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The recent condo-surge which propelled housing starts to levels above demographic requirements in the second quarter is not convincing evidence that the housing slowdown is over. More timely indicators show that new housing demand is still falling sharply …
9th July 2013
The latest Business Outlook Survey suggests that businesses do not expect any material improvement in future sales growth and, as a result, are scaling back their investment plans. Accordingly, softening business sentiment supports our view that Canada's …
8th July 2013
The Bank of Canada has set its economic growth hopes on a revival in exports and business investment. Unfortunately, exports and business investment appear to have lost much needed momentum in the second quarter. Against the still uncertain global …
The fact that employment was unchanged in June, after posting a record-matching 95,000 gain in May, is an encouraging sign that economic conditions did not worsen too much in the second quarter. Nonetheless, trend employment gains are still consistent …
5th July 2013
After being propelled by a rebound in energy exports earlier this year, economic growth appears to have decelerated heading into the second quarter. Moderate export growth, cautious business investment and housing weakness point to sluggish second-quarter …
4th July 2013
The recent rise in rate expectations and bond yields might prompt the Bank of Canada to consider providing some concrete forward guidance in its next policy statement. While the Bank need not go as far as following the US Fed and introducing numerical …
1st July 2013
Canada's economy continued to decelerate at the start of the second quarter, with real GDP expanding by a modest 0.1% m/m in April. Some surprising strength in services helped offset a moderate decline in industrial production. We still estimate that the …
28th June 2013
The further decline in the CFIB's measure of small and medium-sized business confidence in June provides us with more evidence that, after the decent 2.5% annualised gain in the first quarter, second-quarter GDP growth weakened. … Softer business survey …
27th June 2013
Fiscal policy might have to provide more stimulus soon unless economic growth improves materially. For housing bears such as ourselves, the potential for additional fiscal stimulus helps to limit the downside risks from a housing slump and a sharp decline …
26th June 2013
The Canadian dollar is likely to trend lower against the US dollar this year and next. While further declines in commodity prices are likely to play a minor role, we anticipate narrowing interest rate differentials between Canada and the US will be the …
24th June 2013
The recent improvement in the global economic outlook and changing prospects for US monetary policy in particular have prompted us to revise our global bond yield forecasts moderately higher. Unfortunately, even moderate increases in US long-term rates, …
With the official core inflation measure unchanged at a worryingly low 1.1% in May, the output gap would appear to be larger than the Bank of Canada is willing to admit. If, as we expect, economic growth fades this year, then underlying inflation will …
21st June 2013
Although our seasonally-adjusted measure of the household debt-to-income ratio nudged higher in the first quarter of this year, the trend appears to have stabilised. This suggests that there is even less need now for the Bank of Canada to maintain its …
20th June 2013
Governor Stephen Poloz's debut public speech, which focused on the fragile global recovery and lack of business confidence, touched on our long-held concerns about Canada's economic recovery and why we think monetary policy will have to remain highly …
19th June 2013
The rise in the annual growth rate of unit labour costs has more to do with declining labour productivity, rather than any acceleration in the growth rate of labour compensation. Looking ahead, we expect labour productivity growth to remain lacklustre, …
17th June 2013
With most attention focused on the housing sector, the plight of the manufacturing sector has gone largely unnoticed. But manufacturing sales volumes have been trending lower for more than a year now and fell by an additional 1.6% m/m in April. … …
14th June 2013
In spite of the sharp 1.1% m/m increase, the annual growth rate of Teranet house prices held steady at 2.0% in May. For now, both the past decline in existing home sales and the steady rise in the amount of properties for sale suggest that this growth …
12th June 2013
Recent housing evidence does not convince us that Canada's housing downturn has stabilised. As housing demand remains sluggish in certain markets and softens further in others, we expect the still elevated level of new home building to decline further, …
10th June 2013
It is becoming more clear that sluggish global demand and volatile commodity prices will outlast the willingness and ability of households' to provide debt-fuelled support to economic growth. Without any material improvement in global demand conditions, …
The spectacular 95,000 increase in employment in May is almost the strongest on record and obviously makes up for the unusually soft figures over the previous several months. But the recent volatile nature of these data suggest some caution in …
7th June 2013
The pick-up in first-quarter GDP growth to 2.5% annualised, propelled by an energy-driven rebound in net exports, masks the undertow from the slowing domestic economy. Government spending restraint, waning business confidence and the nascent housing …
5th June 2013
April's encouraging 0.7% m/m advance in export volumes, following the previous month's much stronger gain, indicates that exports are holding up and that external trade may continue to buffer GDP growth in the second quarter. This suggests that there is …
4th June 2013
Home building in Canada is on an ominous downward slope, similar in many ways to what happened in the early stages of the slump in the US. For this reason we think it is premature for policymakers to declare of soft landing. Unfortunately, now the hot air …
3rd June 2013
The pick-up in GDP growth to 2.5% annualised in the first quarter is unlikely to be sustained because it was partly due to a one-off rebound in energy exports. Those exports are now almost completely recovered after the disruptions to production last …
31st May 2013
The further decline in the small and medium-sized business confidence in May suggests that second-quarter GDP growth may have slowed down to less than half the estimated 2.2% annualised in the first quarter. … Business confidence falters on insufficient …
30th May 2013
Political unrest, a fragile banking sector and a weak fiscal position are all likely to weigh on Bahrain’s economy over the next few years. As a result, we expect it to be one of the worst performers in the Gulf. … Wages and salaries less supportive to …
29th May 2013
The Bank of Canada stood pat, leaving its tightening bias unchanged ahead of the arrival of the new Governor. The challenges that Governor Poloz will face, namely a weak global economy, volatile commodity prices and a housing downturn, suggest that any …
Against the fragile global backdrop and the volatility of Canadian energy prices, business operating profits, which nudged lower in the first quarter of this year, are likely to remain under considerable pressure this year. Under these circumstances, we …
28th May 2013
Underlying inflation has fallen below the Bank of Canada's inflation 1% to 3% target range and could decline even further if the real economy underperforms this year. Accordingly, without additional policy stimulus, there is a danger that Canada could …
27th May 2013
The outgoing Governor Carney's last scheduled statement next week (May 29th) is unlikely to hint at any shift in policy. Nor do we believe that his replacement Stephen Poloz, due to take over next month, will make any immediate changes. But the Bank's …
24th May 2013
Despite the healthy 0.7% m/m gain in retail sales volumes in March, earlier reports showing far more tepid increases in manufacturing and wholesale trade suggest that the economy ended the first quarter on a somewhat softer note. Nevertheless, given the …
22nd May 2013
After shoring up economic growth over the second half of last year, economic indicators suggest that household consumption will be less supportive to growth over the first half of this year and possibly beyond. With policymakers threatening more loudly to …
20th May 2013
The official core inflation figure, which declined to a slightly lower than expected 1.1% in April from 1.4% in the previous month, might slip below its target range as economic growth disappoints this year and the unemployment rate nudges higher. Under …
17th May 2013
Although manufacturing sales volumes rose by a small 0.2% m/m in March and February's gain was revised down to 1.8% m/m from 2.5% m/m, first-quarter GDP growth is still likely to accelerate to between 2.0% and 2.5% annualised, from 0.6% in the fourth …
15th May 2013
Although house prices rose on a month-on-month basis in April, the annual growth rate slipped to a three-and-a-half-year low of 2.0%, from 2.6% in March. As home sales continue to fall, we expect house prices to eventually start to decline. … …
14th May 2013
The Canadian dollar's recent advance is likely to fizzle out as it becomes clearer to the market that Canada's economy is actually losing momentum. We expect lower commodity prices and a severe housing market downturn to badly constrain economic growth …
13th May 2013
April's moderate 12,500 gain in employment (the consensus estimate was +15,000) suggests that the economy has begun this quarter on a somewhat softer footing. If we are correct about the economy's softening underlying trend, then the Bank of Canada could …
10th May 2013
The continued decline in housing starts from elevated levels supports our view that residential investment will remain a drag on economic growth over the first half of 2013. Unfortunately, housing starts are likely to drop even further in the second half …
9th May 2013
The downward trend in housing starts supports our long-held view that a housing correction is underway. More importantly, the slump in pre-construction condo sales and dwindling number of new project launches indicate that this seemingly mild slowdown …
8th May 2013
The announcement that Stephen Poloz will be the next Bank of Canada Governor came as something of a surprise, since the current number two at the Bank, Tiff Macklem, was widely tipped to take over. But there are no obvious implications for the monetary …
6th May 2013
Canada posted it's first monthly trade surplus in a year in March. Unfortunately, we expect the improvement to be fleeting. The March figures were flattered by a big weather-related jump in natural gas export volumes to the US and a sharp drop in the …
2nd May 2013
The bigger than expected 0.3% m/m increase in Canada's monthly GDP for February, alongside the upward revision to January's gain, suggests that first-quarter GDP growth was at least 2% annualised. … GDP by Industry …
30th April 2013
The release of the provincial GDP figures for 2012 provides us with more evidence that the resource-rich western provinces were behind the bulk of the slowdown in overall economic growth last year. The recent volatility in Canadian oil prices, and the …
29th April 2013
The recent softening in retail sales suggests that household consumption growth has slowed almost to a crawl. Our analysis shows that retailers are struggling partly because households, enticed by the strong Canadian dollar and more generous cross-border …
Although consumption growth was respectable in the second half of last year, the further deceleration in income growth, along with the reported weakness of retail spending, suggests that it has slowed. The modest upward trend in consumer sentiment won't …
25th April 2013
February's retail sales volumes, which were unchanged from the month before, suggest that first-quarter household consumption grew somewhat more slowly than in the previous quarter. This supports our view that the economy continued to underperform its …
23rd April 2013
The Bank of Canada and, to a lesser extent, the International Monetary Fund still remain overly optimistic about Canada's economic growth outlook. The IMF has acknowledged, however, that the negative risks around its latest forecast outweigh the positive, …
22nd April 2013
The official core inflation figure, which held steady at 1.4% in March, is likely to drift lower through this year, as the excess slack in the economy continues to grow due to sluggish economic growth. Providing that housing and household borrowing …
19th April 2013
Based on our calculations of total domestic net worth, Canadians appears to be better off than their seemingly more affluent neighbours to the south. The problem is that the advantage Canada enjoys is largely due to the run-up in residential property …
18th April 2013
The Bank of Canada's decision to stick with its rate tightening bias, despite growing economic slack and below-target inflation, rests uncomfortably on its faith that economic growth will accelerate markedly in the second half of this year and further in …
17th April 2013
