Recent reports from Statistics Canada (StatsCan) show demand might be picking up in Canada. With inflation coming down and the Bank of Canada (BoC) lowering interest rates, financial conditions are loosening. The BoC is hoping lower borrowing costs will help kickstart spending, which would improve the overall health of Canada’s economy. While early data has been encouraging, central bank actions take time to filter through the economy to reach their full desired impact.

• In a preliminary estimate, StatsCan reported that wholesale sales in Canada rose by 0.9% in September. This follows a 0.6% decline in August and was only the third increase in the past nine months. If September’s estimate holds, it would be the largest increase since April.
• Sales of motor vehicles and parts rose over the month, aided by a pickup in activity amid lower borrowing costs. Would-be purchasers are coming back into the car market with rates coming down. Sales for chemicals also increased over the month.
• Retailers are raising inventory with signs sales are improving. Last week, StatsCan said retail sales rose by 0.4% in August, while estimating another 0.4% increase in September. Sales for motor vehicles and clothing climbed higher.
• Canada’s manufacturing sector benefited from rising demand in September. The sector expanded for the first time since April 2023 in response to a jump in domestic orders.

Canada’s economic conditions remain relatively soft, and the impact of tight financial conditions is still being felt by households and businesses. But the BoC is hoping its recent interest-rate cuts will help reignite consumer and business activity. Any recovery in consumer strength will bode well for Canada’s economy and should help lift growth. The BoC makes its final interest-rate announcement of 2024 on December 11.

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