Eagle Vision Quarterly Newsletter

June 2013

Richard L. Simms
President, Black Eagle Executive Search

For the first time in a long time, this writer is happy to report that the economic news in Canada at the end of the second quarter is almost completely positive as noted by Statistics Canada:

·       Retail sales see largest monthly jump in 3 years rising 1.9% in May, the biggest monthly jump since March 2010

·       Wholesale sales rise at fastest pace in more than 2 years rising 2.3% in May

·       Then annual rate of inflation rose 1.2% in June lessening any concern about an increase in interest rates by the Bank of Canada in the medium term.

And from Bloomberg News, Reuters:

·       U.S. New home sales hit 5-year high, prices soar. The U.S Commerce Department said sales increased 8.3% to a seasonally adjusted rate of 497,000 units, the highest level since May 2008

·       Compared with last June, sales were up 38.1%, the largest increase since January 1992.

·       The median new home price increased 7.4% from a year ago.

·       U.S. home resales unexpectedly fell in June after 2 straight months of hefty increases, but a surge in prices suggested the housing market recovery remained on course. The National Association of Realtors said that U.S. home sales fell 1.2% to annual rate of 5.08 million units. Still, sales remained the highest since November 2009. In the 12 months through June, sales were 15.2% higher. The median price for a previously owned home soared 13.5% from a year ago to $214,200, the highest since June 2008

And from the Globe and Mail, July 24, 2013 for Canada:

·    The labour market added an outstanding 95,000 in May and held on to those gains in June.

·       Housing starts have rebounded into the 200,000 territory, a surprising show of strength in a surprising show of strength in a sector that had been in full retreat since last fall and had been a significant drag on GDP growth. 

So, all this news should be a welcome respite for the Canadian building materials and hardware industry that has been hard hit by the U.S. recession especially in the housing and thus lumber sales area.

Anecdotally, during my annual attendance at the National Hardware Show in Las Vegas in May of this year, surveying about the Canadian representatives of about 50 firms exhibiting at the show, only 1 indicated their sales for 4 months were higher than last year, and that was because of market share gains.

Hopefully, the above very positive economic news will lead to higher sales in the second half of 2013 both domestically and in lumber and building materials exports to the U.S.  And higher sales will lead to more jobs in a market sector where employment growth has been quite stagnant.

Another positive aspect of the 95,000 additional jobs created in May 2013 in Canada was that the vast majority of these new jobs - 54,000 – went to young workers (see previous Eagle Vision newsletters on Youth Unemployment). The Canadian youth unemployment rate fell by almost a full percentage point to 13.6%. (Globe and Mail, July 3, 2013).

Contact Black Eagle

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