Delayed U.S. data releases due to the record long government shutdown could begin to trickle out in the week ahead – including potentially the September nonfarm payroll data that was just days away from release before the government shut down in early October.
Next week’s Canadian economic calendar includes important releases on Canada’s household spending and inflation backdrop. October CPI data will likely be the primary focus, with housing starts and resales also set for release on Monday and September retail sales (and the advance estimate for October) to follow on Friday.
We forecast headline inflation to edge down to a 2.1% year-over-year rate, following last month’s upside surprise. This moderation is expected to be primarily driven by lower gasoline prices, which fell 5% from September. We expect food price growth to hold close to September’s 3.8% annual rate in October. The October data will include the annual update on property tax prices in the CPI data. Significant property tax increases again took effect in some major population centers, but nationally we expect a smaller increase (4%) than the 6% increase in October a year ago.
Headline CPI growth continues to be distorted on the downside by the removal of the cabon tax from energy products in most provinces in April. Broader measures of ‘core’ inflation are expected to remain above the Bank of Canada’s 2% target rate in October. We look for the price growth excluding food and energy products to hold at a 2.4% year-over-year rate. CPI-trim and CPI-median measures should hold around a 3% year-over-year rate.
Statistics Canada’s advance estimate indicates retail sales declined 0.7% month-over-month in September, reversing most of a 1% increase in August. On a quarterly annualized basis, retail sales volume growth likely maintained positive momentum in Q3, albeit at a slower pace than Q2. This also aligns with our own cardholder spending analysis for Q3, which indicates consumer resilience despite ongoing moderation in spending patterns.
Week ahead data watch:
We anticipate housing starts will retreat in October following September’s surge. Our forecast stands at 265,000 units, representing a 5% monthly decline that partially reverses September’s 14% increase.
Canada’s October home resales report on Monday should show a mixed housing market backdrop across the country, with early market reports pointing to elevated inventories to sales remaining in less affordable markets in B.C. and Ontario but resale increases in other regions.
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