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The Bank of Canada mentioned this week that the economy is gathering momentum and indicated that it is considering hiking interest rates soon, prompting financial markets to quickly raise bets on a rate hike later this year. But we aren’t convinced the …
16th June 2017
After a downward revised decline in March, manufacturing sales volumes rebounded by 0.5% m/m in April, indicating that the industrial sector began the second quarter on a firmer footing. Further increases in unfilled orders and inventories were also …
15th June 2017
Despite a further slowdown in Vancouver, the national rate of annual house price inflation rose to 13.9% in May, from 13.4%, reflecting an acceleration in Toronto. But the big slump in home sales and spike in new listings there indicate that the housing …
14th June 2017
Toronto’s housing real estate boom is turning to bust. After reaching a record high last quarter, seasonally adjusted home sales have plummeted by 30% so far this quarter, while new listings activity has risen by a similar margin. Based on the slump in …
13th June 2017
The housing market appears on the verge of a downturn and will negatively impact economic growth from the second quarter onwards. Although Vancouver home sales have rebounded in recent past months, we doubt that resurgence can be sustained in the new …
9th June 2017
The impressive 54,500 increase in employment in May, which included a big increase in full-time jobs, will no doubt prompt louder calls for the Bank of Canada to hurry up and raise interest rates. But we think the ongoing weakness in hours worked and wage …
The recent flurry of strong economic growth may look impressive but, looking beneath the surface, there’s still a lot to worry about. While the extraordinary housing investment boom has set new records for its role in supporting the economy, exports and …
2nd June 2017
The moderate 0.8% m/m increase in export volumes in April, following the stronger gain in the month before, provides further evidence that exporters are finally tapping into the recent pick-up in global manufacturing. … International Merchandise Trade …
The strong 3.7% annualised growth in the first quarter was a good start to the year, but with exports still struggling and more recent data pointing to a potential downturn in housing, the pace of GDP growth could slow very sharply in the second quarter. …
31st May 2017
Given the recent ominous signs of a downturn in Toronto, we doubt that the Bank of Canada will be able to do much to prevent a correction in the housing market. The Bank of Canada only has limited scope to reduce its policy rate. Furthermore, the bottom …
26th May 2017
The Bank of Canada’s decision today to keep its policy interest rate at 0.50% and to remain neutral on the outlook for rates shows that, despite strong economic growth and employment gains, policymakers aren’t convinced that the economy is on a …
24th May 2017
The economy has grown strongly over the past few quarters and business confidence has risen. On closer examination, however, business investment has fallen to historically low levels, partly because of the past slump in commodity prices. Although energy …
19th May 2017
Although the headline inflation rate remained at 1.6% in April, the decline in core inflation provides further evidence of disinflationary pressures in the economy. Spare capacity and very low wage pressures will likely keep core inflation below the 2% …
Although manufacturing sales values rose by a strong 1.0% m/m in March, this largely reflected higher prices rather than strong sales volumes. Nevertheless, the stronger gains in unfilled orders and inventories indicate that a recovery in production is …
17th May 2017
While the Bank of Canada will likely hold interest rates at 0.50% next week, the balance of risks around its neutral stance on the interest rate outlook are beginning to tilt to the downside, mainly due to oil price volatility, trade policy uncertainty …
The recent drop in the Canadian dollar to US$0.73, from US$0.75, presumably reflects new fears of a global oil supply glut, which have been weighing on crude oil prices. Although this downward pressure might persist in the near term, we still expect oil …
12th May 2017
Despite a record high in Toronto, the national rate of annual house price inflation edged down to 13.4% in April, from 13.5%, reflecting the rapid slowdown in Vancouver and falling house prices in some other smaller regions. … Teranet-National Bank House …
Average home sale price data contain far more timely market information about potential turns in the housing cycle than the aggregate house price indices that are more closely watched. That said, all sale prices need to be viewed within the context of …
5th May 2017
The meagre 3,200 increase in employment in April, which included a big decline in full-time jobs, was a disappointment and will reinforce the Bank of Canada’s view that policy needs to remain highly accommodative. … Labour Force Survey …
Although export volumes grew by 2.3% m/m in March, that followed a big decline the month before, with exports increasing only trivially in the first quarter as a whole. This poor export performance justifies the Bank of Canada’s cautious stance on the …
4th May 2017
The financial difficulties at alternative mortgage lender Home Capital Group (HCG) don’t necessarily mark the end of the housing boom, since it is too small to matter. But with signs that the housing bubble has already begun to burst in Vancouver and the …
2nd May 2017
The decision by the US Commerce Department to impose preliminary import duties of close to 20% on Canadian softwood lumber isn’t a big surprise to domestic producers, nor will it seriously threaten lumber production or the broader economic outlook. More …
28th April 2017
Despite further gains in housing-related activity, monthly GDP was unchanged in February, dragged down by weakness in export-orientated manufacturing. This demonstrates that, despite the strength in GDP over the preceding few months, the Bank of Canada is …
The economy likely began this year strongly, with real GDP expanding at an annualised quarterly growth rate of 4.5%. The strength in monthly housing and consumption indicators, however, show that the household sector remains the main growth driver. Unless …
26th April 2017
The International Monetary Fund’s latest assessment of Canadian growth prospects is unfortunately naïve. Although the economy expanded strongly at the start of this year, that was partly due to the housing bubble in Ontario and strong household …
21st April 2017
Falling gasoline price inflation led to a drop in the headline inflation rate to 1.6% in March, from 2.0%, and core inflation dipped further below the 2% mid-point of the Bank of Canada’s target range. The slowdown in unit labour costs growth over the …
The Bank of Canada confessed this week that speculation is partly responsible for the recent upswing in house prices, but doesn’t believe that higher interest rates are a solution to the problem. The negative impact on the real economy from higher …
13th April 2017
Although manufacturing sales values edged lower in February, the further gain in volumes and inventories suggest that production is gearing up for stronger export sales. This is a good sign that the long hoped for shift toward sustainable export-led …
The Bank of Canada’s decision today to keep its policy interest rate at 0.50% and to stay neutral on the outlook for rates is understandable given how uneven recent economic growth has been. Until there are clear signs of sustainable export-led growth, …
12th April 2017
Despite a further acceleration in Toronto, the national rate of annual house price inflation eased to 13.0% in March, down from 13.4%, reflecting the continued slowdown in Vancouver and falling house prices in several other smaller regions. … …
The uneven incoming data reinforce our view that the economy hasn’t turned the corner. Exports continue to misfire, which isn’t encouraging for hopes of a recovery in business investment. Meanwhile, households continue to do most of the heavy lifting. …
7th April 2017
The further gains in employment and hours worked in March are positive signs for growth in labour income. That supports our view that household spending contributed strongly to first-quarter GDP growth of 4.5% annualised. But with exports misfiring and …
We expect the Bank of Canada to hold interest rates at 0.50% next week and to remain neutral on the direction of interest rates in the near future. Despite economic slack and muted core inflation, economic growth has continued to surprise on the upside. …
5th April 2017
The 2.5% m/m drop in export volumes in February was widespread and suggests that the economy is still struggling with competitiveness challenges. This just goes to show that the Bank of Canada is right to still be cautious on the growth outlook. … …
4th April 2017
The latest Business Outlook Survey shows that, despite concerns about a potential slowdown in housing, businesses still expect faster economic growth this year. Nevertheless, pressures on production capacity are modest suggesting that core inflation will …
3rd April 2017
Financial markets appear to be ignoring the Bank of Canada’s latest warnings about the uncertain economic outlook and are pricing in an interest rate hike before the end of this year. In contrast, we think there are good reasons why monetary policy in …
31st March 2017
It’s tempting to conclude from the very strong 0.6% m/m gain in January GDP that the economy has turned the corner and that the Bank of Canada’s dovish take on the economy is out of tune with reality. But we aren’t ready to sound the all clear siren until …
After a long period of disappointment, the recent pick-up in global manufacturing activity points to a rebound in non-commodity export growth in the coming months. We think it would take a marked sustained improvement over several months, however, before …
30th March 2017
Economic growth has picked up recently, but we aren’t convinced the economy has turned the corner, particularly not when that growth is still so unbalanced. Non-commodity exports are lagging and business investment will decline further this year. …
29th March 2017
The recent run of positive economic data suggest that growth in first-quarter GDP could turn out to be as high as 3.0% annualised, stronger than the Bank of Canada’s forecast of 2.5%. The underlying growth drivers, however, still look skewed towards the …
24th March 2017
The small decline in the headline inflation rate to 2.0% in February, from 2.1%, was softer than expected, particularly considering higher gasoline price inflation. The bigger story though continues to be the low rate of core inflation. If history is any …
The 2017 Federal budget delivered today, which was largely a wait-and-see budget, is understandable given the highly uncertain outlook on US trade and fiscal policy. Furthermore, the government is also still waiting on the stimulus measures announced in …
22nd March 2017
Recent headline employment gains, mainly in full-time work, have been impressive. It turns out that most of the job creation over the past year have been in industries where hours worked are below-average, however, while jobs in industries with …
17th March 2017
The further 0.7% m/m increase in manufacturing sales volumes in January, partly driven by higher activity in the petroleum industry, provides further evidence that the economy maintained its momentum at the start of this quarter. That’s consistent with …
The annual rate of national house price inflation rose to a ten-year high of 13.4% in February, up from 13.0%, largely reflecting the continued acceleration in Toronto. The housing market conditions underpinning these large annual price gains, however, …
14th March 2017
Residential housing investment rebounded in the final quarter of last year and looks set to grow at an even faster pace this quarter, thanks to a surge in housing construction. While that will provide another boost to quarterly GDP growth, weakening …
10th March 2017
While employment rose by a moderate 15,300 in February, the bigger story was the massive 105,100 jump in full-time work, extending the run of better quality jobs lately. That adds to the evidence the economy has recovered from the oil shock. In addition, …
The rebound in merchandise export volumes in January, led by non-energy trade, is encouraging and broadly consistent with the recent pick-up in external business activity indicators. … International Merchandise Trade …
7th March 2017
The recent upturn in production activity and business confidence are encouraging signs for near-term growth prospects. There are still some big question marks, however. While first-quarter real GDP growth should prove satisfactory, we aren’t convinced …
3rd March 2017
More moderate GDP growth in the fourth quarter completed what proved to be a disappointing year of only 1.4% growth. Policymakers had hoped for a more spirited and sustainable export-led recovery. That plan still looks like a pipe dream, as lagging …
2nd March 2017
