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Ontario economic snapshot for April 20, 2013

April 20, 2013

TORONTO, ON, Apr. 20, 2013/ Troy Media/ – Manufacturing sales in Ontario increased in February but remain on a declining trend from the post-recession high set last June.

This mainly reflects sales of transportation equipment, mostly new motor vehicles and parts which, in turn, is mostly related to exports of new motor vehicles and parts to the United States.

Manufacturing sales in Ontario totalled $22.4 billion in February, seasonally adjusted, up 3.3 per cent from January. Growth was led by new motor vehicles and parts, although sales of chemical, plastic, food and machinery products also increased.

Lower commodity prices brought down manufacturing sales of primary metal, fabricated metal and petroleum products. Transportation equipment sales totalled $13.0 billion in the first two months of 2013, down 5.0 per cent from the same period last year.

That is bad news given that sales of new automobiles and light trucks are up robustly in the United States. Ontario’s automobile manufacturing sector is losing market share in the U.S.

We forecast a declining trend in the U.S./Canadian dollar exchange rate over the next five years, which will lessen but not eliminate Ontario’s declining market share.

CPI

Consumer price inflation in Ontario remained low by historical standards in March as the Consumer Price Index (CPI) inched up 0.3 per cent from February and 1.0 per cent from March 2012.

Prices for food and transportation declined in March but food prices are up from a year ago. Prices for clothing and footwear increased in March but declined year-over-year. Slower housing sales, high levels of household and government debt, and minimal growth in imports and exports have reduced the upward pressure on consumer prices over the past year.

CPI inflation will remain moderate in 2013. No material rise in underlying inflation will occur until the economy is operating with much less excess capacity. We forecast Ontario consumers will see CPI inflation of 1.9 per cent in 2013 and 2.3 per cent in 2014, following a 1.4 per cent increase in 2012.

Housing

Ontario’s re-sale housing market perked up in March, providing further evidence last year’s swoon in activity has bottomed out. Housing sales via the Multiple Listing Service (MLS) totalled $6.23 billion, seasonally adjusted, up 2.8 per cent from February and the fourth consecutive monthly gain. Unit sales increased 2.0 per cent, while the average sale price increased 0.8 per cent.

On an annual basis, we forecast the dollar volume of MLS housing sales will inch down 1.6 per cent in 2013 following a 3.1 per cent increase last year before rising 3.7 per cent in 2014 and 6.3 per cent in 2015. Unit sales are forecast to decline 2.4 per cent this year following a 2.1 per cent decrease last year, before rising 1.4 per cent in 2014 and 4.2 per cent in 2015. The average sale price is forecast to inch up 0.8 per cent this year after increasing 5.3 per cent last year and to rise 2.3 per cent in 2014 and 2.0 per cent in 2015.

Recent growth in housing sales volume has varied among regions and has not occurred everywhere. Over half of Ontario’s board areas have seen rising sales, while the others have seen lower sales.

| Central 1 Credit Union

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