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November's 1.6% m/m rebound in manufacturing sales volumes is encouraging, though not strong enough to offset the previous month's decline of 2.2% m/m. All things considered, the risks to our annualised fourth-quarter GDP growth estimate of 1.5% still lie …
18th January 2013
We expect the Bank of Canada to continue justifying its tightening bias next week on the basis of high household debt. Before year end, however, we expect the Bank to drop talk of rate hikes. The weak global backdrop and potentially severe housing market …
16th January 2013
The fourth-quarter Business Outlook Survey indicates that, while more businesses expect future sales growth to pick-up as they plan to increase investment in machinery and equipment, their modest hiring plans remained broadly unchanged. Overall, the …
15th January 2013
The uncertainty created by the fragile global backdrop and the potential fight brewing over the US debt ceiling are hurting Canadian business investment, and will continue to hold the economy back in the early part of this year. We expect business …
14th January 2013
November's paltry 0.1% m/m gain in export volumes is a discouraging sign for fourth-quarter GDP growth. Overall, the data suggest that the risks to our 1.5% annualised fourth-quarter GDP growth lie firmly to the downside. … International Merchandise Trade …
11th January 2013
Housing starts continued to ease during the fourth quarter of last year, to an annualised 202,855, from 221,709 in the prior quarter. Nevertheless, it is possible that overall residential investment actually rebounded slightly over the final few months of …
10th January 2013
The sharp slowdown in existing home sales is grim news for the new housing industry, which continues to build above population requirements. We expect these growing demand and supply imbalances to trigger a fall in home prices and below consensus 1% GDP …
9th January 2013
The slump in Canadian inflation over the second half of last year makes it even more likely that the Bank of Canada will soon abandon any pretence of hiking interest rates in 2013. Headline CPI inflation dropped below the Bank of Canada's 1% to 3% target …
7th January 2013
There is no denying the strength apparent in Canada's labour market at the end of 2012. Employment increased by nearly 40,000 in December, driving the unemployment rate down to a four-year low of 7.1%. … Labour Force Survey …
4th January 2013
Our bearish call a year ago for moderate to weak GDP growth, subdued inflation and prolonged low interest rates is looking prescient now that the slumping housing market threatens to upset Canada's outperformance. We expect a subdued performance in 2013, …
24th December 2012
The 0.1% m/m gain in October's GDP, which partly reflected a rebound in oil and gas extraction, suggests that the economy began the fourth quarter on a somewhat stronger footing. The pace of economic growth, however, still remains well below the 2% …
21st December 2012
The 0.3% m/m bounce back in retail sales volumes in October, together with the large increase in wholesale trade reported yesterday, suggest that monthly GDP inched higher, stronger than the stagnation we had previously expected. This indicates that …
20th December 2012
A prolonged housing downturn means that economic growth will be much weaker over the next two years. Gains in business investment and somewhat better export growth, though, will help to buffer economic growth. Overall, we expect annual GDP growth to slow …
The continued decline in existing home sales support our view that a potentially severe housing correction is underway. Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to …
17th December 2012
Canada's western provinces, which have outperformed most other provinces over the past two years, are likely to remain on top in 2013. High oil and other commodity prices should continue to benefit these provinces, although better US growth should help …
October's discouraging 2.4% m/m drop in manufacturing sales volumes together with the soft external trade data, released earlier this week, suggest that the economy stalled in October. Accordingly, the risks to the Bank of Canada's annualised 2.5% …
14th December 2012
October's flat export volumes are a discouraging sign for fourth-quarter GDP growth. In addition, the widespread decline in imports hints at a slowing domestic economy. Overall, the data suggest that the risks to our 1.5% annualised fourth-quarter GDP …
11th December 2012
The declining trend in housing starts supports our view that a housing correction is underway. The slump in new and existing home sales suggest that this slowdown will worsen next year, hitting the domestic economy fairly hard. … Housing investment …
10th December 2012
The recent improvement in business capital spending has prompted speculation that a business productivity renaissance is at hand. This seems like wishful thinking. The majority of the growth in recent business capital spending has been devoted to the oil …
November's surprisingly strong 59,300 gain in employment (the consensus estimate was 10,000) seems far too good for an economy that is still growing below its potential rate. Given the uncertain global economy and housing market correction, job gains in …
7th December 2012
Global manufacturing PMI data for November indicate that Canada's non-energy exports will remain broadly stagnant in the near term. The recovery in US home building and auto sales, however, should continue to gain momentum next year, assuming that US …
6th December 2012
Although the monthly small business optimism index fell back in November, the quarterly average of our seasonally adjusted measure still points to fourth-quarter GDP growth of just below 2.0% annualised, up from 0.6% in the third quarter. This supports …
5th December 2012
The Bank of Canada is still clinging to the possibility that its policy rate might need to rise from the current 1% because it is too early to tell whether the housing slowdown will be sustained. It will. We anticipate that this is what will eventually …
4th December 2012
A rebound in Canadian energy production, which was hit by temporary disruptions in the third quarter, should ensure that GDP growth rebounds to around 1.5% annualised in the fourth quarter. The outlook for the energy sector over the next couple of years …
3rd December 2012
Canada's disappointing 0.6% annualised third-quarter GDP growth puts further pressure on the Bank of Canada to drop its tightening bias. We doubt, however, that this would be enough to prompt the Bank to drop its policy tightening bias just yet. But if we …
30th November 2012
Despite the modest drop back in September's non-farm payroll employment and average weekly earnings, third-quarter annualised growth in wages and salaries is likely to have accelerated to perhaps 8.0%, almost double the 4.6% gain posted in the second …
28th November 2012
We expect the Bank of Canada to stick with its tightening bias in next week’s policy statement and through the early stages of next year, before removing it completely by early March. By then we anticipate that the increased economic slack in the economy …
Mark Carney's surprise decision to accept the head job at the Bank of England, after explicitly telling everyone he was not interested, adds to an already uncertain outlook for Canada. Moreover, it could not come at a worse time for Canada's economy, …
27th November 2012
The nascent US housing recovery is welcomed news for Canada's exporters, though a full fledged US economic recovery is likely to remain elusive for another year or two. Nonetheless, we anticipate some improvement in US economic growth next year, which …
26th November 2012
Although core inflation, which remained at 1.3% in October, was slightly firmer than the consensus forecast of 1.2%, it remains well below the 2% policy target. Given the third-quarter economic slowdown and faltering global economic outlook, inflationary …
23rd November 2012
September's disappointing flat retail sales volumes, paired with a decline in wholesale trade and a modest increase in manufacturing sales, indicates that monthly GDP grew by just 0.1% m/m in September. This suggests some minor downside risk to our …
22nd November 2012
The recent decline in the sales-to-listings ratio points to home price stagnation ahead, a prospect that has already begun to scare away some condo investors. In Vancouver and Toronto, existing condo sales have fallen by 16% y/y and anecdotal evidence …
21st November 2012
Canada's economy is entering a slow growth zone. With external headwinds continuing to challenge exports and business confidence, stagnation in the domestic housing market is further casting doubt over the outlook for domestic demand. In addition, the …
20th November 2012
The federal government's updated fiscal plan released last week, which reiterated the commitment to control program spending, is likely to come undone next year if, as we fear, economic growth slows by more than the government's projections suggest. The …
19th November 2012
September's moderate 0.4% m/m gain in manufacturing sales volumes, which was largely bolstered by a jump in aerospace, supports the view that Canada's economy grew by 0.2% m/m. Nevertheless, this still only points to third-quarter annualised growth of …
15th November 2012
Although federal regulatory tightening of mortgage insurance rules and other lending principles have upset housing, we believe the new restrictions on home buying are prudent rather than too onerous. We think that the housing market is unhealthy and in …
12th November 2012
September's trade report confirms that exports were a major drag on overall third-quarter GDP growth, with net exports subtracting possibly as much as three percentage points. This evidence, combined with the disappointing production-based GDP data …
8th November 2012
The latest increase in CFIB's small business optimism index to a six-month high of 65.6 in October, from 62.0 in September, doesn't alter the big picture that the economy may have slowed further at the start of the fourth quarter. Admittedly our …
Since early 2010, housing starts have been driven by the multi-unit sector, with single detached housing starts remaining broadly unchanged. The problem is that housing construction has been running well above household formation, leading to a surge in …
7th November 2012
The fragility of the global economic recovery, as we have long forewarned, has resurfaced and signs point to a material slowdown in global growth and commodity prices. Unfortunately, the global slowdown comes at a most awkward time for Canada's …
5th November 2012
October's unexpectedly weak 1,800 gain in employment (the consensus estimate was 10,000) can be forgiven given the unusually strong gains in the previous two months. The worsening economic outlook, however, suggests that private sector employment gains in …
2nd November 2012
The surprising 0.1% m/m decline in monthly GDP for August suggests the economy might have struggled to grow by even 1% annualised in the third quarter, below our previous estimate of 1.4%. Given the uncertain global outlook and softening domestic housing …
31st October 2012
The downgraded consensus of private-sector GDP forecasts surveyed by the federal government for its upcoming fiscal update still looks overly optimistic. Further negative growth surprises to the government's budgetary outlook, however, are likely to be …
30th October 2012
The sub-prime mortgage crisis is often miscast as the cause of the US housing bust and that because Canada's sub-prime industry is supposedly much smaller in comparison, fears of a similar housing correction are greatly exaggerated. For the record, the US …
29th October 2012
The recent strength in non-farm payroll data, which have showed solid gains in both employment and average weekly earnings, indicates that an improvement in third-quarter wages and salaries growth supported much stronger consumption growth. We estimate …
25th October 2012
The Bank's October Monetary Policy Report (MPR) presents an overly optimistic outlook for Canada's economy. While weak foreign demand restrains Canada's exports, flagging domestic business confidence and tentative signs of housing fatigue point to an …
24th October 2012
The Bank of Canada is still saying that its policy rate will need to rise from the current 1%, but there appears to have been a shift in its reasoning for maintaining the tightening bias. Given the lacklustre pace of economic growth, the Bank is less …
23rd October 2012
Despite the 0.3% m/m decline in retail sales volumes in August, the rebounds in both wholesale trade and manufacturing sales suggest that GDP growth increased by a firm 0.2% m/m in August. Nonetheless, third-quarter GDP growth is on course to weaken to …
Despite the global economic slowdown, Canadian business investment is just about holding up, largely thanks to the strength of engineering and construction projects. All things considered, we think businesses bolstered third-quarter GDP growth, but not by …
22nd October 2012
Core inflation fell further below the Bank of Canada's 2% target in September, to 1.3%, its lowest rate in over a year. With slower anticipated GDP growth this quarter and next, underlying inflation is likely to remain subdued. Against this backdrop, …
19th October 2012
