Filtered by Subscriptions: Canada Economics Use setting Canada Economics
November's flat export and import trade figures suggest that the economy lost some momentum mid-way through the fourth quarter of last year. Given the fairly strong start to that quarter, however, we still think that GDP may have risen by as much as 3.0% …
7th January 2014
The consensus view that economic growth will accelerate this year is misplaced. While exports and business investment should improve modestly, we anticipate this will be more than offset by weaker housing construction, triggered by a pullback in the …
6th January 2014
October's stronger-than-consensus GDP growth of 0.3% m/m suggests that activity began the fourth quarter on a solid footing. For the quarter as a whole, we now think that the economy will expand by just over 3.0% at an annualised pace. … GDP by Industry …
23rd December 2013
The many large-scale energy-related investment projects that are in the works are certainly an encouraging sign for the longer-term economic outlook. With many of these projects still awaiting final government approval, however, the economic benefits are …
20th December 2013
With core inflation unexpectedly falling even closer to the bottom of the 1% to 3% target range in November, the Bank of Canada will be more worried than before about the downside risks to inflation. … Consumer Prices (Nov.) & Retail Sales …
We anticipate only a modest pick-up in the growth rates of exports and business investment, which will be more than offset by the impact of an outright decline in residential investment and slower consumption growth. After growing by 1.7% this year, GDP …
19th December 2013
October's surprisingly strong gain in manufacturing sales volumes was largely due to the strength of the rebound in food sales. The weakness of sales in most other categories and the downward trend in unfilled orders, however, indicate that conditions …
17th December 2013
The Bank of Canada's latest semi-annual Financial System Review was a stark reminder that a lot could go wrong for Canada over the next year or two. While highlighting the progress in Europe, it now views the emerging market economies as a new downside …
16th December 2013
The further acceleration in house price inflation to a 13-month high of 3.4% in November, from 3.1%, reflects the pick-up in existing home sales seen earlier this year. Most recently existing home sales have dropped back, however, and we expect sales to …
12th December 2013
While the recent condo-driven pick-up in housing starts will provide a boost to fourth-quarter residential investment, the slump in new home sales suggests it will be reversed next year, making housing a drag on GDP growth. … Housing will become a drag on …
9th December 2013
The Bank of Canada's increasingly dovish stance explains only a small part of the recent depreciation of the Canadian dollar. We think it has more to do with the pullback in commodity prices, especially crude oil, which is a negative for the economic …
6th December 2013
November's stronger than expected 21,600 gain in employment was overshadowed by the decline in hours worked. Accordingly, the incoming data still points to slower fourth-quarter GDP growth, which we forecast will be 1.5% annualised. … Labour Force Survey …
Canada's economic growth rate has rebounded slightly after the disconcerting slowdown in the second half of last year. Growth remains overly dependent on unsustainable household borrowing, however, which is boosting consumption and residential …
4th December 2013
Although the Bank of Canada maintained its neutral stance as expected, its policy statement showed that it does have more concerns about the growth and inflation outlook, just not enough right now to justify any change in policy. Nevertheless, with the …
October's decline in export volumes illustrates that any export-led recovery is still some way off. This supports our view that fourth-quarter GDP growth will slow to a very underwhelming 1.5% annualised. … International Merchandise Trade …
The recent softening in underlying inflation, which has been partly driven by the widening output gap, has triggered speculation that Canada faces the risk of a deflation developing, particularly if economic growth continues to disappoint. But the …
2nd December 2013
Although the pick-up in third-quarter GDP growth is encouraging, it partly reflects the rebound from flooding in Alberta and the construction strike in Quebec. Unfortunately, the details show a continued weakness in external trade that justifies the Bank …
29th November 2013
Following the downgrading of its economic outlook and dropped tightening bias, the recent economic data have been just about strong enough to allow the Bank of Canada to stand pat at next week's policy meeting. But with its export-led growth plan likely …
27th November 2013
It is encouraging that, even allowing for the modest drop back in September, the payroll survey suggests employment growth picked up in the third quarter. Unfortunately, over the past year, payroll job gains have been less impressive and, more worryingly, …
The slowdown in third-quarter business profit growth and the more recent pullback in commodity prices suggest that investment growth will remain lacklustre. Accordingly, the Bank of Canada's hopes of an export and investment led pick-up in economic …
26th November 2013
The OECD's suggestion that the Bank of Canada may need to raise interest rates soon is misplaced for two reasons. First, it underestimates the amount of monetary policy stimulus that will be needed to shore up economic growth and thereby achieve the …
25th November 2013
October's muted core inflation reading illustrates the considerable economic slack that remains and supports the Bank of Canada's recent decision to discard its tightening bias. With an acceleration in economic growth still some way off, underlying …
22nd November 2013
Finance Minister Jim Flaherty's latest threat to intervene in the housing market appears ill-timed. Although the recent pick-up in existing home sales points to some acceleration in house price inflation over the coming few months, there is a danger that …
18th November 2013
September's stronger than expected increase in manufacturing sales volumes indicate that monthly GDP grew by a respectable 0.2% m/m. For the third quarter as a whole, this suggests some slight upside risk to our third-quarter GDP growth estimate of 2.5% …
15th November 2013
September's trade figures confirm that, for the third quarter as a whole, exports were a material drag on GDP growth, which we estimate was 2.5% annualised. … International Merchandise Trade …
14th November 2013
The further acceleration in annual house price growth to 3.1% in October, from 2.7%, reflects the recent rebound in home sales. Since the latter largely reflects a rush to take advantage of low mortgage rate offers before they expire, we don't expect it …
13th November 2013
After enjoying a stronger than expected 2012-13 fiscal year, the Federal government is taking a cautious approach and sticking with its previous timetable to eliminate the budget deficit by 2015. With the economy likely to continue underperforming, …
12th November 2013
The capacity constraints affecting cross-border pipelines and outages at major US refineries have caused a backup in Canadian oil inventories, temporarily depressing Canadian oil prices. But as these pipeline restrictions ease and US refineries come back …
11th November 2013
October's moderate 13,200 increase in employment, which was only slightly above the consensus estimate of 11,000, is further evidence that the economy is struggling to produce any material improvement in labour market conditions. This justifies the Bank …
8th November 2013
Canada's economic growth appears to have accelerated to close to 2.5% annualised in the third quarter, the fastest pace in two years, thanks partly to a rebound in energy production. With other sectors of the economy such as manufacturing still …
6th November 2013
The recent pullback in the Canadian dollar owes more to weaker domestic fundamentals rather than volatile commodity prices. With domestic economic conditions likely to remain sluggish through next year and the US Federal Reserve still on course to begin …
4th November 2013
The Canadian government's new free trade agreement with the EU, should it be ratified, will provide only modest economic benefits. Since this ratification will take a year or two, the trade deal does not change the sluggish outlook for the economy over …
31st October 2013
The stronger than expected 0.3% m/m increase in August GDP suggests that the economy grew by close to 2.5% annualised in the third quarter, stronger than our previous estimate of 2.0%. But since much of this growth reflects a surge in energy output, it is …
In addition to downgrading its economic outlook last week and postponing when it expects the economy to return to full capacity until late 2015, the Bank of Canada also lowered its estimate of potential output growth. … Capacity constraints won't threaten …
28th October 2013
The Bank of Canada's decision to downgrade its economic outlook and drop its vague tightening bias supports our view that if there is any change in monetary policy over the near-term, it would be to provide more policy support, not less. With economic …
23rd October 2013
The moderate increase in August retail sales volumes, after earlier reports showing unimpressive wholesale and manufacturing figures for that month, suggest that the economy might have struggled to grow by 0.1% m/m. Given the stronger start to the last …
22nd October 2013
We estimate that stronger business investment growth of close to 7.0% annualised helped to boost third-quarter GDP growth, possibly slightly above 2.0% annualised. It is important to stress, however, that this pick-up mainly reflects a post-strike related …
21st October 2013
September's slightly weaker than expected core inflation reading is consistent with the increase in economic slack over the past year. With the Bank of Canada's export-led recovery hopes likely to face even more delays, we expect underlying inflation to …
18th October 2013
We don't expect the Bank of Canada to make any major changes in next week's policy statement (Wednesday, 23rd October). While weak exports and business confidence are likely to have prompted some small downgrades to its GDP outlook, its tightening bias …
16th October 2013
The small decline in manufacturing sales volumes in August suggests that, after rebounding strongly in July, the economy grew by only 0.1% m/m in August. Nevertheless, given the strong start to the third quarter, we still think that the economy managed to …
The uptick in house price inflation, to 2.7% in September from 2.3% in August, is consistent with the reported decline in the supply of housing inventory. But with home sales being pulled forward in the largest and most expensive housing markets over …
15th October 2013
The historically high number of housing units under construction justifies the current strength of construction employment. But the negative spread between housing starts and completions signals that housing construction may soon become a drag on both …
14th October 2013
The latest Business Outlook Survey dealt another blow to the Bank of Canada's upbeat growth outlook. With businesses turning more cautious on the outlook for sales and capital investment, even our bearish GDP growth forecasts for this quarter and next …
11th October 2013
September's modest 11,900 increase in employment, mostly among younger workers, still suggests that the economy is struggling to generate any material improvement in broader labour market conditions. Accordingly, September's labour report is unlikely to …
After being hit by floods and a major labour union strike at the end of the second quarter, Canada's economy rebounded sharply at the start of the third. For the third quarter as a whole, we now estimate that GDP growth was 2.0% annualised. Nevertheless, …
10th October 2013
As the export recovery is further delayed and housing activity softens, we expect Canada's economy to continue to struggle over the next two years. After growing by 1.6% this year, we forecast annual GDP growth of 1.5% in 2014 and 2015. … Housing to hold …
8th October 2013
The unexpected widening of the trade deficit in August suggests that net trade will remain largely neutral for third-quarter GDP growth, which we estimate to be 2.0% annualised. With export volumes still trending sideways, the Bank of Canada's export-led …
The record new motor vehicle sales streak this year mainly reflects the ongoing unwinding of pent-up demand. With some pent-up demand still remaining, vehicle purchases are likely to improve somewhat further this year, before eventually easing back to …
4th October 2013
