Slower Output Growth Continues in July

Real gross domestic product edged up 0.1% in July, matching the increase in June. Increases in mining, oil sands extraction, public sector activity, and crop production supported the headline gain, while lower retail volumes weighed on growth.

Retail volumes were down 1.9% in July, reflecting declines at gas stations and food and beverage stores as consumers continue to adjust to higher prices. Retail activity in July was at its lowest level since December 2021.

Statistics Canada’s advance estimate indicates that real gross domestic product was essential unchanged in August.

Consumer Inflation Continues to Ease on Lower Gas Prices

Headline consumer inflation slowed to 7.0% in August, down from 7.6% in July. August marked the seventeenth consecutive month that the headline rate has been above 3%, and the sixth consecutive month above 6%. Lower prices at the pump have contributed to slower headline inflation during the summer months. Excluding gasoline, annual price growth eased to 6.3% in August as inflationary pressures remained widespread.

Food prices continued to edge higher in August. Grocery prices, measured year-over-year, were up 10.8%, the largest yearly increase since 1981. 

Shelter costs, measured year-over-year, continued to ease but remain elevated. Annual price increases for owned accommodation slowed to 6.2% in August after peaking at 7.6% in April. 

Prices for services were up 5.5% on a year-over-year basis in August, remaining over the 5% mark for the fourth consecutive month.

Employment Little Changed in September

Headline employment was little changed in September (+21,000) as increases in educational services and health care were offset by lower employment in manufacturing and information, culture and recreation. The number of private sector employees and self-employed workers was little changed.

The pace of employment growth has moderated substantially following Omicron-related movements early in the year. Total employment in September was similar to levels reported in February, and down about 90,000 from the recent peak in May.

The unemployment rate declined to 5.2% in September as fewer people searched for work. Average hourly wages, measured on a year-over-year basis, rose 5.2%, remaining above the 5% mark for the fourth consecutive month.

The proportion of workers who reported that they usually work exclusively at home was down slightly from 16.8% in August to 16.3% in September. The share of workers with hybrid arrangements was unchanged in September, at 8.6%.

Wealth Inequality Rose for the First Time Since the Start of the Pandemic

New data from the Distributions of Household Economic Accounts, released on October 3rd, showed that wealth inequality rose in the second quarter as asset markets fell into correction territory. This marked the first quarterly increase in wealth inequality since the start of the pandemic. The net worth of households in the bottom 40% of the wealth distribution fell by 12.0%, more than twice the rate of decline of 5.9% among households in the top wealth quintile.

While wealth fell across all age groups, younger households were most impacted. The average net worth of households in the youngest age group (less than 35 years) fell by 8.2%, reflecting the sharp decline in real estate values.

The data on household distributions also showed that the income gap was at its highest level since the start of the pandemic. The gap in the share of disposable income between households in the two highest income quintiles and the two lowest income quintiles reached 46.3% in the second quarter. Strong wages gains among households in the lowest income quintile were more than offset by lower government transfers, mainly due to the expiry of most pandemic-related benefits.

Source: Statistics Canada