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Briefing highlights

  • Vancouver, Toronto cheaper for expats
  • BlackBerry posts deep quarterly loss
  • Markets rise sharply on Brexit Day
  • Song of the day ...
  • Video: Can you protect your job from robots?

The year of living expensively

Here’s an interesting, if annoying, fact of life: It’s freaking expensive to live in Vancouver and Toronto, if you happen to already be from Vancouver and Toronto.

But costs are falling for expatriates because of the cheaper Canadian dollar.

Indeed, Mercer Canada notes, Vancouver and Toronto are “compelling” places to be on that basis.

According to Mercer’s latest study of the cost of living in major centres, those two cities have actually fallen in the rankings of the most expensive, even if Canadians aren’t feeling it.

Vancouver is still Canada’s most expensive, but it dropped 23 spots in the rankings to No. 142. Toronto’s close behind, at No. 143, down 17 notches.

Montreal and Calgary came in at Nos. 155 and 162, respectively, down 15 and 16 places.

“While the cost of living continues to rise in Vancouver and Toronto for locals, the weak Canadian dollar has made these cities compelling for expatriates from organizations outside the country,” Mercer Canada’s Gordon Frost said in a statement accompanying this week’s findings, which looks at everything from housing to the cost of employer packages for expats.

“However, the depressed dollar provides a challenge to Canadian organizations looking to place employees in cities around the world.”

The most expensive cities in the world, from the top, are Hong Kong, Luanda, Zurich, Singapore and Tokyo. At the bottom are Johannesburg, Blantyre, Bishkek, Cape Town and Windhoek.

Matt Lundy/Globe and Mail

Helping to drive costs in Vancouver and Toronto, of course, are surging prices for accommodation.

Here are some findings this week from Royal Bank of Canada chief economist Craig Wright and senior economist Robert Hogue in their latest look at housing affordability:

Vancouver area: “The combination of very strong demand and limited supply of homes for sale has led to an epic surge in the Vancouver area. ... Unfortunately, further price acceleration in recent months suggests that affordability will likely deteriorate more in the period ahead.”

Toronto area: “The multiyear housing boom in the Toronto area continues to defy expectations of a slowdown, although there is tentative evidence that strained affordability may be starting to have a restraining effect.”

Consider, too, last week’s look at inflation from Statistics Canada: Consumer prices in Toronto rose 2.1 per cent in May on an annual basis, above the national pace of 1.5 per cent, with shelter costs up 2.9 per cent and water, fuel and electricity up 5 per cent.

Inflation in Vancouver came in at 2 per cent, with shelter costs up 1.1 per cent and, on a more forgiving note, water, fuel and electricity down 1.3 per cent.

“Canada is still running one of the fastest inflation rates in the industrialized world,” BMO Nesbitt Burns chief economist Douglas Porter said of the consumer price report, although he did note that the annual pace is still below the Bank of Canada’s target.

Some British Columbia tidbits: Food prices rose 2.5 per cent, with meat up 3.3 per cent and fresh fruit up 3.9 per cent. Transportation costs climbed 1.7 per cent, recreation, education and reading 2.6 per cent, and booze 3.3 per cent.

In Ontario, food costs were up 1.6 per cent, with the fresh fruit component rising 4.4 per cent. Transportation prices rose 1.2 per cent, with a hefty 4.6-per-cent jump in public transit. Booze rose just 1.4 per cent, with tobacco and related products surging 7.1 per cent.

(So if you can’t quit Toronto because of the high costs, you can at least quit smoking.)

And one last fun fact: Furniture sales in Vancouver have surged 43 per cent since the beginning of 2014, according to BMO.

“That’s not because of rising sofa prices, as the national [consumer price index] for furniture is up just 4.6 per cent since then,” said BMO senior economist Sal Guatieri.

“It’s likely due more to rising home prices, with the city benchmark up an eye-popping 46 per cent in just over two years. I guess when you suddenly find yourself living in a million-dollar home, that faded 10-year-old couch just seems out of place.”

Morneau launches housing group

And while we’re on the issue of surging prices, Canada’s Finance Minister has launched a new working group to study the hot real estate markets.

The group will be made up of officials from his government, the provinces of British Columbia and Ontario, and, of course, the cities most affected, Vancouver and Toronto.

They’ll meet through the summer, he said today, to “review the broad range of factors that affect supply and demand for housing, the issue of affordability, and the stability of the housing market,” according to a statement from his office.

He also said his government is still looking at potential other steps, The Globe and Mail's David Parkinson reports.

BlackBerry posts deep loss

BlackBerry Ltd. slumped to a deep loss in its first quarter, but projected better-than-expected results for the year.

The Canadian smartphone and services company posted a loss of $670-million (U.S.), or $1.28 a share, compared to a profit a year earlier of $68-million or 13 cents.

Revenue tumbled to $400-million from $658-million.

Chief executive officer John Chen said in a statement accompanying the results that he expects a revenue increase this year, in software and services, of 30 per cent.

“Based on a more efficient operating model, we expect a non-GAAP [earnings-per-share] loss of 15 cents, compared to the current [consensus among analysts] of a 33-cent loss,” he added.

Song of the day

Brexit day

It’s easy to guess how investors are betting on this, the crucial day of the Brexit referendum.

With the exception of China, major markets are up sharply so far, with New York poised for a stronger open.

“Although the City of London was hit by a heavy thunderstorm last night, markets looked sensibly brighter during the trading session in Asia,” said London Capital Group analyst Ipek Ozkardeskaya.

Tokyo’s Nikkei climbed 1.1 per cent, and Hong Kong’s Hang Seng 0.4 per cent, with the Shanghai composite down 0.5 per cent.

Markets are on fire in Europe, where London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 1.2 and 2 per cent.

North American markets also gained.

“Despite the positive trend in the U.K. markets, the event risk remains high,” Ms. Ozkardeskaya said.

“The sentiment could rapidly turn sour should the slightest panic regarding the Brexit vote hit the headlines,” she added.

“Any selloff could gain momentum as many investors would not hesitate to close their long positions and turn flat before the outcome of the historic Brexit referendum.”

Quebec, Bombardier finalize deal

The Quebec government has signed a definitive agreement with Bombardier Inc. for the previously announced investment of $1-billion (U.S.) in the company’s C Series new-jet program, The Globe and Mail’s Bertrand Marotte reports.

The investment, announced last October, was delayed as discussions between the parties dragged on longer than expected. The first of two $500-million payments from Quebec was initially scheduled for April 1 and the second for June 30.

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