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National house prices declined for the first time since the start of the pandemic in April. However, despite a sharp moderation in April as interest rates started to increase, the level of activity in the housing market remains well above pre-pandemic.
Insolvencies remained low in March, as low interest rates and the continued economic recovery with sustained employment gains are holding them back. However, they could be bottoming out.
Today’s Labour Force Survey data shows that job gains were modest and below expectations after a rebound in employment following the Omicron wave. Nevertheless, the unemployment rate reached a new record low of 5.2%. These are the signs of a mature labour market where most of the post-pandemic adjustment has already happened.
Today’s release of the GDP for February shows that the hit to the economy from the Omicron wave was minor and short-lived. The data shows that the economy had significant momentum going into the second quarter of 2022, with growth estimated at 5.6% q-o-q ar. in the first quarter.
Retail sales eased in February after a strong bounce back the prior month. However, the preliminary estimate for February shows the correction is likely to be temporary.
Various shocks are squeezing household budgets this year. As a result, many households may need to cut down on spending or draw from their savings.
Inflation continued to accelerate in March with its biggest monthly increase since the introduction of the GST in 1991 and reaching a level not seen since 1983. The high level of inflation continues to be mainly due to a handful of components: gasoline prices, food prices, homeowners’ costs, utilities costs and motor vehicles prices
Despite a moderation in March, the level of activity in the housing market remains well above pre-pandemic, supported by changes in housing preferences and historically low interest rates. Moreover, low inventory levels in many markets continue to push house prices higher across the country.
As we expected, the central bank increased its policy rate by 50 basis-points to 1.00% and announced the start of quantitative tightening on April 25.
