B.C. exports were strong in June despite the drag from U.S. tariffs on aluminum and steel products. International dollar-volume goods exports rose 11.4% year-over-year to reach $4.22 billion following a 0.7% increase in May. Year-to-date, sales grew 4.4%.
Export growth accelerated in most sectors as a rebound in energy sales growth led the way. While energy exports were still 5% lower than a year ago in June, this contrasted with a near 30% drop the previous month. Energy exports have been weighed down in part by weaker prices. Metal and non-metallic mineral product exports rose 33% year-over-year, while forestry products growth accelerated to 19.5% from 16% the previous month.
Sales have firmed after a slow start to the year. Strong growth in the U.S. economy and new housing demand as well as expansion in the global economy have lifted demand. Risks remain for further trade disruption. The U.S. could make good on threats to impose auto-related tariffs, while an eruption of global trade tensions could slow trade and economic growth, hurting commodity prices and demand for B.C. goods.
Imports were up 14% year-over-year and year-to-date in June, with refined gasoline a significant driver.
Sluggish Lower Mainland home sales bled into July as federal mortgage lending constraints, higher mortgage rates and provincial policies continued to sideline some buyers. Multiple Listing Service sales in the region spanning Metro Vancouver and Abbotsford-Mission fell 35% year-over-year in July to about 3,100 units – the lowest same-month performance since 2000. However, seasonally adjusted sales were virtually unchanged, pointing to a bottoming of the trend.
Declining sales are lifting inventory, with active listings up 30% from same-month 2017. But given the strength in the economy, the tight labour market and rising wages, owners for the most part have the luxury of waiting out current market sluggishness by delisting or delaying property sales.
That said, weak sales volume is expected to extend through the end of the year, keeping the market in a zone between buyer’s and balanced. The average price in July was down 2.6% to $955,620 compared with June, albeit with year-over-year growth at 2%. The constant-quality benchmark price fell 0.5% from June but remained 9% above year ago levels. This deviation between the average and benchmark values generally reflects firm underlying prices up until recent months, but a shift away from higher-priced homes which impact average pricing. A mild but temporary correction of 5% to 10% from peak is realistic in the current environment.
Bryan Yu is deputy chief economist at Central 1 Credit Union.
Bryan Yu / Business In Vancouver