EconoTicker

Canada’s June data showed a rebound in producer and raw material prices, signaling cost pressures returning to the supply chain.

🔹 Key Data:

• Industrial Product Price Index (IPPI, MoM): +0.4% (exp: 0.1%, prev: ‑0.5%)
• IPPI (YoY): +1.7% (prev: 1.3%)
• Raw Materials Price Index (RMPI, MoM): +2.7% (exp: ‑0.1%, prev: ‑0.7%)
• RMPI (YoY): +1.1% (prev: ‑3.2%)

📊 What it Means:

The sharp monthly increase in raw material costs, alongside higher producer prices, suggests inflationary pressures may re-emerge in upstream sectors. This could influence the Bank of Canada’s view on future rate paths if the trend persists.

Canada posted a net capital outflow in May, as foreign investors reduced their holdings of Canadian securities while Canadians sharply increased purchases of foreign assets.

🔹 Key Data:

• Foreign Securities Purchases (by foreigners): -C$2.79B (prev: -C$9.46B)
• Foreign Securities Purchases by Canadians: +C$13.37B (prev: C$4.07B)

📉 What it Means:

The negative balance suggests growing appetite among Canadian investors for offshore assets—possibly seeking higher returns abroad—while foreign interest in Canadian securities remained subdued. The data may reflect diverging rate expectations and a cautious global sentiment toward Canadian markets.

Canadian housing starts held firm in June, coming in above forecasts and showing continued resilience in residential construction.

🔹 Key Data:

• Housing Starts (Jun): 283.7K (exp: 262.0K, prev: 282.7K)

📈 What it Means:

The stable and elevated level of new housing starts suggests that builders remain active despite high interest rates and affordability challenges. The data may ease supply-side pressures in major cities but could complicate inflation control efforts if construction demand remains strong.

Canada’s inflation stayed tame in June, with headline CPI in line with expectations and core inflation decelerating sharply on a monthly basis.

🔹 Key Data:

• CPI (YoY): 1.9% (exp: 1.9%, prev: 1.7%)
• CPI (MoM): 0.1% (exp: 0.1%, prev: 0.6%)
• Core CPI (YoY): 2.7% (prev: 2.5%)
• Core CPI (MoM): 0.1% (prev: 0.6%)

📉 What it Means:

Inflation in Canada remained well within the Bank of Canada’s target range, and the notable drop in monthly core CPI adds weight to the argument for a potential rate cut later this year. Slowing price momentum may give the BoC more confidence to ease policy if economic growth shows further signs of softening.

Canada’s labor market showed surprising strength in June with a net employment gain of 83.1K jobs, vastly exceeding expectations of just 0.9K. However, the breakdown reveals a heavy skew toward part-time positions, which jumped by 69.5K, while full-time employment increased modestly by 13.5K.

Despite the strong headline figure, the unemployment rate ticked up to 6.9% from 7.0%, though this was better than the expected rise to 7.1%. The participation rate also edged up slightly to 65.4%.

Meanwhile, average hourly wages for permanent employees rose 3.2% year-over-year, cooling from 3.5% in May, suggesting some easing in wage pressures.

RBA July 2025 Rate Decision Summary

At its meeting on 8 July 2025, the Reserve Bank of Australia (RBA) decided to hold the cash rate steady at 3.85%, despite expectations of a cut from several major banks.

🧭 Key Highlights

• Inflation has moderated significantly since its 2022 peak. Headline inflation is now at 2.1%, and trimmed mean inflation sits at 2.4%, both within the RBA’s target range.
• The Board noted that recent CPI data was slightly stronger than expected, prompting a cautious approach.
• Labour market conditions remain tight, with low underutilisation and steady wage growth, although productivity gains are still lagging.
• Global uncertainty, including trade tensions and the expiration of U.S. tariff pauses, influenced the decision to wait for more data before adjusting rates.

🏠 Impact on Borrowers & Housing

• The decision means no immediate relief for mortgage holders, though previous cuts have already reduced repayments for many.
• Auction clearance rates and property prices continue to rise, with national house prices up 1.4% in Q2.
• The RBA remains mindful of the risk that further cuts could fuel housing demand and push prices higher.

🕵️‍♂️ What’s Next?

• The Board voted 6 in favour, 3 against holding rates.
• Economists expect further cuts later in 2025, possibly in August or November, depending on inflation and global developments.
• The RBA emphasized its commitment to price stability and full employment, and remains ready to respond to international shifts if needed.

• Trade balance improved to -$5.90 billion in May, better than expectations of -$6.00B and narrowing from April’s revised -$7.60B, reflecting a modest rebound in export performance and easing import demand.
• Exports increased to C$60.81 billion, up from C$60.12B in April, driven by stronger shipments of energy products, metals, and motor vehicles, supporting Canada’s resource-heavy trade profile.
• Imports fell to C$66.66 billion, down from April’s C$67.72B, as purchases of consumer goods and industrial equipment slowed, helping to narrow the trade gap.

Analysts note the improvement in Canada’s trade balance should soften the drag on Q2 GDP from net exports and signals resilience in key export sectors despite global uncertainties. However, they caution that currency volatility and softer external demand could still weigh on trade flows in coming months.

🕕 Tuesday, 24 June 2025

Canada’s headline CPI rose 0.6% month-over-month in May, rebounding from April’s -0.1% and slightly above expectations (0.5%). The annual CPI remained steady at 1.7%, in line with forecasts.

The Core CPI, which strips out volatile items, also increased 0.6% MoM and 2.5% YoY, suggesting underlying inflation pressures may be stabilizing, even as overall inflation remains below the Bank of Canada’s 2% target.

The data may ease immediate pressure on the BoC to cut rates, but the soft annual figure still signals a weak price environment.

Canada’s Industrial Product Price Index slowed to 1.2% year-on-year in May (April: 1.9%) and fell 0.5% month-on-month (forecast: 0.0%; April: –0.8%), indicating cooling producer input costs. Meanwhile, the Raw Materials Price Index’s annual decline narrowed to –2.8% (April: –3.9%), and the month-on-month contraction eased to –0.4% (forecast: –0.8%; April: –3.3%), underscoring reduced deflationary pressures upstream.

Canada’s core retail sales fell 0.3% month-on-month in April (forecast: –0.2%; March: –0.8%), while headline retail sales rose 0.3% (forecast: 0.4%; March: 0.8%), reflecting a divergence between underlying and overall consumer spending.

Foreign investors sold a net CAD 9.36billions of Canadian securities in April (forecast: –2.94 billion; March: –4.21 billion), marking an accelerated outflow. Meanwhile, Canadians purchased CAD 4.10 billion of foreign securities in April (March: 15.63 billion), reflecting a sharp pullback in overseas investment.

Canada’s Ivey PMI non‐seasonally adjusted rose to 53.8 in May (April: 52.3), indicating solid raw growth. However, the seasonally adjusted Ivey PMI slipped to 48.9 (forecast: 48.3; April: 47.9), remaining just below the 50 threshold and signaling a slight contraction when seasonal factors are accounted for.