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Economy looking a bit better than the Bank expected The 1.0% annualised rise in fourth-quarter GDP was stronger than the stagnation that the Bank of Canada expected and, together with the downward revision to the third-quarter contraction, is reason to …
29th February 2024
Underlying inflation pressures ease in January But signs of stronger economy reduces risk of maintaining restrictive policy We expect the Bank to cut interest rates in June The Bank will be relieved to see the broad-based easing in core inflation in …
28th February 2024
The encouraging January CPI data mean that the Bank of Canada’s April policy meeting is back in play for a potential interest rate cut, although it still seems more likely that the Bank will wait until June – unless the economic and labour market data …
23rd February 2024
Set for a weaker first quarter The strong rise in December means that retail sales volumes rose by close to 5% annualised last quarter, supporting the preliminary estimate that GDP growth turned positive again. With sales volumes broadly unchanged in …
22nd February 2024
Better news on core inflation While the larger-than-expected drop in headline inflation in January was partly driven by weaker than expected energy inflation, the Bank of Canada will be pleased to see the more marked easing in its measures of core …
20th February 2024
Signs of healthy growth going into the first quarter support our view that the Bank of Canada will probably wait until June to pivot to rate cuts. Signs of positive activity in the first quarter The latest January data has brought signs that growth could …
16th February 2024
Although house prices continued to fall in January, lower mortgage rates are beginning to support affordability and stimulate home sales. With the sales-to-new listing ratio now pointing to positive house price inflation, we expect house prices to be …
15th February 2024
Sales dragged down by vehicle plant shutdowns The 0.7% m/m decline in manufacturing sales values in December was actually a positive outcome, since the more downbeat export data had suggested that the fall would be far bigger than the 0.6% m/m provisional …
We survey 12 major advanced economy housing markets to understand why house price falls have been small despite high starting points and sharp increases in mortgage rates. We then use this information to ascertain whether the correction in house prices is …
14th February 2024
The strength of the labour market in January is another reason to think that the Bank of Canada can wait a little longer before it starts to cut interest rates. Bank’s latest communications give little away Governor Tiff Macklem gave little away in his …
9th February 2024
Wage pressures still too strong Although the sharp rise in employment in January may paint a healthier picture of the labour market than what is under the surface, the Bank of Canada will still be concerned about the renewed decline in the unemployment …
Trade balance back in deficit Net trade appears to have contributed to the likely rebound in GDP last quarter but, with exports falling in December and the survey indicators of external demand still weak, that boost will probably go into reverse this …
7th February 2024
To mark the addition of Canada to our Regional Climate Databank , this Update takes a closer look at the sub-national climate-related data in the country. Our Global Climate Databank and Green Transition Scores are the places to go to compare climate …
5th February 2024
The upside surprise to fourth-quarter GDP should, somewhat counterintuitively, make the Bank of Canada more confident that inflation is heading back to 2% because it implies that productivity has rebounded. Nonetheless, with the Federal Reserve pushing …
2nd February 2024
The recent acceleration in the Labour Force Survey measure of wage growth seems to be overstating wage pressures. The other wage indicators, which are normally more reliable, show far lower rates of growth. With labour market slack increasing, it is …
1st February 2024
High interest rates are still feeding through and we expect both GDP and employment to be flat over the next two quarters. As excess supply builds, a fall in inflation to the 2% target will leave scope for the Bank of Canada to cut interest rates sharply, …
31st January 2024
GDP growth set to remain well below potential The monthly GDP data imply that the economy returned to growth in the fourth quarter and the strong handover from December reduces the risk of the economy contracting this quarter, despite the weakness of the …
The outlook for monetary policy all depends on whether the Bank of Canada is willing to act based on where it thinks shelter inflation is heading, rather than its current rate. The Bank’s communications suggest it is starting to move in that direction, …
26th January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts, particularly as the Bank also hinted that it may be willing to look through elevated mortgage interest costs and rent inflation. We continue to …
24th January 2024
Bank drops its hiking bias The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts. We continue to think that the Bank’s forecasts for the economy are too optimistic, and that inflation will slow faster …
The new cap on international student visas is another reason to expect population growth to slow sharply. That will give the Bank of Canada confidence that CPI rent inflation will ease later this year, providing a clearer path for headline inflation to …
23rd January 2024
There was little for the Bank of Canada to be encouraged by this week, with evidence of a further deterioration in the economy yet little sign of a fall in inflation expectations or downward pressure on core inflation. That puts the Bank in a tricky …
19th January 2024
Retail sales volumes rose strongly last quarter Retail sales were weaker than expected in November, but earlier gains and the strong preliminary estimate for December still suggest that sales volumes grew substantially over the fourth quarter. The latest …
CPI-trim and CPI-median are overstating inflation pressures Economy going from bad to worse Bank to start cutting interest rates in April The acceleration in the CPI-trim and CPI-median measures of core inflation in December suggests the Bank of Canada …
17th January 2024
Lower mortgage rates supporting demand The decline in mortgage rates appears to be supporting demand, with home sales rebounding last month. While prices continued to fall in December, the sales-to-new listing ratio is now pointing to positive house price …
16th January 2024
Core inflation pressures still too strong Although the rise in headline inflation in December was mainly due to gasoline price base effects, the more worrying development is that the CPI-trim and CPI-median core measures both rose by a larger 0.4% m/m. …
The Bank of Canada’s quarterly business and consumer surveys continue to flash warning signs about the outlook for the economy and labour market. The normalisation of inflation expectations remains painfully slow, however, presenting a risk to our view …
15th January 2024
Temporary rebound in sales volumes The rebound in manufacturing sales in November was broad-based but, with new orders dropping back and the manufacturing surveys weakening in December, that strength is unlikely to be sustained. The 1.2% m/m rise in …
The latest Trans Mountain regulatory hearing will determine whether the pipeline expansion is once again delayed. That would weigh further on the outlook for exports, with external demand already very weak. Another year, another year’s delay? Admittedly, …
12th January 2024
Tougher times ahead for exporters Export volumes were little changed in November but the surveys suggest that tougher times lie ahead, with export orders seemingly falling fast in December. The trade surplus halved to $1.6bn in November as exports …
9th January 2024
Conditions in the housing market seem to be improving, with the local real estate board data pointing to a big improvement in the home sales-to-new listing ratio in December. While the unseasonably warm weather may have played a role and house prices …
5th January 2024
This page has been updated with additional analysis since first publication. Jump in wage growth a concern for the Bank The unchanged level of employment in December is consistent with the message from the business surveys that labour demand has weakened …
A version of this article appeared in the Globe and Mail on 3 rd January, 2024. Read that version here . The giant leap forward for artificial intelligence has inevitably led to concerns about the potential for mass unemployment. Tripping over …
3rd January 2024
It is no secret that strong immigration is pushing up rents but, as rent growth for new tenancies was little changed last year, this does not fully explain the surge in CPI rent inflation. The CPI measure is picking up unusually large rent increases on …
Canada Chart Pack (Dec. 2023) …
28th December 2023
Data this week showed that the population jumped by 430,000 in the third quarter alone, almost as much as the official full-year permanent resident target of 465,000. Nonetheless, the November CPI data showed a much-needed slowdown in rent inflation, …
22nd December 2023
This page has been updated with additional analysis since first publication. Rate cuts approaching The weaker-than-expected monthly GDP figures raise the risk that the economy contracted again this quarter and are another reason to think that the Bank of …
Consumption growth better than feared The strong rise in retail sales volumes in October suggests that consumption growth will accelerate this quarter. That presents an upside risk to our forecast that GDP will edge down again, although we remain …
21st December 2023
This page has been updated with additional analysis since first publication. A temporary step backward The renewed acceleration in core inflation pressures in November was largely due to a jump in travel tour prices, which is likely to be quickly …
19th December 2023
Household net worth fell in the third quarter, although the recent resurgence in bond and equity prices means that should soon be reversed. It is too soon to sound the all-clear for households’ finances, however, given that the debt service ratio is set …
15th December 2023
A weak November but lower mortgage rates ahead November was a weak month all round for housing, with prices falling at a faster pace and starts plunging. Lenders are already cutting mortgage rates in response to the recent drop in bond yields, which could …
A third consecutive decline in sales volumes The slump in manufacturing sales volumes in October suggests that there are downside risks to the flash estimate that GDP rose by 0.2% m/m at the start of the fourth quarter. The 2.8% m/m decline in …
14th December 2023
The Bank of Canada this week reiterated that strong immigration is putting upward pressure on inflation because housing supply is failing to keep up. Yet the Bank surely can’t be oblivious to the negative impact of high interest rates on construction. …
8th December 2023
Overview – Further declines in GDP in the coming quarters mean that the economy is unlikely to grow at all next year. Weak growth and a return in inflation to the 2% target will leave scope for the Bank of Canada to cut interest rates sharply, with the …
7th December 2023
The Bank of Canada is clinging on to the idea that restrictive policy is still needed to get inflation back to 2%. Nonetheless, with core inflation pressures muted, GDP and house prices falling, and labour market conditions loosening rapidly, it won’t be …
6th December 2023
Bank maintains tightening bias, but next move likely to be a cut The policy statement from the Bank of Canada was a bit more hawkish than we expected, with the Bank reiterating that it is still concerned about the outlook for inflation and “remains …
Slump in imports only partly due to UAW strike The slump in import volumes in October was partly due to the knock-on effects of the UAW strike in the US, but it also suggests that firms are now drawing down their inventories as demand weakens. That raises …
The revisions to the national accounts leave the post-pandemic recovery looking stronger than we thought. But that is partly due to intense inventory building, which leaves the economy vulnerable to a period of destocking now that demand is weakening. …
1st December 2023
Labour market conditions loosening The labour market is weaker than the 24,900 rise in employment might suggest, with the unemployment rate rising again and hours worked slumping by 0.7% m/m last month. The fall in hours worked means that the preliminary …
