Weekly Economic Watch - July 22, 2013‏

– Existing home sales rose 3.3% in June compared to May, on a seasonally adjusted basis, a fourth consecutive increase. This is the first time in 12 months that sales are up compared to the same period a year ago. However new listings fell by 0.5%. Based on the new listings/sales ratio, the Canadian market tightened in June, but remains in balanced territory.

The consumer price index was flat in June. Yet, the year-on-year inflation rate rose five ticks to 1.2% (from 0.7%). This acceleration in the inflation rate reflects the removal of the June 2012 month-over-month decline (- 0.4%) from the year-over-year calculation. In seasonally adjusted terms, the CPI rose by 0.3% month-over-month, as six of the eight broad categories saw price increases.Price gains for transportation (+1.6% mostly due to the near 3% gasoline price hike), food (+0.1%), shelter (+0.2%), recreation/reading (+0.1%), household ops (+0.2%), and health/personal care (+0.1%) more than offset the decline for alcohol/tobacco (-0.1%). Prices for clothing/footwear were flat. The core CPI, which excludes eight of the most volatile items, fell 0.2% although the drop didn’t prevent the year-on-year core inflation rate from rising two-ticks to 1.3%. In seasonally-adjusted terms, core CPI rose 0.2%. On a three-month annualized basis, core inflation is running at a soft 1%, while the headline is at an even milder 0.3%.

Manufacturing sales jumped by 0.7% in May. This is only the second gain in six months. Sales rose in 11 of 21 industries, which account for 57% of the sector. The chemical industry (+5.1%) was the largest contributor, due to a higher than usual increase in fertilizer sales, as wetter and colder weather delayed spring planting. New ordersjumped 1.8% with half the gain coming from aerospace products (+31.2%). Unfilled orders rose by 0.6%, also mostly due to aerospace products (+1.2%). Inventories shrank by 0.2%. This brought the inventory-to-sales ratio down by 0.1 to 1.42. In real terms, manufacturing sales rose by 0.7% in May.

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