In this issue:

• North American Labour Market Remains Strong

• Canadian Headline Inflation Decelerates to 2.8% y/y in June

• Lake Property Succession Planning

• Team Update

• Chart Corner

It has been a busy start to the summer. The Bank of Canada and the U.S. Federal Reserve raised interest rates as expected. Inflation figures in the U.S. and Canada suggest pricing pressures continue to ease. Meanwhile, the second quarter earnings season has officially begun. We also recently received updates on the employment front in both Canada and the U.S. Overall, the labour situation in North America, despite marginal changes, remains healthy. We discuss this more below.

North American Labour Market Remains Strong

The Canadian economy added 60,000 jobs in the month of June, predominantly in the retail, manufacturing, health care and social services sectors. The unemployment rate increased from 5.2% to 5.4%, an uptick largely driven by a growing labour force as Canada’s population surpassed 40 million for the first time. According to the latest outlook survey by the Bank of Canada, labour availability has become less concerning for businesses. This is a notable change from recent years when access to labour was a dominant issue for most businesses.

Meanwhile, the U.S. added 209,000 jobs in the month of June, led by the government, health care, social services, and construction sectors. While that figure was slightly lower than expected, it was offset by a near-historic-low unemployment rate of 3.6% and wage growth of 4.4% that exceeded expectations. The headline data suggest the job market remains tight, even with a slowing pace of job gains. The 6-month moving average of monthly new jobs, which was close to 445,000 a year ago, is now down to roughly 278,000. Layoffs across the technology sector and some larger companies have garnered a lot of media attention but appear to be contained as the trend of weekly initial jobless claims, which refer to claims for unemployment benefits filed by newly unemployed individuals, has only gradually been moving higher this year. All this suggests that like in Canada, the U.S. labour market remains healthy and stable, with pressures that are slowly moderating.

Much of the North American economy’s resilience to date stems from a strong employment backdrop. Consumer demand, particularly for services, continues to be strong despite elevated interest rates and prices, thanks to plentiful jobs and rising pay.

Canadian Headline Inflation Decelerates to 2.8% y/y in June

Canadian headline inflation decelerated slightly below the consensus expectation of 3.0%. The softer-than-expected data was primarily driven by the pullback in energy prices. Benchmark West Texas Intermediate crude oil and gasoline prices retraced by approximately 32% and 22%, respectively, from a year prior. On the flip side, food and mortgage interest costs continue to be key drivers of inflationary pressure, with the latter climbing by 30% y/y. In the bigger picture, inflationary pressure remains broad in nature and consumer spending has proven to be relatively resilient. Source

As lake season is in full swing, it's time to reflect on your lake property. Cottages are often one of the most emotionally charged assets in any estate. These resources will highlight various considerations to help you and your family start the estate-planning conversation:

• The Wealthy Barber on how a cottage can complicate estate planning
• Succession planning for your Canadian vacation property
• The family cottage: managing inheritance of an emotionally tied property (podcast)

Our team is excited to share our new team brochure, which provides an overview of our services and team! Please contact our team if you'd like a hard copy. Read Now

~Shawn Milligan | Senior Wealth Advisor | The Milligan Private Wealth Management Team | RBCDS     

               

---

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence. © 2022 RBC Dominion Securities Inc. All rights reserved.