the European Central Bank are welcome, but further measures, including quantitative easing, are warranted,” it added.
“Given the weakness of demand, European countries should also use the full degree of flexibility available within the EU’s fiscal rules.
Among emerging nations, the group projected China’s economy will expand by 7.4% this year, and 7.3% in 2015, compared to India’s 5.7% and 5.9%, and Brazil’s 0.3% and 1.4%.
Source: The Globe and Mail
Canadian Home Resales Surge in August, CREA Boosts Annual Forecast
Sales of existing homes in Canada rose in August month-over-month for the seventh month in a row, bringing sales to their highest level since January 2010.
The strength that the housing market is showing has prompted the Canadian Real Estate Association (CREA) to boost its forecast for sales this year. It now expects that 475,000 existing homes will sell in 2014, up 3.8% from last year. In June it expected that number to be 463,400.
CREA reported on Monday that August’s sales were 1.8% higher than July’s on a seasonally-adjusted basis.
Prices continued to climb with the average national sales price in August coming in at $398,618, 5.3% higher than a year earlier. The MLS home price index, which seeks to create a more apples-to-apples comparison of price gains than the average, also rose 5.3%.
Single-family homes are seeing greater price gains than condos or apartments, and Calgary, Toronto and Vancouver are seeing bigger price gains than other cities.
Factoring out Toronto and Vancouver, the national average price rose 3.9% to $324,738.
Sales have slowed on a year-over-year basis in recent months, with August’s sales coming in just 2.1% higher than a year earlier (without seasonal adjustment). In comparison, July’s sales had been 7.2% higher than a year earlier and June’s had been 11.2% higher than a year earlier. But sales remain stronger than CREA and many economists anticipated.
The number of newly listed homes fell 1.2% in August compared to July. Led by Greater Toronto, new supply was down in about 60% of local markets.
The national sales-to-new listings ratio was 55.5% in August, up from 53.9% in July. While this means the housing market became marginally tighter, it remains well entrenched within the range between 40 and 60% that marks balanced territory.
There were 5.8 months of inventory nationally at the end of August 2014, down from 6.0 months in May, June and July. As with the sales-to-new listings ratio, the number of months of inventory remains well within balanced market territory but does point to a market that has become tighter in recent months.
“The deferral of sales and listings during an extraordinarily bleak winter delayed the start to the spring home buying season earlier this year,” CREA stated in its revised forecast. “This deferral boosted activity in May and June as properties were snapped up after finally hitting the market, particularly in markets with a shortage of listings.
“Although this boost was and is still expected to be transitory, sales have yet to show signs of cooling as activity strengthened slightly further over the summer. The increase reflects continuing strength in home sales among large urban markets that initially drove the spring rebound together with gains in markets where activity had previously struggled to gain traction. Lowered mortgage interest rates supported this trend.”
CREA said that is still anticipates that activity will peak during the third quarter, as the pent-up demand from spring dissipates while “continuing home price increases erode housing affordability.”
This would place activity in 2014 slightly above but still broadly in line with its 10-year average. Despite periods of monthly volatility since the recession of 2008-09, annual activity has remained stable within a fairly narrow range around its 10-year average. This stability contrasts sharply to the rapid growth in sales in the early 2000s prior to the recession.
British Columbia is forecast to post the largest year-over-year increase in activity (11.9%) followed closely by Alberta (7.7%). Demand in both of these provinces is currently running at multi-year highs.
Activity in Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick is expected to come in roughly in line with 2013 levels, with sales increases ranging between 1 and 2% in the first three provinces and edging lower by about 1% lower sales in the latter two provinces. Sales in Nova Scotia and in Newfoundland and Labrador are projected to be down this year by 3.9% and 5.2% respectively.
Mortgage interest rates are expected to edge higher as Canadian exports, business investment, job growth, and incomes improve. These opposing factors should benefit housing markets where demand has been softer but prices have remained more affordable. Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates.
CREA expects sales to reach 473,100 units in 2015, representing a decline of four tenths of 1%. Sales activity is forecast to grow fastest in Nova Scotia (+3.3%), followed by Quebec (+1.3%) and New Brunswick (+1.3%). Alberta is the only other province forecast to post higher sales next year (+1.0%).
In other provinces, activity is forecast to decline in the range of between 1 and 2%. In British Columbia and Ontario, this trend reflects eroding affordability for single family homes.
The national average price has evolved largely as expected since the spring, resulting in little change to CREA’s previous forecast.
The national average home price is now projected to rise by 5.9% to $405,000 in 2014, with similar price gains in British Columbia, Alberta, and Ontario. Increases of just below 3% are forecast for Saskatchewan, Manitoba and Prince Edward Island. Newfoundland and Labrador is forecast to see average home price rise by about 1% this year, while Quebec is forecast to see an increase half that size.
Prices are forecast to be flat in New Brunswick and recede by almost 2% in Nova Scotia. The national average price is forecast to edge up a further 0.7% in 2015 to $407,900. Alberta and Manitoba are forecast to post average price gains of almost 2% in 2015, followed closely by Ontario at 1.3%. Average prices in other provinces are forecast to remain stable, edging up by less than one percentage point.
Source: CREA, The Globe and Mail
Canadian Housing Market Momentum Continues as Home Prices Rise
Canadian home prices rose in August and the pace of 12-month home price appreciation accelerated, a report showed last Friday, suggesting robust demand for housing is carrying through to the second half of the year.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.8% last month, exceeding the historical average for August.
Prices were up 5.0% from a year earlier, a pickup from July’s 4.9% price gain.
August was the ninth month in a row in which the composite index did not fall. The price increases, on top of robust housing starts data in the spring and summer, have surprised economists who have been calling for a slowdown in Canada’s long housing boom.
David Tulk, chief Canada macro strategist at TD Securities, said the report suggests the momentum in the housing market has continued into the second half of the year.
“While a gradual drift higher in interest rates should limit the degree to which housing can continue to increase, a persistent low rate environment will prevent a more pronounced correction,” Tulk said in a research note.
“The housing market will also remain on the Bank of Canada’s radar and the strength we have seen buttresses the case to resume the withdrawal of stimulus once the improved international backdrop has provided a sufficient lift to net exports,” he added.
Canada’s central bank is not expected to raise rates until the second half of 2015.
The Teranet data showed prices rose in August from the month before in 10 out of 11 cities, led by a 1.8% gain in Winnipeg, a 1.5% gain in Ottawa and a 1.2% rise in Toronto.
Prices were down 0.7% in Montreal.
Year-over-year price gains were also seen in 10 of the 11 cities surveyed.
Compared with a year earlier, prices were up 7.9% in Calgary, 4.5% in Edmonton, 0.9% in Halifax, 6.7% in Hamilton, 1.1% in Montreal, 1.2% in Ottawa, 6.7% in Toronto, 6.1% in Vancouver, 2.1% in Victoria and 1.9% in Winnipeg.
Prices compared with a year earlier were down 0.1% in Quebec City.
Source: Reuters
New Home Prices in Canada Unchanged, Toronto Sees Drop
New home prices in Canada were on average unchanged in July from June, with declines in the major cities of Toronto, Vancouver and Ottawa offsetting hikes in Calgary and elsewhere, Statistics Canada said last Thursday.
Year-on-year prices were up a modest 1.4%.
Statscan reported that its New Housing Price Index (NHPI) was unchanged in July, following a 0.2% increase in June. Monthly price increases in eight metropolitan areas offset decreases in seven areas, resulting in no change to the Canada level index.
St. Catharines–Niagara and London (both up 0.3%) recorded the largest monthly price increases among the census metropolitan areas (CMAs) covered by the survey. Builders reported that market conditions contributed to the gain in both CMAs. This marked the third consecutive monthly price increase in London and the first since February in St. Catharines–Niagara.
New housing prices were up 0.2% in the CMAs of Hamilton, Kitchener–Cambridge–Waterloo and Calgary. In Hamilton—where prices have been rising since February—builders cited increased development charges and higher material costs as the reasons for the price rise. Builders reported that higher municipal levies were the main factor for the price increase in Kitchener–Cambridge–Waterloo, while builders in Calgary experienced higher material and labour costs as well as good market conditions.
Québec, Montréal and Regina saw new housing prices rise 0.1% in July.
Prices were unchanged in 6 of the 21 metropolitan areas surveyed.
New housing prices were down 0.2% in the CMAs of Ottawa–Gatineau and Vancouver. Builders in Ottawa–Gatineau reported lower negotiated selling prices in July, while builders in Vancouver offered bonus incentive packages and reduced list prices to stimulate sales. Monthly prices in Vancouver have been flat or decreasing for the past 12 months, while prices in Ottawa–Gatineau have been decreasing since March of this year.
Prices also declined in the combined metropolitan region of Toronto and Oshawa, as well as in Charlottetown, Halifax, Saskatoon and the combined region of Saint John, Fredericton and Moncton (all down 0.1%). This was the first decrease in Toronto and Oshawa since February 2010.
On a year-over-year basis, the NHPI rose 1.4% in July, the smallest annual increase since December 2013. Calgary (+6.9%) and the combined metropolitan region of Toronto and Oshawa (+1.9%) continued to lead the annual growth.
Other significant year-over-year increases occurred in Hamilton (+2.8%), Saskatoon (+2.4%) and St. Catharines–Niagara (+2.2%).
Among the 21 census metropolitan areas surveyed, 6 posted 12-month price declines in July: Vancouver (-1.8%), Charlottetown (-1.6%), Ottawa–Gatineau (-1.3%), Victoria (-0.9%), Halifax (-0.3%) and Edmonton (-0.1%). This was the first annual decrease in Halifax since early 1998.
Source: Statistics Canada, Reuters
Latest U.S. Economic News
U.S. Consumer Prices Drop for First Time in 16 Months
U.S. consumer prices edged down in August, the first monthly drop since the spring of 2013, as gasoline, airline tickets and clothing prices all fell. It was the latest evidence that inflation remains under control.
Consumer prices edged down 0.2% last month following a tiny 0.1% gain in July, the Labor Department reported Wednesday. It was the first decline since a similar 0.2% drop in April, 2013. Core prices, which exclude energy and food, were unchanged in August, the first time there hasn’t been an increase since October, 2010.
Over the past 12 months, overall prices and core prices are both up a modest 1.7%. These gains are well within the 2% annual increase for inflation that the Federal Reserve considers optimal.
Analysts believe that inflation will remain moderate in coming months, helped by falling energy prices. AAA reports that the nationwide average for a gallon of gasoline is down to $3.38 (U.S.), down eight cents from a month ago and 14 cents lower than a year ago.
The recent decline in gasoline prices is one reason that economists are optimistic that consumer spending will show solid gains in the coming months. A drop in gasoline prices means consumers will have more to spend on other items.
For August, energy prices fell 2.6%, the second straight monthly decline. Gasoline costs were down 4.1% in August after a smaller 0.3% July drop.
Food costs edged up 0.2% in August following a 0.4% July. Over the past 12 months, food costs have risen 2.7% reflecting drought in California that has cut into crop yields.
The cost of new vehicles and alcoholic beverages were up in August but the price of airline fares, recreation, home furnishings, clothing and used cars were all down.
The report on consumer prices was released as the Federal Reserve wrapped up two days of discussions Wednesday on what to do with interest rates.
The Fed seeks to promote maximum employment and stable prices, which the Fed defines as inflation rising at a moderate 2% annual rate. Price increases measured by the Fed’s favourite inflation gauge have been running below 2% for the past two years.
That has given the central bank the leeway to keep interest rates ultra-low in an effort to combat an anemic economic recovery. However, some critics say the Fed needs to start raising rates in coming months to make sure its prolonged period of easy credit policies does not set the stage for future inflation problems.
Source: The Associated Press
U.S. Retail Sales Rise on Higher Auto Sales
U.S. retail sales rose in August as Americans bought automobiles and a range of other goods, which should ease some concerns about consumer spending and support expectations for sturdy growth in the third quarter.
The Commerce Department said last Friday that U.S. retail sales increased 0.6% last month after an upwardly revised 0.3% gain in July.
The increase in retail sales, which account for a third of consumer spending, was in line with economists’ expectations. July’s retail sales were previously reported to have been flat.
So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of GDP, increased 0.4% in August.
That followed an upwardly revised 0.4% gain in July, which was previously reported as a 0.1% rise.
Retail sales are lagging other relatively bullish U.S. economic data such as manufacturing, housing and employment. That has raised concerns that growth this quarter could fall below the anticipated 3% annual rate.
August’s fairly solid retail sales report and upward revisions to July’s figures should ease some of those fears. The U.S. economy grew at a 4.2% pace in the second quarter.
In August, receipts at auto dealerships jumped 1.5% after advancing 0.6% the prior month. While sales at service stations fell 0.8% that reflected declining gasoline prices, which should free up income and support discretionary spending in the months ahead.
Sales at clothing retailers gained 0.3% and receipts at sporting goods shops increased 0.9%.
Sales at electronics and appliance stores rose 0.7%, while receipts at building materials and garden equipment suppliers rebounded 1.4%. Sales at non-store retailers, which include online sales, edged up 0.1%.
Source: Reuters
Consumer Sentiment in U.S. Rises to Highest in 14 Months
U.S. consumer sentiment rose in September to its highest in more than a year on more upbeat views on the domestic economy in the coming year, a survey released last n Friday showed.
The Thomson Reuters/University of Michigan's preliminary September reading on the overall index on consumer sentiment came in at 84.6, the highest since July 2013, up from 82.5 in the final August reading.
The number beat the median forecast of 83.3 among economists polled by Reuters.
"All of the early September gain was in the Expectations Index, while consumers judged current economic conditions slightly less favorably than in August," survey director Richard Curtin said in a statement.
"Although consumers anticipated a slowdown in employment growth, (they) expected the highest rate of growth in their wages in six years."
The survey's gauge of consumer expectations jumped to 75.6 from the 71.3 reading last month and above a forecast of 73.0.
The survey's barometer of current economic conditions dipped to 98.5 from 99.8 and below a forecast of 100.
The survey's one-year inflation expectation fell to 3.0% from 3.2% and the survey's five-to-10-year inflation outlook was at 2.8% from 2.9%.
Source: Reuters
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