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Finance Minister Bill Morneau focused entirely on longer-term infrastructure spending in today’s fiscal update, offering no new short-term stimulus measures to bolster the struggling economy. If, as we fear, a housing downturn condemns Canada to another …
1st November 2016
The 0.2% m/m gain in August GDP, partly driven by the further recovery in oil extraction, all but confirms that the economy grew by close to 3.5% annualised in the third quarter following the wildfire-related disruption in the second. But with little …
The mixed messages coming from Bank of Canada Governor Stephen Poloz last week, which caused a stir in financial markets and the media, makes us wonder if, like most other major central banks, the Bank should publish policy meeting minutes. Releasing …
28th October 2016
The potential collapse of Canada’s Comprehensive Economic Trade Agreement (CETA) with the European Union would not be a big economic blow, since estimates suggested that even the long-term boost to Canadian GDP would have been a trivial 0.2% to 0.3%. But …
27th October 2016
The labour market appears to have come storming back in September, with employment increasing by almost 70,000 in a single month. Under the surface, however, labour market conditions remain weak. The new jobs added over the past 12 months are …
26th October 2016
Although the Bank of Canada gave no indication in last week’s policy statement that it was considering an interest rate cut, Governor Stephen Poloz freely admitted in his press conference that an immediate reduction was considered at the meeting. That …
21st October 2016
The recent softness in core CPI inflation could become a major concern for the Bank of Canada. The Bank was forced to cut its projection for inflation earlier this week in its new Monetary Policy Report and September’s data suggest the risks to that lower …
The Bank of Canada gave no indication in today’s policy statement that it was considering an interest rate cut, even though it lowered its projections for GDP growth and now doesn’t expect the economy to return to full employment until mid-2018, which is …
19th October 2016
The better than expected 0.9% m/m increase in manufacturing sales in August, which translated into an even bigger 1.2% m/m gain in volumes terms, will provide even more reassurance to the Bank of Canada that third-quarter GDP growth rebounded strongly. … …
18th October 2016
The massive 67,200 increase in the Labour Force Survey (LFS) measure of employment in September would seem to suggest that labour market conditions are improving. But under the surface there is a multitude of troubling signs. Recent job gains have been …
14th October 2016
The Bank of Canada is unlikely to announce any major changes to either its economic projections or policy stance next Wednesday. The apparent rebound in third-quarter GDP and the surge in employment in September will provide some comfort that the economy …
The current madness in Toronto’s housing market will predictably be blamed on foreigners, but the near-record 16.4% increase in house prices over the past 12 months is mainly due to low interest rates and lax lending standards for domestic borrowers. … …
13th October 2016
The Bank of Canada’s Autumn Business Outlook Survey shows that the drag from the collapse in crude oil prices last year is finally fading. However, there are still few signs that the recovery will be anything more than modest. … Business outlook …
7th October 2016
The housing market dominated the headlines again last week, with news of another sharp decline in Vancouver home sales in September accompanied by the announcement of a package of new measures on mortgage rules from the Liberal government. The media …
The massive 67,000 increase in employment in September will reassure the Bank of Canada that the economy is still enjoying a decent rebound following the wildfire disruption in the second quarter. Nevertheless, the details of the report were nowhere near …
The modest decline in the trade deficit to $1.9bn in August, from $2.2bn, was entirely due to price effects, with the real deficit actually widening slightly. Exports increased by 0.6% m/m in nominal terms, but only 0.4% in real terms. In contrast, while …
5th October 2016
During the first US presidential debate last week, Republican nominee Donald Trump predictably returned to one of the central themes of his campaign; that the US is being cheated by global trade rules. As he has done before, Trump reserved most of his …
30th September 2016
The bigger than expected 0.5% m/m gain in July GDP means that the Bank of Canada’s forecast of a 3.5% annualised increase for the third quarter as a whole now looks well within reach. However, it is worth noting that July’s gain was entirely due to the …
The fall in core inflation to a two-year low of 1.8% in August adds to the growing list of concerns for the Bank of Canada. The Canadian dollar’s sharp decline in 2014 and 2015 had kept core inflation slightly above the 2% mid-point of the Bank’s target …
27th September 2016
In a strange speech last week, Bank of Canada Governor Stephen Poloz acknowledged that the so-called neutral real interest rate was now much lower than before the financial crisis. But in his prepared remarks, Poloz completed ignored the implications for …
23rd September 2016
The decline in the Bank of Canada’s preferred measure of core CPI inflation to a two-year low of 1.8% in August, from 2.1%, shows that the upward pressure on prices from last year’s slump in the dollar is now beginning to fade. At the same time, however, …
The focus remained on the nation’s housing boom last week, with figures released showing that house prices continued to rise rapidly last month, even as home sales fell further in the aftermath of the new foreign buyer tax in Vancouver. Unsurprisingly, we …
16th September 2016
The 0.6% m/m increase in sales volumes in July shows that manufacturing is moving in the right direction, but the broader pace of growth is still very disappointing given the strong boost that the weaker dollar should have provided over the past 18 …
The Teranet house price index shows the national growth rate climbed to a six-year high of 11.4% y/y in August, as prices continued to increase in Vancouver even after the introduction of the new foreign buyer tax. … Teranet-National Bank House Prices …
14th September 2016
The reported 23% y/y decline in Vancouver home sales in August unsurprisingly prompted claims in the media last week that the new foreign buyer tax, which took effect at the start of last month, had a devastating impact on the local market. However, most …
9th September 2016
The 26,000 rebound in employment in August looks good at first glance but, following the 31,200 decline in July, that still means employment is down slightly over the past three months as a whole. The unemployment rate actually edged up to a four-month …
The Bank of Canada issued a relatively dovish statement today, warning that “risks to the profile for inflation have tilted somewhat to the downside since July”. … Bank of Canada opens door to rate …
7th September 2016
The Bank of Canada is unlikely to take any action at the upcoming policy meeting this Wednesday. The 1.6% annualised decline in second-quarter GDP was worse than the 1.0% fall the Bank assumed in its July Monetary Policy Report. But Statistics Canada …
2nd September 2016
The decline in the trade deficit to a six-month low of $2.5bn in July, from $4.0bn, is encouraging news for third-quarter GDP growth, although the improvement appears to be partly due to a seasonal adjustment failure. … International Merchandise Trade …
The Bank of Canada is unlikely to take any action at the upcoming policy meeting on 7th September. The 1.6% annualised decline in second-quarter GDP was worse than the 1.0% fall the Bank assumed in its July Monetary Policy Report. But Statistics Canada …
1st September 2016
The 1.6% annualised decline in second-quarter GDP was worse than the 1.0% decline anticipated by the Bank of Canada in its July Monetary Policy Report. But Statistics Canada estimates that decline was entirely due to the Alberta wildfires in May, so we …
31st August 2016
The big news in the last month has been a sharp move up in exchange stocks of copper and a renewed slump in tin inventories. However, the bigger picture is that exchange stocks of metals have not moved by much this year. The main exception is stocks of …
30th August 2016
Our calculations suggest that monthly GDP rebounded by 0.5% m/m in June which, if GDP in the first two months of the quarter was unrevised, would translate into a 1.5% annualised decline in the second quarter as a whole. Unfortunately, there are plenty of …
26th August 2016
The surge in the annual rate of house price inflation to a six-year high of 10.9% y/y in July, from 10.0%, reflected a spreading out of the housing mania beyond just Toronto and Vancouver. The recent drop back in the CREA sales-to-listings ratio, however, …
19th August 2016
A drop back in gasoline prices was enough to push the annual CPI inflation rate back down to 1.3% in July, from 1.5%. The core inflation rate was unchanged at 2.1% last month, however, as the Canadian dollar’s big decline last year continues to exert some …
At first glance, the 0.5% m/m rebound in manufacturing sales volumes looks encouraging, but downward revisions to sales in the first two months of the quarter mean that the decline in second-quarter GDP growth may have been worse than previously feared. … …
16th August 2016
Right now it is hard to find anything positive to say about Canada’s economy. Around the start of this year things seemed to be going in the right direction; with non-energy exports on a tear and the new Liberal government committing to a modest fiscal …
12th August 2016
The acceleration in national house price growth to a six-year high of 10.9% y/y in July, from 10.0%, reflects a spreading out of the housing mania beyond just Toronto and Vancouver. The most recent drop back in the CREA sales-to-listings ratio, however, …
The economy’s reliance on trade with the US means that the current US presidential election campaign could be pivotal for Canada’s export outlook. The big question is whether a President Trump would follow through on the anti-trade rhetoric the nominee is …
5th August 2016
The B.C. government’s announcement last week that it intends to impose a 15% tax on home purchases by foreign investors is unlikely to topple Vancouver’s housing bubble. … Tax on foreign investors won’t pop Vancouver …
29th July 2016
Monthly GDP fell by a bigger-than-feared 0.6% m/m in May, as the Alberta wildfires triggered a massive slump in oil sands production. … GDP by Industry …
The sharp drop in oil prices and the Canadian dollar have led to a rapid deterioration in Canada’s economic outlook, overwhelming the ability of policymakers to stabilise the economy with conventional stimulus. We expect GDP growth to be less than 1% in …
27th July 2016
This is the week that we will finally discover just how badly the economy was hit by the Alberta wildfires in May, which caused the shutdown of the majority of oil production in the Fort McMurray area. Our calculations point to a 0.3% m/m decline in …
22nd July 2016
The surprisingly resilient 0.2% m/m gain in retail sales in May, which was above the consensus forecast of no change, means that monthly GDP probably only contracted by 0.3% m/m despite the disruption caused by the Alberta wildfires. In volume terms, …
The decline in the unemployment rate to an 11-month low of 6.8% in June, from 7.1% as recently as April, is not as good as it looks. It went down primarily because people gave up looking for work not because they found jobs. As a result, the participation …
15th July 2016
The 1.0% m/m decline in manufacturing sales in May was only partly due to the Alberta wildfires and that nominal decline was flattered by a rebound in energy prices. In volume terms, sales fell by a much bigger 2.1% m/m in May, adding to fears that …
After a brief surge at the start of this year, GDP growth has already slowed markedly in recent months. (See Chart.) Unfortunately, the recent limited rebound in commodity prices won’t be enough to prevent a continued decline in investment. Non-energy …
14th July 2016
The Bank of Canada shocked no-one with its decision to leave its key policy rate unchanged at 0.50% today, but we still anticipate that it will eventually be forced to cut rates again, probably in the first half of next year, as the lacklustre performance …
13th July 2016
When the next edition of Charles Kindleberger’s Manias, Panics and Crashes is released , Canada’s housing market will warrant its own chapter. According to Teranet , the 11-city house price index increased by 2.3% m/m in June and the annual growth …
The latest Bank of Canada surveys support our view that falling business investment, particularly in the oil and gas sector, will weigh on the economy in the second half of the year. Making matters worse, non-energy exports have barely risen at all in …
8th July 2016
