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The third and final wave of data from Statistics Canada's National Household Survey (NHS) published last week reveal that the Canadian home ownership rate surpassed the record peak at the height of the US housing bubble. … Canada's home ownership fling …
16th September 2013
The latest pick-up in house price inflation is consistent with the reported rebound in existing home sales. But as mortgage rates continue to rise, we expect falling home sales will eventually result in a renewed house price disinflation, before outright …
12th September 2013
Restrictive mortgage rules and rising fixed mortgage rates suggest that the slowdown in household credit growth is likely to persist. Meanwhile, trends in business sector credit growth suggest that business confidence might be improving, with …
11th September 2013
Housing investment might continue to support GDP growth over the second half of this year, but there are still tentative signs that a day of reckoning lies around the corner, with housing likely to become a significant drag on growth next year. … …
10th September 2013
We expect the recent depreciation of the Canadian dollar to be followed by another downward leg before year-end. While improving global economic conditions and buoyant commodity prices will help to limit this depreciation, domestic economic weakness and …
9th September 2013
The surprisingly robust 59,200 rebound in employment in August, following declines over the prior two months, wasn't quite as good as it looks because that gain owed a lot to a surge in part-time jobs for older workers. The moderate pace of job creation …
6th September 2013
Following disruptions to energy output in the second half of last year, Canada's economy rebounded over the first half of this year, posting GDP growth of 2.2% and 1.7% annualised in the first and second quarters respectively. But with only modest impetus …
5th September 2013
Although the Bank of Canada retained its tightening bias word for word, it now admits that the continuing weakness in exports and investment mean hopes of a smooth 'rotation in demand' look less promising than before. This new dovish admission hints that …
4th September 2013
July's discouraging decline in export volumes adds to our concern that Canada is not fully benefitting from the gradually improving US economy. With export competitiveness challenges likely to persist, the Bank of Canada's export-led recovery could face …
Those hoping that the expected pick-up in US domestic demand growth will drive an export-led recovery in Canada are likely to be disappointed. Over the past decade, Canadian firms have suffered a dramatic loss of competitiveness relative to US firms. …
30th August 2013
The moderate slowdown in GDP growth to 1.7% annualised in the second quarter, from 2.2% in the first, is encouraging given the impact of the flooding in Alberta and the construction strike in Quebec. … GDP (Q2 …
Another rise in the CFIB's small business confidence in August suggests that firms continue to expect GDP growth to pick up in the third quarter, from our estimated 1.5% annualised in the second. (Data due tomorrow.) A further drop back in hiring …
29th August 2013
The Bank of Canada is unlikely to make any major changes in its upcoming policy announcement next Wednesday (4th September), but the recent surge in Canadian long-term interest rates could prompt the new Governor Stephen Poloz to introduce some stronger …
28th August 2013
Canada's economy contracted sharply at the end of the second quarter, but only partly because of one-off factors related to severe floods and a brief labour strike. For the second quarter as a whole, stronger household consumption and housing investment …
26th August 2013
July's subdued inflation figures are consistent with an economy growing below potential, which will only reinforce the Bank of Canada's reluctance to raise rates anytime soon. With growth expected to remain sluggish this year and next, it will be a long …
23rd August 2013
The rebound in domestic crude oil prices over the first half of this year has improved the outlook for Canadian business investment. Overall, this suggests some upside risk to GDP outlook of 1.5% in 2013 and 1.0% in 2014. … Favourable oil prices could …
22nd August 2013
June's 1.2% m/m decline in retail sales volumes, which only partially reversed the 1.9% m/m gain in the month before, confirms that, over the second quarter as a whole, household consumption growth rebounded. Nevertheless, the June decline supports our …
Canada's trade with the euro-zone is small, so any sustained European recovery would provide only modest support to Canadian export growth. That said, there are a few industries that might benefit more notably, such as aerospace, which could support much …
19th August 2013
Despite a strong rebound in petroleum refining, June's surprising 1.3% m/m decline in manufacturing sales volumes, which wasn't related to the floods in Alberta, suggests that second-quarter GDP growth probably slowed to between 1.0% and 1.5% annualised. …
16th August 2013
The recent uptick in existing homes sales most likely reflects a rush by home buyers to complete deals before mortgage rates rise further. However, this has only pulled forward sales that would have happened later this year and next. Under these …
15th August 2013
The continued deceleration in house price inflation across most major cities in July is broadly consistent with the past slowdown in home sales. As demand and supply imbalances continue to intensify this year and next, we still anticipate that house …
14th August 2013
The latest slowdown in hourly earnings provides further evidence that underlying inflation is likely to remain close to the lower bound of the Bank of Canada's target range of 1% to 3%. This supports our view that the Bank will refrain from raising …
13th August 2013
While housing starts have displayed some surprising resilience over the past several months, which would seem to support the consensus view that the housing market is enjoying a soft landing, more timely data shows that new housing demand has slumped to …
12th August 2013
July's surprising 39,400 decline in employment looks bad but, since it mainly reflects less hiring of younger workers this summer, the Bank of Canada should view it as a temporary shock that will be unwound after the Labour Day holiday. Nevertheless, the …
9th August 2013
Canada's export growth slowed to around 2.0% annualised in the second quarter, from just over 6.0% in the first quarter, which would seem to refute hopes of an export-led pick-up in economic growth. Admittedly, with import growth slowing too, net exports …
7th August 2013
June's 1.5% m/m rebound in export volumes and further contraction in imports are further evidence that the economy lost momentum in the second quarter. This supports our view that the economy grew by less than its potential 2% annualised growth pace. … …
6th August 2013
Canadian manufacturing production is being hampered by sluggish foreign demand and, to a lesser extent, moderating domestic demand. While gradually improving US demand is providing much needed support, feeble overseas demand is unfortunately offsetting …
5th August 2013
Canada's economy regained some lost momentum mid-way through the last quarter, with real GDP expanding by 0.2% m/m in May. (See Chart.) Taking into consideration the likely weakness in June's GDP due to the major flooding in Western Canada, we still …
31st July 2013
The anticipated slump in potash prices should have only a minor impact on Canada's economy. Potash mining represents a tiny share of Canada's GDP and exports. Moreover, the relatively lower cost of production in Canada means that the country's miners are …
30th July 2013
Canada's economy is poised for a long period of slow growth, as the mining investment boom simmers down and other parts of the economy such as housing or exports are either over-extended or growing too slowly to pick-up the slack. After expanding by 1.5% …
The evidence suggests that, after a paltry 0.9% annualised in the first quarter, second-quarter real consumption growth accelerated to 3.0% annualised. Unfortunately, we suspect that consumption growth will drop back in the second half of the year. …
26th July 2013
The uptick in the CFIB's small and medium-sized business confidence in July suggests that third-quarter GDP might rise by as much as 2.0% annualised. The details behind this optimism, however, appear tentative. Overall, we still expect the economy to …
25th July 2013
The robust 1.9% m/m gain in May's retail sales volumes, together with earlier reports showing strong increases in manufacturing and wholesale trade, suggest that the economy grew by as much as 0.4% in May. This suggests that the risks to our estimate that …
23rd July 2013
We think the Bank of Canada has over-estimated the negative impacts on second-quarter GDP from Alberta's recent major flood and Quebec's construction labour strike. Instead of 1.0% annualised, we estimate that the economy grew by 1.5% in the second …
22nd July 2013
The modest increase in the official core inflation figure in June, to 1.3% from 1.1% in the month before, was mainly due to specific base-year effects. We expect underlying inflation to stay at the bottom of the Bank of Canada's 1-3% target range as …
19th July 2013
Although the Bank of Canada held its view that the economy will soon accelerate and that interest rates will eventually rise, several dovish tweaks to its policy statement suggest even more strongly than before that it is in no hurry to tighten policy. We …
17th July 2013
The 0.7% m/m rise in manufacturing sales volumes suggests that GDP growth in May might have been higher than 0.1% m/m. As a result, the risks to our forecast that second-quarter GDP will rise by 1.5% annualised now lie to the upside. … Survey of …
16th July 2013
Canada should weather China's economic slowdown relatively well, with fairly minor consequences for economic growth. Since China represents a fairly small share of Canada's total exports, any slowdown there is likely to be more than offset anyway by …
15th July 2013
Despite stronger economic data, there are good reasons to expect a more supportive policy statement next week. Although the new Governor Stephen Poloz has said nothing recently that indicates the Bank will drop its tightening bias, rising market rate …
10th July 2013
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, …
