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Despite house prices rebounding by 0.4% m/m in March, the annual rate of house price growth dropped to a three-year low of 2.6%, down from 2.7% in February. We expect that, as existing home sales trend lower in the upcoming months, this house price …
17th April 2013
February's surprising 2.5% m/m rebound in manufacturing sales volumes, which follows two consecutive monthly declines, suggests that overall economic growth in that month might have increased by 0.2% m/m, possibly more. Overall, the risks to our …
16th April 2013
The year-on-year drop in existing home sales supports our view that a potentially hard housing market correction is underway. Assuming that home sales continue to trend lower this year, then this will eventually lead to outright home price declines. … …
15th April 2013
The downward trend in housing starts is not over. While home builders continue to 'adjust' to softening housing demand, the oversupply of new unoccupied housing units are likely to become more excessive, reaching the high levels witnessed during Canada's …
Weaker business investment intentions could not come at a worse time for the domestic economy. With housing investment contracting and governments reining in spending, slower business investment growth will make it even tougher for the economy to …
11th April 2013
We don't anticipate any major changes from the Bank of Canada at Governor Mark Carney's penultimate policy meeting next Wednesday (April 17th), but the Bank will be forced to admit in the accompanying Monetary Policy Report (MPR) that it has been …
10th April 2013
A protracted housing downturn, less supportive growth in business investment and controlled government spending will curb economic growth this year. Thankfully, moderate export growth will bolster an otherwise sagging economy. Nevertheless, we expect …
9th April 2013
The downward trend in existing home sales, building permits and housing starts suggests that shrinking residential investment will be a drag on GDP growth over the first half of this year. Accordingly, we still remain convinced that the Bank of Canada …
The latest Business Outlook Survey suggests that, while slightly more businesses expect future sales to pick-up over the next 12 months, investment intentions have been scaled back and hiring intentions remain moderate. Overall, this suggests that, rather …
8th April 2013
The Spring housing season is just getting underway but, unfortunately, hopes of a rebound in housing demand don't look promising. The affordability argument based on low mortgage rates isn't enticing greater numbers of would-be homeowners because …
March's ugly 54,500 decline in employment offsets the previous month's equally surprising gain, leaving employment little changed over the first quarter of this year. Given recent sluggish GDP growth this is not terribly surprising. Unfortunately, …
5th April 2013
The latest survey of private sector forecasters, included in the recent Federal Budget, shows that they remain overly optimistic about the prospects for economic growth in 2013 and beyond. Ignoring the fragile global backdrop, discounted Canadian oil …
1st April 2013
January's 0.2% m/m rebound in monthly GDP, which reversed a similar-sized contraction in the final month of last year, still leaves the economy struggling to advance at a rate anywhere close to the economy's potential. With underlying inflation likely to …
28th March 2013
The stronger than expected pick-up in headline inflation to 1.2% in February, from 0.5% in January, mostly reflects higher gasoline and motor vehicle prices. It does not alter the near-term outlook for monetary policy. With economic growth expected to …
27th March 2013
While at some point the latest pick-up in the US economic recovery will translate into stronger Canadian manufacturing sales, we suspect that the weak pulse of the domestic economy will limit any improvement. … Manufacturing still faces considerable …
25th March 2013
The flat growth in January's retail sales volumes suggests that the slowdown in consumption growth seen at the end of last quarter appears to have continued into the first quarter. Accordingly, there is some downside risk to our monthly GDP estimate of a …
21st March 2013
Despite the past weakening in existing home sales and rising number of properties for sale, the annual growth rate of house prices remained at 2.7% in February. As sales continue to trend lower, however, we expect the deceleration in house price inflation …
20th March 2013
January's disappointing 0.4% m/m decline in manufacturing sales volumes suggest that industrial production might have struggled to rebound from December's decline. Thankfully, wholesale activity increased by 0.5% m/m, but even this was not enough to …
19th March 2013
The strong pick-up in Labour Force Survey hours worked suggest that first-quarter wages and salaries growth should improve from the modest 2.4% annualised gain posted in the fourth quarter of last year. But with LFS average hourly earnings data possibly …
18th March 2013
The downward trend in both existing home sales and housing starts indicates that the housing slowdown is unfortunately becoming more broad-based. As demand and supply imbalances intensify this year, the downward pressure on house prices will mount as …
13th March 2013
Concerns about when governments will meet their budget deficit elimination goals have mostly centred on rosy consensus real GDP growth forecasts. But lower inflation could also result in even longer fiscal delays for federal and provincial governments. … …
The underlying impetus for economic growth is fading. For 2013, we doubt that export and business investment growth will provide strong enough pillars to offset modest consumption growth, government restraint and declines in housing investment. Overall, …
11th March 2013
February's 50,700 gain in employment (the consensus estimate was +8,000) is a big surprise given how weak GDP growth has been recently. Even after taking into account the 21,900 jobs lost in January, the three-month average monthly gain was 20,000, a …
8th March 2013
January's external trade data bodes well for first-quarter real GDP growth, which we anticipate will increase by 1.5% annualised. Other data released this morning also shows that January's residential building permits bounced back, though not fully. This …
7th March 2013
With inflation now below target and the economy operating well below its potential, it was no surprise to see the Bank of Canada back even further away from raising interest rates. We still think that the Bank is being overly optimistic in expecting GDP …
6th March 2013
Canada's economy grew by only 0.7% annualised over the second half of last year, with a decline in exports subtracting almost 2 percentage points from annualised GDP. The recent lacklustre pace of non-commodity exports suggests that any export growth will …
5th March 2013
The recent improvement in small and medium-sized business optimism concurs with our forecast that economic growth rebounded at the start of 2013. However, the underlying details of the survey suggest that any hopes of an economic turnaround this year are …
4th March 2013
Canada's economic slowdown over the second half of last year and uncertain prospects ahead put additional pressure on the Bank of Canada to completely abandon its tightening bias next week. Given the increasing likelihood of below potential growth of 1% …
1st March 2013
The FDIC’s banking profile for the fourth quarter of last year shows that US banks are well placed to continue boosting lending to both firms and households. At the same time, there is not much evidence that banks are compensating for low net interest …
26th February 2013
We estimate that Canada's economy grew by roughly 0.5% annualised over the entire second half of last year and is likely to perform little better over the first half of this year. Trade competiveness challenges, lower Canadian oil prices and the beginning …
25th February 2013
Following a year in which India’s growth weakened, external deficit widened, and sovereign ratings came under pressure, the upcoming budget will be a crucial test of the government’s policy credibility. … Consumer Price Index …
22nd February 2013
National home prices have been in decline for five consecutive months and we anticipate further declines this year, as potential buyers are scared off by the prospect of capital losses. We standby our view that house prices will decline by 25% over the …
20th February 2013
The turnaround in the US housing market, which has pushed lumber prices up to multi-year highs, is benefiting Canada's forestry exporters. However, the pick-up in demand for lumber south of the border is likely to be, at least partially, offset by the …
19th February 2013
We think that the Bank of Canada has been underestimating the amount of slack in the economy, which explains why its recent quarterly inflation forecasts have erred on the high side. Looking ahead, economic slack is likely to increase further as the …
18th February 2013
December's disappointing 3.1% m/m drop in manufacturing sales more than offset the previous month's rebound and suggests that industrial production faltered at the end of last year. Overall, the risks to our annualised fourth-quarter GDP growth estimate …
15th February 2013
The latest batch of economic data, particularly the slump in construction activity, supports our view that Canada's economy will expand by only 1.0% in 2013, well below the expectations of most other economists and policymakers. … As housing goes, so goes …
11th February 2013
Those still looking for what might trigger a major house price correction in Canada need look no further than Vancouver's housing bubble, where house prices have already begun to deflate. The sudden drop in home sales, which predates the recent tightening …
December's decline in export volumes is a discouraging sign for fourth-quarter GDP growth. Moreover, the widespread drop in imports suggest that the domestic economy slowed quite a bit at the end of last year. (See Chart.) Overall, it appears that net …
8th February 2013
January's weaker than expected 21,900 decline in employment (the consensus estimate was +5,000) can be forgiven, given the unusually strong gains posted in previous months. Nevertheless, with the global backdrop still weak and a domestic housing …
Canada's headline annual inflation rate has fallen to its lowest level in over three years, suggesting that there is more slack in the economy than commonly perceived. With economic growth forecast to remain below the economy's potential pace this year, …
6th February 2013
At a global level, stock markets have been buoyed by signs that economic outlook is improving. Unfortunately, held back by weak domestic demand, low inflation and narrowing interest rate differentials, the improvement in Canadian equities has been …
4th February 2013
The recent improvement in small and medium sized business confidence points to a pick-up in economic growth in the first quarter, to around 2% annualised, roughly twice the pace of last quarter. We doubt that this pace will be sustained, however, given …
1st February 2013
November's 0.3% m/m gain in GDP, following the slightly downward revised 0.1% advance the month before, almost insures that fourth-quarter GDP growth improved somewhat over the poor 0.6% annualised showing in the third quarter. Even so, growth was …
31st January 2013
Slower growth in wages and salaries and lower consumer confidence suggest that real consumption growth slowed sharply in the fourth quarter, to only half the 3.8% annualised gain in the third. We suspect that this slower pace of income and spending growth …
30th January 2013
An underperforming economy will make it tougher for the federal government to eliminate its budget deficit worth just over 1% of GDP. Although some headway has been made this year, weak underlying economic growth and subdued inflation are likely to …
29th January 2013
The Bank of Canada and International Monetary Fund still expect economic growth in Canada to accelerate through the course of this year. Admittedly, net exports are unlikely to remain a drag on GDP growth, but cautious business investment, further …
28th January 2013
The surprising drop in December's official core inflation rate to 1.1%, from 1.2% in November, suggests that there is much more slack in the economy than most economists previously thought. With sub-par economic growth forecast ahead, disinflationary …
25th January 2013
In a surprise climb down, the Bank of Canada admitted that the need to withdraw policy stimulus is less imminent, partly reflecting the weaker global economic outlook, but mainly because the housing downturn looks sustained. This will no doubt come as a …
23rd January 2013
November's solid 0.8% m/m gain in retail sales volumes, paired with a similar increase in wholesale trade, suggests that monthly GDP grew by 0.3% m/m in November. Nonetheless, there is still some downside risk to our fourth-quarter GDP estimate of 1.5% …
22nd January 2013
The latest round of housing data released last week predictably led to more claims that the market is enjoying a soft landing because, even though home sales fell sharply over the second half of last year, prices are still rising, at least at the national …
21st January 2013
