CLI Falls in Second Quarter 2022

Sep 27, 2022

Posted by
Ryan McLaughlin


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The BCREA Commercial Leading Indicator (CLI) fell to 153 from 155 in the second quarter of 2022, but the six-month moving average hit a record high. Compared to the same time in 2021, the index was down by 1.6 per cent.

It is important to note that while the Canadian economy generally continues recovering strongly, the environment for commercial real estate remains highly abnormal and uncertain. Although the CLI was designed to interpret economic and office employment growth as positive indicators for commercial real estate demand, the recent strong growth of these indicators may not translate as readily into improved conditions in the commercial real estate market relative to the pre-pandemic period.

The CLI fell in the second quarter due to deteriorations in the economic and financial components of the index, while employment contributed somewhat positively.

The economic activity index was driven downwards by inflation-adjusted declines in wholesale trade, retail and manufacturing sales. Rapid appreciation in the consumer price index caused by supply chain obstacles and the war in Ukraine meant that rising nominal values in these economic areas were offset after adjusting for general price growth. The financial component of the index was negative as a result of falling REIT prices.

Although falling spreads between corporate and government costs contributed positively, it was not enough to bump the financial component of the index into positive territory. The index’s employment component was slightly positive, with a rise in office (finance, insurance and real estate) employment offsetting a fall in manufacturing employment.

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Ryan McLaughlin
Chief Economist
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