Member Login
Username
Forgot Password
GO

CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY
Volume 16, Issue 27, July 13, 2016

Inside This Issue:

• CHHMA Scholarship Program Applications Due this Friday
• Industry Memorial Golf Classic to Take Place on September 27th at Blue Springs G.C.
• CHHMA Golf Tournament Dates Set for Next Year
• Order the Hardlines Retail Report by this Friday and Receive a $50 Discount Towards the Hardlines Conference
• Canadian Tire Reappoints Stephen Wetmore as CEO in Surprise Shakeup
• RONA Tests Digital Flyer to Appeal to Female Shoppers, Ends Up Doubling Sales
• Lee Valley Tools Founder Leonard Lee Passes Away
• Empire Co. Announces Sudden Departure of CEO Marc Poulin Following Huge Losses
• Groupe BMR Joins ILDC
• Bank of Canada Holds Rate, Cuts Economic Outlook
• Royal LePage Expects Housing to Remain Hot Through the End of 2016
• Toronto Condo Construction Boosts Pace of Housing Starts
• Canadian Building Permits Unexpectedly Drop 1.9% in May
• B.C. Releases First Set of Data on Foreign Home Ownership in Vancouver
• Canadian Job Market Stalls in June, Fewer Seek Work
• Latest U.S. Economic News



Association News

 
CHHMA Scholarship Program Applications Due this Friday

The CHHMA is once again pleased to be able to offer the opportunity for children of employees of our member companies to apply for a scholarship to help offset the cost of post-secondary education. The Association recognizes the importance of education and therefore encourages children of our member companies to attend University or College. Successful candidates receive $1,000 CDN per year for the first two years of study leading to a diploma or degree from an accredited community college or university.

The scholarship program is available to the dependents of any current full-time employees of the CHHMA or member companies. The program is only offered to Canadian companies or divisions of companies based in Canada which are members of the CHHMA. The member company must remain a member in good standing in order for the student to qualify for the second year of the scholarship.The student's parent or guardian must be an active full-time employee with at least one year seniority with the CHHMA or member company as of July 15th in the year of application. Applicants must be preparing to enter an accredited community college or university in the fall term, and attain a minimum average of 75% in the last year of high school (or CEGEP).The decision of the Selection Committee and the CHHMA is final and not open to appeals.The CHHMA reserves the right to withdraw a scholarship should the student's parent(s) or guardian(s) voluntarily leave the employment of the CHHMA or member company, or if employment is terminated for just cause prior to the start of the school year, or if the company terminates its membership in the Association.

Complete details, application forms and information sheets in English and French can be found at https://www.chhma.ca/Public/Scholarship-Program.

The CHHMA must receive applications from potential candidates by this Friday, July 15, 2016.

Since 2001, the CHHMA has awarded $160,000 towards scholarships and some 80 young people have benefited from the scholarship program.



Industry Memorial Golf Classic to Take Place on September 27th at Blue Springs G.C. 

The 15th Annual Industry Memorial Golf Classic is taking place on Tuesday, September 27th at the Blue Springs Golf Club in Acton, Ontario.
The event is held on behalf of the hardware and housewares industry and it honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend.

This year’s honourees at this time include: David Holden (Hamilton Beach) and Leonard Lee (Lee Valley Tools).

Past honourees include: David Fry, Ted Kennedy, Geoff Somers,Ray Ceolin, Tom Ross, Bruce Webster,Chris Hrushowy, Mike Pullen,Jim Ypma,Bill Caldwell, Brayl Copp, Ed Hardison, Stuart North,Joseph Kuchar, Shelly Lush, Jack Pountney, Christof Vanooteghem, Ian Hay, Trygve Husebye, Bernie Carpenter, Don McDonald, Les Groves, Bob Hilton, Doug Straus, Mel Boshart, George Giles and Ed Barnes.

The day allows family, friends and colleagues to honour these gentlemen while enjoying a fun day out on the golf course followed by a dinner and silent auction.

The event will start off with registration and breakfast at 8:00 a.m. with a 9:00 a.m. tee off. Dinner will commence at around 2:30 p.m.

Money raised from the event will go towards the CHHMA Scholarship Program which provides support for children of CHHMA member company employees to attend university or college.

Look for further details and registration info in the coming weeks.



CHHMA Golf Tournament Dates Set for Next Year

The dates for next year’s CHHMA Golf Tournaments have been set:

The CHHMA Quebec Golf Classic will take place on Thursday, May 25, 2017, at the Club de golf Le Fontainebleau in Blainville, Quebec, 9:00 a.m. registration & breakfast, 11:00 a.m. shotgun start with dinner following.

On Tuesday, May 30, 2017, CHHMA & COPA will hold a joint Ontario Golf Tournament at the Angus Glen Golf Club on both the South and North courses.Registration & BBQ lunch from 11:00 a.m. – 12:45 p.m., 1:00 p.m. shotgun start with a 6:30 p.m. dinner following the golf.

So mark your calendars and we hope to see you there next year!

You can see recaps of this year’s tournaments at Past Events on the CHHMA website or click on the following links:

2016 Quebec Golf Classic     2016 Ontario Golf Tournament



Order the Hardlines Retail Report by this Friday and Receive a $50 Discount Towards the Hardlines Conference

At a breakfast seminar held on June 21, the Hardlines team presented their latest data on the Canadian home improvement retail market.

Their research indicated that retail sales (POS) for the overall market were up a higher than expected 7.2% in 2015 from 2014 ($44.994B vs $41.971B), with Home Depot Canada posting the highest market share. The top four retail groups (Home Depot Canada, Lowe’s Canada/RONA, Home Hardware and Canadian Tire Retail) represented 53.6% of the industry sales in 2015 (up from 52.1% in 2014) and had growth of 10.1% from 2014.The rest of the industry saw a sales increase of 4.0% during 2015.

Updated details on the top retailers and buying groups as well as trend and growth analysis for the industry can be found in the lastest Hardlines Retail Report, click here for further information on the report and how you can purchase a copy.

Hardlines is also happy to offer a special deal to CHHMA members - Until Friday, July 15, any member who orders the Retail Report will get a discount of $50 towards the Hardlines Conference being held on October 18 & 19 in Niagara Falls. Click here for info on the conference.



Industry News

Canadian Tire Reappoints Stephen Wetmore as CEO in Surprise Shakeup   


After only two years as chief executive officer, Michael Medline is leaving the top job at Canadian Tire Corp. Ltd. and being replaced by his predecessor as the company grapples with the “increasing complexities of the new world of retail.”

In a surprise announcement Wednesday, the retailer said it has appointed Stephen Wetmore as president and CEO of the company, effective immediately.

Mr. Wetmore was CEO of Canadian Tire from January 2009 to December 2014. Mr. Medline, a 15-year veteran at the company, became president in 2013 and CEO in 2014.

Mr. Medline’s ouster took industry people and analysts by surprise, especially given the company’s relatively strong performance to date in an increasingly tough retail environment whose key challenges include online competition.

“The board has taken a unanimous decision to change the leadership of the company at a time of unprecedented change in the retail industry,” Canadian Tire chairman Maureen Sabia said, stressing that Mr. Wetmore’s reappointment “is neither an interim, nor a short-term, appointment.”

Desjardins Securities analyst Keith Howlett said in a research note that the board and Mr. Wetmore -- as deputy chairman -- “likely disagreed with Mr. Medline over one/all of the following: (1) the appropriate digital strategy, (2) the pace of its implementation, or (3) the role of acquisitions in implementing the company’s digital strategy.”

Short-term earnings weakness -- expected in the second quarter of 2016, to be reported next month -- is not likely the underlying cause for the CEO shakeup, Mr. Howlett said.

But “the change in the CEO does reflect that traditional retailing paradigms are under stress and must evolve.”

“While our short-term priorities are delivering results, the Board’s responsibility is the long-term success of Canadian Tire. Stephen transformed our company during his previous tenure and laid the foundation for our current performance. We believe he is uniquely qualified to lead the company through the increasing complexities of the new world of retail.”

Bringing back Mr. Wetmore is good news, RBCDominion Securities analyst Andrew Calder said in a research note.

“While surprising, we expect investors to react positively to this change. Investors widely consider Mr. Wetmore’s previous tenure to be a success, which included the transformational purchase of [sports retailer] Forzani.

“In our view, in addition to the online channel which the organization has rolled out successfully in the Sportchek banner, the core Canadian Tire Retail banner is facing increasing competitive threats by way of Wal-Mart, Amazon, Costco and other innovative players with online ordering and home delivery of hard goods and other core work/life/play products.”

Mr. Medline had been spearheading a major expansion of Toronto-based Canadian Tire’s online presence, including the testing of different e-commerce strategies.

During his stint as Canadian Tire CEO, Mr. Wetmore, a New Brunswick native and former CEO of Bell Aliant , spearheaded the acquisition of sports retailer Forzani Group Ltd., whose banners include Sport Chek, and streamlined administrative functions at head office.

He also bolstered Canadian Tire’s core retail presence in tires and auto parts.

The company said on Wednesday that Mr. Wetmore will step down as deputy chairman of the board but stay on as a director.

The board “has given me a clear mandate to take our iconic brand to the next level,” Mr. Wetmore said.

“Every day our customers are demanding more control over their shopping experience. We must continue to rapidly evolve the Tire to exceed both our customers’ and our shareholders’ expectations.”

Source: The Globe and Mail



RONA Tests Digital Flyer to Appeal to Female Shoppers, Ends Up Doubling Sales

RONA inc. says its efforts to attract tech-savvy shoppers got a recent boost when the retailer temporarily replaced its printed flyer with an expanded digital offering.

The company says sales doubled at its stores across Canada despite scrapping the printed flyer during a nationwide test one week in February.

Marketing vice-president Claire Bara said the boost far exceeded expectations and silenced internal skeptics of RONA’s three-year strategy to spend more on digital marketing.

“I think for us that was a turning moment because that test confirmed that we have been doing the right shift,” she said in an interview.

The 15-page digital flyer, created at half the cost in partnership with digital flyer platform Flipp, was far larger than its typical printed versions. Like traditional printed flyers, the digital version promoted products on sale in-store but allowed readers to click to find more details, create lists and watch how-to videos.

RONA also got insight into consumer choices because it could track what they viewed, including a video on installing toilets that proved to be popular.

With little lead time for publication, digital flyers including ones targeted to certain shoppers can be easily altered to account for sudden weather changes that could drive traffic for specific products — like shovels after a major snowstorm, for example.

The RONA flyer was distributed online to customers in the company’s databases and those of Air Miles. It was also available on the Flipp app and some websites, including those linked to Canadian newspapers.

Bara said the digital flyer experiment’s success was confirmed by the number of Air Miles loyalty program coupons that were redeemed in-store. RONA’s Reno-Depot big box stores didn’t participate.

Jean Coutu, one of Canada’s largest pharmacy networks, said it’s also seeing success with its digital efforts. The company said cosmetic sales got a 5% lift after it twice published a 20-page digital flyer this year enhanced with videos on the Montreal La Presse Plus tablet and website.

Chief executive François Coutu said the move is part of the company’s efforts to attract younger female shoppers.

“We have to fight the idea that we are the pharmacy of my mother,” he told reporters after its annual meeting.

The digital flyers are part of a larger push by both retailers to offer services that consumers are increasingly demanding.

“As a marketing manager it’s very simple: I need to be where the consumers are and Canadian consumers are spending more and more time online,” said Bara.

Although digital flyers were launched more than a decade ago, retailers have accelerated their efforts since companies like Flipp enhanced distribution through apps and websites, said Flipp managing director Seth Stover.

The Toronto-based company says about 15 million North Americans have downloaded the Flipp app since its launch in November 2013, giving easy access to digital flyers for retailers including RONA, Walmart, Canadian Tire and Home Depot.

A recent Nielsen study found that 79% of primary household shoppers browse digital and print flyers weekly. Print still dominates, but use of digital advertising is growing annually among all demographics, but especially millennials.

One in four Canadians between the ages of 18 and 54 read more digital flyers now than they did last year, the study found.  Some 16% of Canadian household shoppers are almost exclusively using digital flyers, but that number is 26% among millennials.

That’s doesn’t mean the 13 million printed flyers that are delivered weekly to Canadian households will disappear any time soon.

“Canadian customers today are living in the two worlds — the traditional world and the online world — so I need to keep a balance,” Bara said.

Stover said there will always be consumers who will use print, but he sees a majority of consumers shifting exclusively to digital flyers within the next three years.

BrandSpark International, which conducted a study for commercial printer Transcontinental, found resiliency in printed flyers.

Vice-president Mark Baltazar predicts a dramatic shift will only take hold when most of the public becomes comfortable with digital platforms, and online shopping continues to grow.

Despite a potential long-term threat, Transcontinental said its retail flyer volume is stable as it continues to sign long-term contracts.

“Printed flyers are a mass marketing tool that work. It drives traffic to the store,” said Jennifer McCaughey, vice-president of communications for Transcontinental.

Source: The Canadian Press 



Lee Valley Tools Founder Leonard Lee Passes Away

Leonard Lee, the founder of the popular Ottawa woodworking and gardening tool retailer Lee Valley Tools, died last Thursday morning at the age of 77.

Lee, born on July 17, 1938, in Wadena, Sask., started the company in 1978 after a career in the Canadian Foreign Service and serving as the executive director for the Canadian Consumer Council and National Dairy Council of Canada.

His son Robin Lee said his father's business sense came from his humble beginnings growing up in a log cabin with a dirt floor.

"He was a very honest man and a very generous man," Robin said. "I think a lot of that stemmed from his upbringing in rural Saskatchewan, where you shared with your neighbours and you couldn't get along in a small town without telling the truth. I think that sort of foundation served him very well in his business career."

Jason Tasse, chief of operations, says Lee brought a personal touch to his leadership and his employees are mourning his death.

"The day-to-day operation took a back seat today to a tremendous amount of reflection and story-sharing about all the great times with Mr. Lee," Tasse said. "He was a big advocate of management by walking around, getting to know people, delivering birthday cards on their birthday."

Tasse who has worked at Lee Valley for 21 years, said Lee had a passion for tools and the people who worked for him.

"He had this refreshing approach to business which is do right by people, but it's not to make money at all costs," Tasse said.

"There's so much pressure in business to drive that way, yet he was just this beacon that kept you going in the right direction."

Robin Lee said his father decided to start his own business when he became frustrated with the bureaucracy of his job in the public service, though he valued the friends he made there.

"He wanted to have the freedom to follow what he believed. That's what drove him from an entrepreneurial standpoint. He didn't want to have to answer necessarily to anybody else. He wanted to be able to answer to his own set of principles and values."

He said that contributed to his managing style, giving his employees the room to learn from their mistakes and feel like they were part owners of the business. It was an approach that extended to Robin, who is now the president of the company.

He remembers developing names for products with his dad and the joy his father took from creating new products.

Robin said Lee loved developing new tools and products.

"It's the business equivalent of being a rock star. How well your product sells, how well it's received by the public, reflects directly on the efforts you've put into developing and manufacturing something and he was very proud of it," he said.

Lee Valley Tools initially sold cast iron stove parts by mail order from a rented basement in a strip mall in Ottawa and published its first catalogue in the fall of 1978.

The company expanded to retail locations across Canada and established Veritas Tools, a manufacturing division.

He also founded Canica Design, a medical tool company, in 1998, as well as Algrove Publishing.

Mr. Lee was bestowed with many honours and awards throughout his career. In 1992, Lee Valley received the Popular Mechanic’s Design and Engineering Award. He received honorary degrees from Carleton University, Royal Military College, Ottawa University and the Telfer School of Management. He is a recipient of the Queen's Golden and Diamond Jubilee Medals and was honoured with the Order of Canada (C.M.) in 2003 for his success as an entrepreneur.

In 2014, Mr. Lee was inducted into the Hardware & Housewares Industry Hall of Fame and was able to attend the luncheon ceremony during the CHHMA Spring Conference & AGM.

Lee had vascular dementia and his condition deteriorated rapidly over the last several months. Robin said his father was still working in December and still in his own home until May. He was hospitalized after a short stay in a seniors residence.

"Clearly it's a sad day for all of us but for many of us we're feeling a sense of a relief that it was a very graceful ending to a very terrible disease," Robin said.

Source: CBC News 



Empire Co. Announces Sudden Departure of CEO Marc Poulin Following Huge Losses

The Sobeys grocery chain and its parent company say their chief executive and president has left the organization — effective immediately.

Marc Poulin is being replaced in those roles on an interim basis by Francois Vimard, the chief financial officer of Empire Co.

Poulin’s sudden departure from the Empire organization follows a series of huge losses related to the acquisition of Canada Safeway as Sobeys expanded its position in Western Canada.

“On behalf of the board, I would like to thank Marc for his efforts and leadership as CEO over the past four years and, prior to that, for the important role he played in developing our Quebec business,” said Rob Dexter, chair of Empire Co., in a press release.

Two weeks ago, Empire reported a $2.13 billion net loss for its 2016 financial year — mostly because of difficulties related to the integration of Safeway operations into the national grocery chain.

The normally profitable company, based in Stellarton, N.S., had earned $419 million in fiscal 2015 prior to a series of quarterly writedowns of its western business.

Sobeys paid $5.8 billion to acquire the Canadian assets of Safeway in 2013 — about a year after Poulin became president and CEO of the grocery company. He also became president and CEO of Empire in December 2013.

Not only has Sobeys suffered from integration setbacks related to the deal, it is perceived as having overly high prices at a time when consumers are increasingly cost-conscious. The company posted a $942.6-million loss last quarter, largely owing to the second writedown on the Sobeys deal.

The grocer’s Safeway integration woes break down into multiple problems, with the supply chain one of the biggest. When Safeway was a separate company, its U.S. parent handled its produce delivery. When Sobeys took over, it installed new SAP software and point-of-sale technology that troubled Safeway staff.

Sobeys also had a different way of doing business, deciding to relocate all head-office functions to a Safeway centre in Calgary – just a few years after setting up regional hubs in cities such as Edmonton and Winnipeg. The change sapped morale.

Source: The Canadian Press, The Globe and Mail  



Groupe BMR Joins ILDC

Groupe BMR inc. announced last Thursday that it has joined the Independent Lumber Dealers Co-operative (ILDC).

With Groupe BMR as the newest member, the combined sales of the buying group now represent $4.3 billion.

Together, the 22 members of the group have 625 places of business throughout the country.  Each member organization competes for business under its own name. ILDC is also a member of the Hardlines buying group Spancan.

“We are very happy to welcome a major Canadian player such as BMR in our group. This new partnership strengthens our position in the home improvement industry in Canada, which benefits our current and future members”, said Paul Bonhomme, President of ILDC, in a press release.

“The great purchasing power of ILDC, combined with our own, and their business model that allows us to preserve our independence were important factors in our decision to join the group. With this business decision, we also join 21 fellow businesses from the industry with which we will have the opportunity to share experiences and best practices. We are confident that this decision will benefit Groupe BMR and its dealers”, added Pascal Houle, CEO of Groupe BMR.

Source: Groupe BMR inc.



Economic News

Bank of Canada Holds Rate, Cuts Economic Outlook


The Bank of Canada is lowering its forecast for economic growth this year in light of Brexit uncertainty, disappointing export figures and weaker business investment both at home and in the United States.

The bank announced as expected Wednesday that it is keeping its overnight interest rate at 0.5%, where it has been for the past year.

While 2016 got off to a steady start in Canada during the first quarter, with GDP growing by an annualized pace of 2.4%, the second quarter likely contracted by 1%, “pulled down by volatile trade flows, uneven consumer spending, and the Alberta wildfires,” the bank said.

However, policymakers expect the third-quarter growth to bounce back by 3.5% — helped mainly by the resumption of oil production after the Alberta blazes and the start of reconstruction in Fort McMurray, which was hardest hit by the natural disaster.

As well, consumer spending should get a boost from the enhanced Canada Child Benefit program, introduced by the new Liberal government in Ottawa.  “Federal infrastructure spending and other fiscal measures announced in the March budget will also contribute to growth,” the bank said.

The July Monetary Policy Report forecasts real GDP growth of 1.3% in 2016, which is down from the 1.7% projected in April. Growth for 2017 is now projected to average 2.2%, down from the 2.3% forecast in April.

Bank of Canada Governor Stephen Poloz had previously said the Canadian economy would return to its potential at some point in the second half of 2017, but the bank now expects this closing of what it calls the output gap will occur “somewhat later” and “toward the end of 2017.” It also cautioned that the timing of this is highly uncertain because of the challenges in forecasting the effects of Brexit – as well as the structural adjustments taking place in the Canadian economy – as growth shifts away from the energy sector in favour of non-commodity exports.

The July report marks the bank’s first comprehensive assessment of how the economic shocks of last month’s United Kingdom referendum vote in favour of leaving the European Union and the Alberta wildfires will affect growth.

The fallout from the Brexit vote has highlighted the resiliency of the global financial system, according to the bank, but the negative effects will be seen in the form of trade and investment flows as well as a weakening of overall business confidence.

The impact on Canada is expected to be modest, with the bank estimating a 0.1% reduction in the level of Canadian GDP. Canada’s direct trading relationship with the United Kingdom is relatively small, accounting for just 3.5% of Canadian exports.

As for the wildfires in the Fort McMurray area that led to mass evacuations and temporary production shutdowns in the oil patch, the bank estimates real GDP growth was reduced by about 1.1 percentage points in the second quarter as a result. However the return of oil production and rebuilding activity in the region is expected to more than offset that decline in the third quarter.

While oil prices have increased nearly $10 (U.S.) per barrel since April, the bank said prices are still below what is required for many oil producers to break even and are not high enough to create profitable new investments in oil sands projects.

“The Canadian economy continues to adjust to low commodity prices. The reallocation of investment and employment from the resource sector to the non-resource sector is progressing,” the bank stated in its report. “The expansion of activity in the non-resource sector will assert itself as the dominant trend in the second half of 2016 as the drag from declining investment in the energy sector wanes.”

On housing, Wednesday’s report said the sharp price increases in the greater Vancouver and Toronto areas could be driving by self-reinforcing expectations, making those markets more sensitive to an adverse housing shock.

The bank sets interest rates with the goal of keeping inflation between 1% and 3% and aims for a 2% midpoint target. The bank noted on Wednesday that total consumer price index inflation remains in the lower half of its targeted range. The bank’s forecasts for inflation have been revised slightly higher for the first three quarters of 2016 in comparison to the April projection.

According to the central bank’s bigger picture, the global economy is forecast to increase by 2.9% this year — down from 3.1% in 2015 — but then grow by 3.3% in 2017 and advance 3.5% in 2018.  Those estimates represent only marginal declines from the bank’s previous forecasts in its April MPR.

“The world economy is expected to gather strength following a weak start to 2016, particularly in the United States and China,” the bank noted.

Meanwhile, the U.S. economy is expected to post gains of 2.0% this year and 2.1% in 2017, while 2018 growth should be around 2.0%. China, the second largest growth engine next to the U.S., will likely expand by 6.4% this year and in 2017, and advance by 6.3% in 2018.

Source: The Financial Post, The Globe and Mail



Royal LePage Expects Housing to Remain Hot Through the End of 2016

Continued low interest rates have one of the country’s biggest real estate brokers backtracking on its earlier prediction of a slower housing market in the second half of the year.

Royal LePage expects Toronto area housing prices to be 14.9% higher to an average of $718,000 in the last quarter of 2016, compared to the same period last year.

That, along with a 27% forecast increase in Greater Vancouver home prices to an average of $1.206 million, is helping push the company’s national year-end quarter prediction to 12.4%.

“I believe it is the highest value put forward by a serious forecasting agency since the turn of the century,” said Royal LePage CEO and president Phil Soper.

Earlier, Royal LePage had been predicting about a 7% national increase in the final quarter, he said.

“In our own forecasting you’d have to go back into the high inflation era of the 1980s before you’d see a number that large.  It’s even more astounding if you look at the rise in value in real dollar terms compared to inflation,” he said.

“Over the long term, home prices in Canada have appreciated at 5% per year over 50 years. Inflation has run at about half that.  So real increases after inflation have been 2-3%,” he said.

The climbing price is partly a product of the simultaneous growth of Toronto and Vancouver markets.

“For the first time for the last 16 years that we’ve seen strong price appreciation out of our two big and expensive cities,” he said.

Soper credits low interest rates along with the underlying economies of B.C. and Ontario. The growth of knowledge economies in a time when “Brand Canada” is strong is a big contributor to the hot Toronto and Vancouver markets, said Soper.

Prices rose 9.5% nationally in the second quarter of the year, according to the report released Wednesday. In Toronto that was a 10.2% increase with average prices at $656,365 compared to $595,730.

Still, Toronto remained relatively calm compared to Vancouver.

Home prices there rose a staggering 24.6% year over year. The Royal LePage report notes that the search for affordable homes there is pushing up the price of larger condos with 1,000 sq. ft. or more. That suggests that families are being priced out of detached homes in that city, says the report.

“In the GTA, this trend has not yet taken hold, suggesting buyers are still predominantly moving ‘out’ to surrounding regions, versus ‘up’, in search of relatively affordable housing options,” said Soper, who nevertheless doesn’t rule out the possibility that could happen here.

“Our forecasting models, which pointed to a slowing housing market as the year progressed, included a modest increase in the cost of borrowing,” Soper said. “Economic and social disruptions have rocked the world once again, introducing new risks and making it very likely that the Bank of Canada will leave interest rates as-is for now. Few industries are as rate sensitive as real estate. We don’t see even a mild correction for either the Toronto or pistol-hot Vancouver markets in 2016.”

Despite citing the Brexit vote as increasing uncertainty in the market, LePage says foreign money tied to Europe will flow into Canadian commercial real estate as opposed to the residential market.

LePage’s own internal surveys do say foreign markets are impacting Toronto and Vancouver real estate, but the money is coming from beyond the European Union.

Foreign investment is increasing in both Toronto and Vancouver, Royal LePage research suggests that it is probably below 10% of sales. Soper said it’s closer to 5%.

“To me that rings true,” he said.

“It’s also true that even though 5% is a small portion of 100, it is enough to influence the overall market.”

Government continues to consider measures to deal with the impact of foreign owners and the federal finance minister has promised to create a working group of provincial and municipal counterparts to consider the issue in Toronto and Vancouver. On Monday, British Columbia agreed to grant Vancouver the right to tax owners of vacant property — a move seen as being at least partially aimed at foreign investors.

Soper cautioned against government getting too involved in the housing market.

“We remain convinced that heavy-handed use of tax policy in an effort to artificially influence asset values in an open-market economy like ours is fraught with peril, particularly in a cyclical industry like housing.”

Still, he left no doubt his industry has some concerns about the fast-paced nature of the market and some of the impact it has on prices. Soper even issued a warning to speculators.

“At Royal LePage, we see residential real estate as a long-term investment supporting family life. A home is ill-suited as a buy-and-flip investment. People that engage in this kind of activity are inevitably burned when a market slows and the time it takes to sell the property increases substantially,” he said.

Source: The Toronto Star, The Financial Post



Toronto Condo Construction Boosts Pace of Housing Starts 

The Canada Mortgage and Housing Corporation (CMHC) said the pace of home construction picked up last month, boosted by work beginning on apartments in Ontario and especially condominiums in Toronto.

The housing agency reported Monday the seasonally adjusted annual rate (SAAR) of housing starts was 218,333 units in June, up
16.9% from 186,709 in May.

Economists had expected June to come in at 190,000, according to Thomson Reuters.

“Overall, June saw housing starts pick up pace in Canada, bolstered by apartment construction in Ontario – especially new condo construction in Toronto’s downtown core,” said Bob Dugan, CMHC Chief Economist. “However, elsewhere in the country, construction activity slowed as apartment construction eased in Quebec. Housing starts are also trending down in Alberta as a result of high inventories in the new and existing home markets of that province.”

“We’ve argued that Canadian housing wasn’t going to fall off a cliff, but we didn’t exactly expect it to climb again,” CIBC economist Nick Exarhos said.

The increase came as the pace of urban starts increased by 18.1% in the month to 202,702 units, boosted by multiple urban starts, which gained 26.7% to 142,819. Single-detached urban starts increased by 1.7% to 59,883.

Regionally, the pace of urban housing starts rose in B.C., Ontario and in the Prairies, but fell in Atlantic Canada and Quebec.

“Residential construction activity remains a highly regional story in Canada, as it should given how widely economic conditions differ below the surface right now,” BMO Capital Markets senior economist Robert Kavcic said.

The health of the Canadian housing market has been a key focus for economists.

The Bank of Canada has identified the housing sector as an area of risk and warned that the pace of home price increases in the red-hot markets of Vancouver and Toronto is unlikely to be sustained.

Kavcic noted that the national pace of housing starts looked to be settling in around 200,000, up from the rate in recent years.

“This level of construction activity is somewhat stronger than needed to support demographic demand, but if there is ‘overbuilding’ starting to take shape, it is largely centred in one area — British Columbia,” he wrote in a report.

Rural starts were estimated at a seasonally adjusted annual rate of 15,631 units, up 3.8% from 15,053 in May.

The six-month moving average of the monthly seasonally adjusted annual rate increased to 197,918 in June compared with 190,302 in May.

Source: CMHC, The Canadian Press   



Canadian Building Permits Unexpectedly Drop 1.9% in May

Municipalities issued building permits worth $6.8 billion in May, down 1.9% from the previous month, Statistics Canada reported last Thursday. Lower construction intentions for commercial buildings in Quebec and Ontario and single-family homes in Ontario contributed most to the decrease.

Analysts polled by Reuters had predicted a 2.0% increase. Statistics Canada revised April’s drop of 0.3% to a rise of 0.1%.

In the residential sector, the value of building permits was down 1.1% to $4.3 billion, following a 0.9% drop the previous month. The increase in the value of multi-family dwelling permits was not sufficient to offset the decline for single-family dwellings. Decreases were posted in six provinces, led by Alberta.

The value of permits for single-family dwellings decreased 7.2% to $2.3 billion in May, following three consecutive monthly increases. Declines were recorded in seven provinces, led by Ontario, followed distantly by New Brunswick and British Columbia.

In the multi-family dwellings component, the value of permits was up 7.1% to $2.0 billion in May, following a 5.8% decline in April. Advances were recorded in six provinces, led by Ontario, which had posted a 19.0% decline the previous month. Quebec and Nova Scotia were a distant second and third. In contrast, multi-family dwelling construction intentions in Alberta declined, following a 96.4% increase the previous month.

Municipalities approved the construction of 16,360 new dwellings in May, down slightly (-0.2%) from the previous month. The decline was the result of lower construction intentions for single-family dwellings, which decreased 10.6% to 5,519 new units. Multi-family homes were up 6.1% to 10,841 new units.

The value of non-residential permits fell 3.3% to $2.5 billion in May, following a 1.9% increase in April. The decrease resulted mainly from lower construction intentions for commercial structures.

The value of commercial building permits was down 15.6% to $1.2 billion in May, a third consecutive monthly decline. The drop was largely the result of lower construction intentions for office buildings, recreational facilities and distribution warehouses. Decreases were reported in five provinces, led by Quebec, Ontario and Manitoba.

In the industrial component, the value of permits edged up 0.6% to $384 million, after posting a 7.8% decline the previous month. The advance was attributable to higher construction intentions for manufacturing plants. Gains were reported in six provinces, led by Ontario and Quebec.

The value of institutional building permits was up 20.3% to $842 million, a second consecutive monthly advance. Higher construction intentions for medical facilities led the increase. The largest gain was recorded in the Northwest Territories, followed by Ontario and Quebec.

Regionally, lower construction intentions were posted in three provinces in May, led by Alberta, followed by Manitoba and New Brunswick. Conversely, the value of permits in the Northwest Territories reached a record high.

Following a 26.9% increase the previous month, the value of permits in Alberta fell 22.5% to $916 million in May. Every component posted a decline, except single-family dwellings. The decrease was led by multi-family dwellings and institutional structures.

The value of permits in Manitoba was down 32.3% to $200 million, after three consecutive monthly advances. Lower construction intentions for commercial and institutional buildings led the decline, although every component, except multi-family dwellings, posted a decrease.

In New Brunswick, the value of permits dropped 48.0% to $55 million, after posting strong gains the previous two months. Lower construction intentions were recorded for every component, led by single-family homes and institutional structures.

In contrast, the value of permits in the Northwest Territories reached a record high of $107 million in May. Higher construction intentions for institutional structures, specifically, medical facilities, were responsible for the advance.

Source: Statistics Canada, Reuters  



B.C. Releases First Set of Data on Foreign Home Ownership in Vancouver

New data show foreign buyers purchased 5% of the homes sold in and around Vancouver over three weeks last month and, on average, spent about $400,000 more than Canadians in these transactions, the first statistical hint of the impact offshore money might be having on the region’s overheated market.

Economists say the 5% figure is high enough to be a factor in the surging cost of Metro Vancouver’s housing stock, but B.C. Finance Minister Mike de Jong wouldn’t comment on how the two might be linked.

Across British Columbia, foreign buyers purchased about 3% of homes between June 10 and June 29, a rate similar to the 4% tracked in New York State, according to figures released last month by the National Association of Realtors in the United States. Mr. de Jong’s office said the province had no comparative data from other parts of Canada, but official statistics released earlier this year found foreigners owned 3.3% of all condos in Greater Toronto, slightly down from 3.5% in Metro Vancouver.

Facing an election next spring where housing affordability figures to be a major issue, Mr. de Jong said this is the first time concrete data have shown the extent of foreign investment in the sector.

“It is actual, it is factual and it is beyond conjecture, it is beyond theories and speculation,” Mr. de Jong said. “So I attach importance to the data and we’re going to approach it with an open mind.”

After an endless public debate over a lack of hard evidence, the provincial government announced a plan earlier this year to track foreign ownership amid growing concerns that speculators from outside Canada are superheating Vancouver’s housing market. The new rules require citizenship information to be recorded when a home is registered, and the provincial property transfer tax paid, following a sale. Buyers must indicate whether they are Canadian citizens or permanent residents – or, if not, the country in which they hold citizenship.

Mr. de Jong said those foreign purchasers bought homes that on average cost $1.16-million, which is about $422,000 higher than the average home bought by Canadian citizens or permanent residents during that time.

He noted that of the more than 5,000 Metro Vancouver transactions tracked by his government last month, 260 involved foreign citizens who weren’t permanent residents. Of those, 234 were from China.

Mr. de Jong said his staff will be “zeroing in to examine and analyze” why foreign buyers spent more money on housing during the time period covered by the data, but he cautioned that the sample period was too short to draw any conclusions about any wider role played by foreign buyers.

Benjamin Reitzes, senior economist at BMO, said low interest rates are a much larger factor in the soaring cost of housing, but foreign buyers represent a portion of the market big enough to further “juice” up prices.

“Even at the high end, when you push one house out of the market, a domestic buyer who maybe would have otherwise bought it has to buy a different house [after getting outbid],” Mr. Reitzes said.

Still, it is difficult to measure this effect when no historical data exist, he added. “Maybe [foreign investment] has been consistently 5%, we don’t really know that,” he said.

Economist Tom Davidoff, a professor at the University of British Columbia, said if those non-Canadian buyers were stopped from purchasing during those three weeks, prices in Metro Vancouver would have fallen more than 14%, according to standard modelling. Prices would likely fall even more, he added, because local buyers would feel less “spooked” to get into the market before they become priced out.

Province-wide, there were about 10,000 transactions during those same three weeks, of which 337 – about 3% – involved foreign nationals.

The government only began its tracking on June 10 and its data do not cover sales on June 30, an important day when many deals close at the end of the month, Mr. de Jong said. He said he released the figures now, rather than waiting the six months he had promised, because of pent-up public demand for information.

“The longer the reporting period, the more reliance we can have on the data, but my sense was people weren’t going to be very happy with an answer that said, ‘Yes we’re compiling the data ... but you won’t be able to see it for six months.’”

Mr. de Jong said while the provincial government understands the frustration of the growing number of families priced out of owning their own home, the soaring prices are a sign of B.C.’s economic health. “It’s a challenge that virtually every other jurisdiction would like to have, because it is a challenge that is associated with a growing economy,” he said.

NDP Leader John Horgan called that claim absurd and noted that the government likely captured less than half of all foreign buyers because the data were self-reported and didn’t take into account numbered companies that purchased property.

The percentage of foreign buyers in the market is likely 10 to 15%, NDP housing critic David Eby argued, based on income data from the 2011 census and a recent City of Vancouver study on empty homes.

Year-over-year growth in the price of Greater Vancouver’s detached houses hit 38.7% last month, up from 24.3% in December. In Toronto, prices for single and semi-detached houses increased about 20% in June from a year earlier.

Last month, the Bank of Canada warned that foreign ownership is contributing to both Vancouver and Toronto’s untenable spike in housing prices. The central bank statement said this upward trend can’t be expected to continue and that typical factors that drive housing markets – such as job growth and immigration – don’t explain the current frenzy in these two cities.

At the time, Mr. de Jong called this assessment balanced, noting that it estimated the risk of a downturn in the near term remains low.

B.C.’s release of data comes months before the results of Ottawa’s “deep dive” into the factors driving the country’s housing markets are expected to be announced.

Source: Article by Mike Hager, The Globe and Mail   



Canadian Job Market Stalls in June, Fewer Seek Work

Canada’s employment picture held steady overall in June, but with the jobless rate easing lower as fewer people looked for work.

A decline of 40,100 full-time positions during the month was offset by a gain of 39,400 in part-time workers, Statistics Canada reported last Friday. The public sector shed 27,000 jobs in June and private positions fell by 10,500.

As well, 37,700 more people said they were self-employed in June, compared to the previous month, helping to push the unemployment rate down to 6.8% from 6.9%.

Economists had forecast a gain in overall employment of at least 5,000 last month, but with the jobless rate rising to 7%.

In May, about 14,000 jobs were added to the economy.

The Statistics Canada data underlines the challenges facing an economy trying to adjust to weak oil prices that have depressed demand and led to layoffs in the energy industry. The labour participation rate dropped to 65.5%, the lowest since December 1999.

“It feels like it’s a fairly weak report befitting conditions in the wider economy ... full-time hiring was weak so that’s something that stands out as an additional source of concern,” said David Tulk, chief Canada macro strategist at TD Securities.

In the 12 months to June, the number of people employed has edged up by 107,600, or 0.6%, with the majority of gains in part-time work. The six-month average for employment growth was 7,300 jobs, down from 11,200 in May.

For the second month in a row, Statistics Canada was unable to collect employment data in the Fort McMurray area of Alberta, where wildfires had forced the evacuation of residents and shut down oil production facilities in the northern region of the province.

Instead, the federal agency used data collected from “similar respondents from surrounding areas” to estimate of residents’ responses to the labour survey.

Employment in Alberta was down 1,900 in June, while British Columbia added 16,000 jobs.Employment was little changed in Ontario and Quebec.

By industry, construction lost 29,000 positions and manufacturing fell by 13,000, while accommodation and food services added 20,000 workers.

Employment in manufacturing has been on a downward trend since the start of 2016.

Source: Statistics Canada, The Financial Post    
     


Latest U.S. Economic News 
       

IMF Says Sees ‘Negligible’ Brexit Impact on U.S. Growth
Britain’s referendum on leaving the European Union has caused uncertainty and increased risks to the U.S. economy, but thus far it looks likely to have a pretty “negligible” impact on U.S. growth, the International Monetary Fund said on Tuesday.

The IMF said in its formal annual review of the U.S. economy and policies that the Brexit vote has prompted a rise in the U.S. dollar that has been less than feared, up about 1% in nominal effective terms, while stock markets have recovered losses incurred in the immediate aftermath of the vote. Meanwhile, the safe-haven rush into U.S. Treasuries has lowered yields, and home and business financing costs, considerably.

“The net effect on growth is pretty negligible,” Nigel Chalk, the IMF’s mission chief for the United States, told reporters on a conference call.

Source: Reuters

U.S. Job Growth Surges in June in Huge Boost to Economy as Confidence Returns
U.S. job growth surged in June as manufacturing employment increased, more evidence the economy has regained speed after a first-quarter lull, but tepid wage growth could see the Federal Reserve remaining cautious about hiking interest rates.

Nonfarm payrolls increased by 287,000 jobs last month, the largest gain since last October, the Labor Department said last Friday. May’s payroll count was revised down to only 11,000 from the previously reported 38,000.

While the U.S. unemployment rate rose two-tenths of a percentage point to 4.9%, that was because more people entered the labour force, a sign of confidence in the jobs market.

Tepid wage growth put a wrinkle on the otherwise upbeat report. Average hourly earnings increased only two cents or 0.1% in June. The year-on-year gain in earnings rose to 2.6% after advancing 2.5% in May.

The signs of economic strength would be welcomed by Fed officials. But given the U.S. central bank’s desire to wait on more data to assess the economic impact of Britain’s stunning vote last month to leave the European Union, it probably will not have an impact on the near-term outlook for interest rates.

The so-called Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might negatively impact companies’ hiring and investment decisions. Economists have also warned that slower growth in Europe and a stronger dollar could weigh on the U.S. economy.

Economists polled by Reuters had forecast payrolls rising 175,000 last month and the jobless rate rising one-tenth of a percentage point to 4.8%.

The return of 35,100 Verizon workers, who were excluded from May’s payroll count while on a month-long strike, also boosted job growth last month.

Manufacturing employment increased 14,000 last month after shedding 16,000 jobs in May. Retail rose 29,900 and leisure and hospitality sectors gained 59,000 jobs.

Construction payrolls were unchanged after two months of declines.

Even with June’s jobs bounce back, forward momentum in the labour market has slowed. Economists say the deceleration is normal given the relatively advanced age of the economy’s recovery from the 2007-09 recession, with the labour market now near full employment.

The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose one-tenth of percentage point to 62.7%.

Source: Reuters

Fed Minutes Suggest Rate Hikes on Hold until Brexit Impact Clear
Federal Reserve policy makers decided in June that interest rate hikes should stay on hold until they have a handle on the consequences of Britain’s vote on EU membership, according to the minutes of the Fed’s June policy meeting released last Wednesday.

The minutes of the June 14-15 meeting, which took place ahead of the June 23 referendum in which Britons voted to leave the European Union, showed widespread unease over the so-called “Brexit” vote, including among voting members on the rate-setting Federal Open Market Committee.

“Members generally agreed that, before assessing whether another step in removing monetary accommodation was warranted, it was prudent to wait for additional data on the consequences of the U.K. vote,” according to the minutes.

Worries have only intensified since the vote and Fed Governor Daniel Tarullo cited the rise in uncertainty when he argued for holding off on rate hikes until inflation had turned decisively higher.

At the June policy meeting, policy makers also cited a severe slowdown in hiring by U.S. employers as a reason for leaving interest rates steady last month, the minutes showed.

The Brexit vote, which shocked investors and politicians, has raised anxiety in financial markets around the world, in part because it could take years before Britain and the EU agree to new rules on finance, trade and immigration.

Already, global financial conditions have tightened, with a firming of the U.S. dollar poised to weigh on U.S. exporters.

The dollar, which has gained more than 2% against a basket of currencies since the Brexit vote, weakened slightly following publication of the minutes.

Before the vote, the Fed had signalled two interest rate hikes would likely be needed this year to keep the U.S. economy from eventually overheating.

But since the British referendum, several Fed policy makers have said the uncertainty warrants caution, including New York Fed President William Dudley who said last Tuesday the Fed needed to be patient on rate increases and that it was too soon to know the fallout from the British decision.

A severe slowdown in hiring during May and weak business investment even outside the sagging energy sector had raised questions about the U.S. outlook even before the Brexit vote.

Still, in the minutes of the June meeting, many Fed policy makers who participated in the policy discussion stressed the sharpness of the hiring slowdown could be statistical noise, and most argued the economy would be ready for rate increases unless a financial or economic shock knocks America off course, according to the minutes.

Since the Brexit vote, the British pound has plunged 13% against the dollar, including a 1% decline last Wednesday, and investors and policy makers are watching out for further signs of financial stress that could hit economic growth in America and worldwide.

“None of us really knows the magnitude and I doubt there will be a moment when people say Brexit is done. It will be something that attenuates over time,” Tarullo said. “There is a good bit of uncertainty.”

Source: Reuters                       
 
  

 Upcoming CHHMA Events 

Industry Memorial Golf Tournament
Tuesday, September 27, 2016
Blue Springs Golf Club, Acton, Ontario

CHHMA Industry Calendar

To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 ext.21.


CHHMA Links


Freight Logistics Savings
No Obligation Consultation



Discount Cellular
Phone Rates



Long Distance &
Telecommunications Savings



Discount Gas & Diesel Rates


Logo Apparel &
Promotional Products




Office Product Discounts


"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca

If you would no longer like to receive our newsletter, please click here: Unsubscribe

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca