Is a recession on the way or not? Is it already here? Those are the questions Canadian policy makers and economists are trying to answer.
A few weeks ago, Deputy Prime Minister Chrystia Freeland warned suppliers gathered in Windsor, Ont., the economy is about to take a turn for the worse.
But just days ago, Scotiabank Economics said the near-term outlook appears bright.
New-vehicle sales in October make both seem correct.
Only a handful of brands still report monthly sales. Results from those that do vary greatly.
Total Toyota sales, including Lexus, rose 8.2 per cent to 16,581 compared to October of a year ago. But Honda Canada sales, including Acura, fell 10.4 per cent to 9,884.
Kia sales managed to increase by 6.2 per cent to 5,850 while its Korean cousin Hyundai had its sales plummet 27.6 per cent to 8,329. Luxury brand Genesis saw its sales fall 5.6 per cent to 475.
Mazda sales were off 16.1 per cent to 4,057.
Volvo had yet to report sales by end of day Nov. 1.
When it comes to the economy and labour market, Freeland warned suppliers that “our economy will slow” and that “our unemployment rate will not stay at a record low.”
Still, Scotiabank is hopeful in the short term, even though it says a “technical recession” is underway.
“Sales in Canada have been weak this year, but the economy still has some near-term momentum, which benefits auto demand in the context of heightened uncertainties,” the bank said in its latest Global Auto Report.
Scotiabank says that unlike the latest supply-driven decreases in inventory and sales, past downturns in North American auto sales were mostly the result of labour market weaknesses and declining economic activity. That’s not the case right now.
Scotiabank says the Canadian labour market is tighter than the one in the United States — the Canadian unemployment rate after sitting at 5.4 per cent in August dropped to 5.2 per cent in September, the latest month for which data is available.
The bank also says labour shortages and job vacancies will likely persist the rest of 2022 and perhaps beyond. And, wages have been rising rapidly with relatively high breadth, with 56 per cent of firms surveyed expecting to pay higher wages over the next 12 months.
“Real wage growth, which underpins auto demand, could pick up next year while inflation comes down,” the report says. “We anticipate strengthening sales alongside inventory improvements over the remainder of this year and next.”