Overview:

Economic activity slowed during the second half of 2022 as businesses and households adjusted to higher borrowing costs. Business entry pulled back and investment in housing contracted sharply. Household spending rose late in the year, while merchandise export volumes and non-residential business outlays edged down.  Employment strengthened as the unmet demand for workers eased. Business labour productivity remained near pre-pandemic levels while unit labour costs continued to trend higher. 

Headline consumer inflation eased during the second half of 2022, while prices for many household essentials, including food and shelter, remained elevated. Food inflation rose into double-digit territory, while higher mortgage interest costs put upward pressure on shelter prices. Housing affordability deteriorated as mortgage and non-mortgage borrowing grew at a slower pace.

• Real gross domestic product (GDP) was basically unchanged in the fourth quarter after rising 0.6% in the third.
• Household disposable income rose 3.0% in the fourth quarter, buoyed in part by enhancements in government benefits.
• Household spending rose 0.5%, supported by purchases of new and used vehicles as easing supply disruptions improved the ability of automakers to meet consumer demand.
• Non-residential business investment also declined in late 2022 after six consecutive quarterly increases. Combined business outlays on non-residential structures and M&E were down 1.4% as lower spending on M&E offset higher outlays on structures.
• After a recent peak in May 2022, retail volumes moderated, posting two gains during the last six months of the year.

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