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The unexpected 0.1% m/m decline in April's GDP and slight downward revisions to earlier figures suggest that the economy likely slipped into a recession in the second quarter. With the fallout from the oil price shock far from over, we now expect the Bank …
30th June 2015
Although there is limited scope to reduce interest rates further, the hit from lower oil prices on the economy is taking a heavier toll than widely acknowledged. Without any offset from the non-energy economy, we see no reason why the Bank wouldn't take …
29th June 2015
The increase in the national jobs vacancy rate over the past year suggests that the economy has withstood the oil price shock. Closer examination, however, reveals that this measure lags economic growth by as much as six months. Accordingly, we would be …
22nd June 2015
While May's inflation figures are consistent with the Bank of Canada's forecast, the incoming data suggest that the real economy is still underperforming. If economic growth undershoots the Bank's projections for the rest of the year as we expect, then it …
19th June 2015
The larger than expected decline in April's manufacturing sales suggests that the recent big gains in factory jobs were perhaps a head fake and that the economy began this quarter on a weak footing. Accordingly, the risks to our forecast that …
15th June 2015
The recent rebound in crude oil prices isn't enough to make new oil sands projects profitable again. With the list of cancelled projects growing with each passing day, we expect falling business investment to remain a large drag on the economy over the …
The rate of house price inflation edged up to 4.6% in May, from 4.4%, and the recent rebound in the existing home sales-to-new listings ratio indicates that is where it might remain over the rest of the year. This seemingly tranquil headline, however, …
12th June 2015
After a weather-related pause in the first quarter, household spending is soaring. Faster income growth and a potential drop in the saving rate could see second-quarter consumption grow by more than 5.0% annualised. But we wouldn't bet on a repeat …
9th June 2015
After a dismal turn in the first quarter of the year, the economy should perform somewhat better in the second quarter, but the pace of growth is likely to be unspectacular. With growth of no more than 1.0% annualised expected, this will leave lingering …
8th June 2015
The fact that the economy generated a surprisingly strong 58,900 jobs in May suggests that it is holding up against the oil price shock better than we had expected. This supports the Bank of Canada view that the January rate cut was enough insurance. … …
5th June 2015
The futures market indicates that most investors are now convinced by the Bank of Canada's view that the January interest rate cut will be enough to prevent the economy from being derailed by the collapse in oil prices. In contrast, we think that the …
3rd June 2015
While April's slight pick-up in exports volumes might prompt suggestions that the economy began the second quarter on a stronger footing, the sharp decline in imports indicates that domestic demand only got weaker. Accordingly, this doesn't inspire much …
While headline inflation has fallen sharply due to lower energy prices, the boost to core inflation from the lower Canadian dollar may fade sooner than most realise. Wholesale price inflation, which is most sensitive to swings in the exchange rate, …
29th May 2015
The unexpected 0.6% annualised decline in first-quarter GDP suggests that the Bank of Canada's single 25 basis point rate cut in January may not have been enough insurance against the oil price slump after all. … GDP …
The Bank of Canada's policy statement this morning showed that it remains confident in its optimistic growth outlook and believes that the January rate cut was enough insurance against the oil price shock. We, however, doubt it and anticipate the economy …
27th May 2015
The all-clear siren sounded by the Fraser Institute last week on household debt is misleading. The debt service metric they use only captures the interest cost portion of debt, which completely misses the point in a high debt, low interest rate …
25th May 2015
While headline inflation fell below the Bank of Canada's 1% to 3% target range in April , the ongoing impact of the weaker loonie meant that core inflation rate was still as high as 2.3%. The impact of the currency depreciation will eventually fade, …
22nd May 2015
At next week's policy meeting we expect the Bank of Canada to keep its policy rate at 0.75%. Tighter financial conditions over the past month, however, may have it second guessing whether or not the January rate cut was enough insurance against the oil …
20th May 2015
The recent job losses in the construction sector are likely only a precursor of what's in store for the year ahead. Falling energy investment and cooling housing demand could form the perfect storm, with potential job losses in the sector exceeding those …
18th May 2015
Although the rebound in manufacturing sales in March was stronger than expected, this mainly reflected volatility in transportation, with little evidence of any underlying improvement. Accordingly, this supports our view that the economy stagnated in the …
15th May 2015
The rate of house price inflation edged down to 4.4% in April, from 4.7%, and the existing home sales-to-new listings ratio indicates that some further slowing is likely in the coming months. … Teranet-National Bank House Prices …
13th May 2015
Canada's growing current account deficit probably hit a record high in the first quarter, as the impact of the recent slump in oil prices hit export revenues. The lower Canadian dollar will help to narrow the deficit eventually but, in the near-term, the …
11th May 2015
Although employment declined by a larger than expected 19,700 in April, the details showing strong full-time gains was reassuring, as was the fact that the unemployment rate remained at 6.8%. Nevertheless, the slowing trend in employment hints at …
8th May 2015
The widening of the merchandise trade deficit in March to C$3.0bn, from C$2.2bn, mostly reflected a decline in the terms of trade, whereas export and import volumes rebounded by a similar margin. For the first quarter as a whole, however, external trade …
5th May 2015
In his appearance before the House of Commons Finance Committee last week, Bank of Canada Governor Stephen Poloz reassured policymakers that the economy is showing signs of progress and that the positives will soon outweigh the negatives from the slump in …
4th May 2015
Although February's GDP stagnation was a more mild result than most expected, the details indicated that the fallout from the slump in oil prices hasn't really hit yet, while other parts of the non-energy economy continue to struggle. Accordingly, we …
30th April 2015
The faster pace of payroll job gains might normally be a more trustworthy gauge of labour market trends than the more volatile Labour Force Survey employment figures. The slowdown in real GDP growth that began late last year, however, suggests that, …
27th April 2015
The futures market indicates that most investors are now convinced by the Bank of Canada's view that the January interest rate cut will be enough to prevent the economy from being derailed by the collapse in oil prices. (See Chart.) In contrast, we think …
21st April 2015
Although the Conservative-led government fulfilled its pledge to eliminate the Federal budget deficit, fiscal restraint at this juncture seems unnecessary considering the negative fallout from the slump in oil prices. We expect economic growth to be much …
The Bank of Canada's policy statement last week showed that it isn't willing to fold on its optimistic growth predictions, despite being dealt a bad card in the first quarter. Instead, it decided to double down, by arguing that the oil shock is almost …
20th April 2015
The rise in the official core inflation rate to 2.4%, from 2.1%, was a surprise, but the details showed that this was largely due to pass-through effects from the lower Canadian dollar, rather than any fundamental strengthening in underlying economic …
17th April 2015
The Bank of Canada kept its policy rate at 0.75% this morning, showing confidence that, after stalling in the first quarter, the economy will rebound in the second quarter and never look back. We think this is pure fantasy and expect the oil shock to hit …
15th April 2015
February's larger than expected decline in manufacturing sales, which partly reflects some temporary shutdowns at auto assembly plants and bad weather, is further evidence that first quarter GDP growth was very weak. The balance of risks around our …
Although house price inflation rose to 4.7% in March, from 4.4%, the existing home sales-to-new listings ratio suggests that any further pick-up is likely to be short-lived. … Teranet House Prices …
14th April 2015
The Canadian dollar, which has slumped in response to low oil prices, weakening domestic fundamentals and an easing in monetary policy, probably still has further to fall. An even weaker currency would benefit non-energy exporters, but it will only partly …
13th April 2015
Employment rose by 28,700 in March, more than anyone expected, though not by enough to reduce the jobless rate from 6.8%. The details, however, were less impressive. Even so, the odds of a rate cut by the Bank of Canada next week have diminished somewhat, …
10th April 2015
Canada's economic outlook has deteriorated significantly over the past few months. With energy prices showing no signs of a rebound, oil producers have slashed plans for future investment and employment. A downturn in housing also appears to be underway, …
7th April 2015
The Bank of Canada's latest Business Outlook Survey shows that, while some firms are benefitting from a weaker Canadian dollar, the slump in crude oil prices is having a greater negative impact on the outlook for business investment and hiring. … Oil …
While the modest decline in January's GDP was a better result than most economists had feared, we suspect that this may just be the calm before the storm. The continued collapse in oil & gas drilling rig activity since January indicates that the worst …
The decline in Canada's trade deficit to C$1.0bn in February, from an upwardly revised C$1.5bn, reflected an improvement in the terms of trade. Export and import volumes both fell, supporting our view that the economy performed very poorly in the first …
3rd April 2015
Although the 0.1% m/m decline in January's GDP was more mild than most expected, the first signs of a slump in oil and gas drilling points to more weakness ahead. As things stand now, we estimate the economy barely grew by 0.5% annualised in the first …
1st April 2015
The collapse in domestic drilling activity, triggered by the slump in oil prices, which has been compounded by another year of unseasonably bad winter weather, has been severe enough to indicate that the economy contracted in the first quarter. With the …
31st March 2015
The speech earlier today by Bank of Canada Governor Stephen Poloz and his remarks during the press release shortly afterwards suggest that the Bank isn't in any hurry to cut rates further. Accordingly, the odds of another rate cut coming in April are …
26th March 2015
After slowing in the final quarter of last year, the economy appears to have lost considerably more momentum this quarter, with GDP growth likely to be no better than 1.0% annualised, below the current consensus forecast of a 1.5% gain. Furthermore, we …
23rd March 2015
While February's headline inflation rate remained at 1.0%, the core inflation rate eased to 2.1%, from 2.2%. These figures by themselves won't sway the Bank of Canada to cut interest rates further. But the continued weakness in indicators of real economic …
20th March 2015
Canada's economy continued to lose momentum in the final quarter of last year and the slowdown was only partly due to lower oil prices. Furthermore, the seemingly gradual slowdown in headline GDP growth masks a potentially much sharper decline in …
19th March 2015
January's larger than expected decline in manufacturing sales, which partly reflects the petroleum industry downturn, suggests that the economy started the year poorly. The balance of risks around our first-quarter GDP growth forecast of 2.0% annualised …
17th March 2015
The slump in crude oil prices has changed the Bank of Canada's game plan and, we fear, could prove to be the trigger that bursts the housing bubble, derailing the economy in the process. Under these circumstances, we think short term interest rates and …
16th March 2015
February's modest decline in employment and rise in the unemployment rate, to 6.8% from 6.6%, reflects the early negative effects of a downturn in the mining sector. Accordingly, this supports our view that the Bank of Canada is likely to cut interest …
13th March 2015
The Teranet-National Bank index shows that house price inflation slowed to 4.4% in February, from 4.7% in January, partly due to the abrupt slowdown in housing activity in regions hit by the slump in oil prices. House price inflation is likely to slow a …
12th March 2015
