Review of Economic Statistics — September 21, 2018 - Transcript
(The Statistics Canada symbol and Canada wordmark appear on screen with the title: "Review of Economic Statistics — September 21, 2018")
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Richard Evans: Welcome to the Review of Economic Statistics. I’m Richard Evans.
Guy Gellatly: And I’m Guy Gellatly.
(Text on screen below presenters: "Richard Evans, Director General, Industry Statistics. Guy Gellatly, Principal Researcher.")
Richard Evans: Guy, today, the spotlight is on households. The prices they pay, the spending they make, and the state of their household finances. So let’s start with prices and, of course, I’m referring to the inflation report, which reached 3% in July. What happened to inflation in August?
Guy Gellatly: Richard, a slight pullback in that headline number. Consumer inflation in August slowed to 2.8%. Gas prices were again an important part of the overall story in August.
Richard Evans: They usually are.
Guy Gellatly: Gas prices—20% higher in August of this year than they were in August of 2017. And that’s a pretty notable difference. But it’s actually slightly less than the year-over-year increase in gas prices that we had in the July report when inflation was at that 3% mark.
(Text on screen below presenters: "Consumer inflation slowed to 2.7% in August.")
Richard Evans: So it’s often useful to look at inflation without gasoline. If we do that in August, what do we get?
Guy Gellatly: Richard, you take gasoline prices out of the mix and consumer inflation would’ve come in at 2.2%, and that’s basically unchanged from the July number.
Richard Evans: Very good. Let’s look at household spending now through the retail report. Retail capped a strong second quarter. But at the same time, the trend, if we compare to 2017, has been levelling off in recent months. So what happened in July?
Guy Gellatly: Richard, a modest gain in July. Overall retail sales up 0.3% in the month, gasoline sales really on higher prices at the pump supporting that gain. We did have some lower sales at auto dealers, and that’s the second consecutive month that has declined. So, if you take auto dealers out of the mix, retail would’ve been slightly stronger at 0.9%.
(Text on screen below presenters: "Retail sales increased 0.3% in July.")
Richard Evans: Okay. So, the autos—tell me more about auto dealers. So, what’s been going on there trend-wise?
Guy Gellatly: You know, it’s interesting, Richard. We had such a strong year in 2017 in terms of auto sales. So if you look at, basically, the first half of this year, auto sales are really still at a very high level. We’re just not seeing the growth that we had through much of last year.
Richard Evans: And to close out, let’s look at the quarterly balance sheets and the household picture there. What are the highlights?
Guy Gellatly: Well, the net worth of households—and that’s basically the total assets of households minus their liabilities—that was actually up in the second quarter. It was up 1.1%.
Richard Evans: And what happened to the borrowing component?
Guy Gellatly: Yeah. Lots of eyes, Richard, certainly on those borrowing numbers. So, if you look at household mortgage borrowing, it continued to slow in the second quarter. So, if you look at the amount of borrowing in the quarter, on a seasonally adjusted basis, it’s down about 40% from levels in the fourth quarter of last year.
(Text on screen below presenters: "Household net worth rose 1.1% in the second quarter.")
Richard Evans: Okay. Big variation there. So what did this do to the overall debt load of households?
Guy Gellatly: It’s interesting. On the debt side, if we go to that widely cited indicator, which is the ratio of credit market debt to disposable income for the household sector— so credit market debt is mortgage loans, non-mortgage loans and consumer credit. And if you look at all of that, as a ratio, it’s at about a 169% of disposable income. So $1.69 worth of debt, basically, for each dollar of disposable income. And that ratio actually came up a little bit in the second quarter. But it’s slightly lower than it was, basically, through the better part of last year.
Richard Evans: Okay, great. Thank you, Guy. And to close out for all you users who are interested in infrastructure data—that’s data on roads and bridges and so on— fresh data are out and more are coming. So please consult our website for more. And see you next time.
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