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The modest 0.1% m/m increase in Canada's monthly GDP in May supports our existing estimate that the economy expanded at a disappointing 1.7% annualised pace in the second quarter. That would mark the third consecutive quarter of sub-2% growth. … GDP by …
31st July 2012
With exports hampered by the global economic slowdown and the nascent domestic housing downturn likely to hit housing investment and consumption too, a slowdown in Canada's overall economic growth would seem unavoidable. At a time when all levels of …
Our measure of Canada's 'effective' crude oil price, a blend of three key benchmarks, has rebounded by a sharp 25% over the past few weeks, to US$88 p/b from US$70 p/b. But this rally in crude oil prices has been driven by hopes of further action among …
27th July 2012
Labour market conditions have steadily improved since the economic recovery took hold in mid-2009. This improvement, however, is partly due to a sharp rebound in construction activity. Although residential construction is likely to support employment over …
May's payroll survey data, which showed solid gains in average weekly earnings and employment, indicate that second-quarter wages and salaries increased by close to 7.0% annualised, more than double the pace recorded in the first quarter. This is …
26th July 2012
Housing activity is cooling and if this trend continues, as we expect, the typical lag times between activity and prices suggest that house prices might begin to decline outright next year. Given the scope for mortgage interest rates to decline even …
25th July 2012
May's 0.7% m/m rebound in retail sales volumes, paired with last week's positive wholesale and manufacturing volumes figures, indicate that monthly GDP grew by 0.2% m/m in May, slightly stronger than our previous estimate of 0.1% m/m. This suggests some …
24th July 2012
20th July 2012
June's rise in the official 'core' inflation figure, to 2.0% from 1.8%, mainly reflects transportation base year effects. With inflation expectations well anchored and economic growth likely to remain below the economy's 2% potential rate, we anticipate …
The Bank of Canada's new economic forecasts, presented in its July Monetary Policy Report, still look too optimistic, mainly because of its rosy domestic assumptions. Although the bank's lower near-term GDP growth outlook brings it closer in line with our …
19th July 2012
The modest 0.4% m/m decline in manufacturing sales values in May was entirely due to the fall in the sale of petroleum and coal products. In volume terms, though, overall sales actually nudged higher by 0.2% m/m, which suggests that there is some upside …
17th July 2012
Today's Bank of Canada policy statement showed that it is unwilling to throw in the towel on its previous statements that interest rates may need to rise, from the current 1%. Even so, the Bank's downbeat assessment of global economic growth prospects, …
Canada's economy likely grew by a more modest 1.7% in the second quarter, down from the 1.9% pace recorded in each of the two quarters before that. We had expected GDP growth of 2.2% annualised, but softer than expected monthly trade figures, both for …
13th July 2012
May's 0.6% m/m decline in export volumes together with downward revisions to previous months indicate that second-quarter exports declined, a significantly weaker result than our earlier assumption. Even allowing for some modest rebound in June, net …
11th July 2012
The Bank of Canada policy announcement next week, which almost surely will maintain the policy interest rate at 1%, is likely to acknowledge that the more modest outlook for the global economy has prompted downgrades to Canada's economic prospects. …
The recent strength in housing starts, mostly multiples, reflects strong new housing sales from over a year ago. However, home sales are now softening and the recent tightening of mortgage insurance rules this month is likely to further slow housing …
The latest quarterly business surveys indicate that, while significantly fewer businesses expect future sales growth to pick-up over the next 12 months, they remain steadfast in their plans to increase investment and payrolls. Overall, these survey …
10th July 2012
Canadian businesses are flush with cash. Even if just a small fraction of the cash held by the non-financial sector were used to boost dividends, we estimate it would significantly increase personal disposable income and consumption. … Corporate cash …
6th July 2012
June's modest 7,300 gain in employment was close to consensus expectations (+5,000) and supports our view that the economy grew more strongly in the second quarter, to 2.2% annualised from 1.9% in the previous quarter. … Labour Force Survey …
The faltering global economy has driven commodity prices lower, with Canadian oil prices down sharply from levels earlier this year. Although oil prices have risen somewhat over the past week, we doubt that this trend will be sustained without markedly …
5th July 2012
We calculate that, after falling by 0.8% m/m in April, retail sales volumes rebounded strongly in May. In addition, recent employment gains and lower gasoline prices likely supported retail sales in June. Overall, we estimate that second-quarter …
29th June 2012
April's 0.3% m/m increase in GDP, thanks to a rebound in the volatile mining sector, was slightly stronger than consensus expectations (0.2% m/m) and supports our view that Canada's economy grew somewhat faster this quarter than last. We estimate GDP …
April's payroll survey data, which showed a strong increase in average weekly earnings and a modest gain in employment, point to solid second-quarter wages and salaries growth of around 5.0% annualised, up from 2.9% in the first quarter. This supports our …
28th June 2012
The recent depreciation of the Canadian dollar is likely to continue this year and next. Our reasons for thinking so are the prospects of further declines in commodity prices and lower expectations for interest rate differentials between Canada and the …
26th June 2012
Household borrowing has accelerated over the last few quarters, a trend that might continue to push the debt-to-income ratio higher. However, the faltering global economic recovery and drop back in commodity and equity prices suggest more cautious …
25th June 2012
May's slightly larger than expected decline in the official 'core' inflation figure, to 1.8% from 2.1%, provides even greater leeway for the Bank of Canada to refrain from raising interest rates anytime soon. … Consumer Price Index …
22nd June 2012
The finance department's surprise announcement earlier today to tighten the screw further on mortgage insurance rules starting in early July is prudent action in our view, given the elevated risks around high household debt and an increasingly overheated …
21st June 2012
April's disappointing 0.8% m/m drop in retail sales volumes would be disconcerting for monthly GDP growth if it were not for the surprisingly strong growth in wholesale trade data released earlier this week. Overall, after increasing by 0.1% m/m in March, …
After a slight pick-up in the second quarter, we expect GDP growth to drop back below 2% annualised in the second half of this year, as the strength in housing investment fades and consumption slows. While growth in business investment continues at a …
19th June 2012
The faltering global economy has sent commodity prices tumbling and it seems unlikely they will rebound. Prices might rally initially in response to any further support provided by global central banks, but additional measures are unlikely to fuel a …
18th June 2012
April's surprising 0.8% m/m decline in the value of manufacturing sales, mainly due to lower volumes, points to another month of modest growth in GDP, possibly as low as 0.1%m/m. We originally assumed growth of around 0.3% to 0.4% m/m, so unless wholesale …
15th June 2012
The latest permit data indicate that condo developments continue to be the main source of strength in new housing construction, which has showed little sign of slowing. Given the lengthy construction timetables of condo buildings, the considerable amount …
11th June 2012
May's more modest 7,700 gain in employment is forgivable given the unusually strong growth in the previous two months. That said, the details were somewhat discouraging. While part-time employment accounted for most of the increase in employment, …
8th June 2012
Canada's economy grew by 1.9% annualised in the first quarter, matching the pace in the previous quarter and, given the recent slump in commodity and equity prices, a substantial pick-up in growth this quarter seems less likely. While that was …
6th June 2012
The Bank of Canada's policy statement, while keeping its policy rate at 1.00%, backed off from the suggestion in the previous statement that interest rates may need to rise. The Bank is now more deeply concerned about the faltering global economic …
5th June 2012
Although underlying inflation appears to have drifted higher over the last several months, this trend still remains well within the central bank's inflation target range. Recent movements in commodity prices and monetary aggregates, however, suggest that, …
4th June 2012
Canada's 1.9% annualised first-quarter GDP growth was somewhat stronger than we had estimated (+1.6%), though it fell short of the 2.5% growth that the Bank of Canada had expected in its April monetary policy report. With inflationary pressures already …
1st June 2012
March's business payroll figures showed an encouraging 0.8% m/m gain in average weekly earnings and a respectable 48,950 gain in employment. Even so, given the previous declines in payroll employment, we estimate that first-quarter growth in wages and …
31st May 2012
While it is widely expected that the Bank of Canada will keep its policy interest rate at 1.00% next week, we think the Bank's upcoming policy statement, due out on Tuesday, will be more downbeat about global economic growth prospects and the downside …
29th May 2012
The rapid appreciation of the Canadian dollar since 2003 has certainly added to the challenges confronting the manufacturing sector. Much more important to this sector's struggle, however, has been the persistent weakness in foreign demand. … Canadian …
28th May 2012
March’s strong 0.4% m/m gain in retail sales volumes bodes well for monthly GDP growth, helping to offset the negative impact from the weaker wholesale trade report released last week. Overall, we estimate that, after falling by 0.2% m/m in February, GDP …
23rd May 2012
Although Greece's departure from the euro now seems almost inevitable, that should have only moderate consequences for well capitalised Canadian banks and the Canadian economy, even if the exit from the single currency is accompanied by a Greek banking …
21st May 2012
April's surprising rise in the official 'core' inflation figure, which rose to 2.1% from 1.9% in March, partially reflects higher motor vehicle prices and does not suggest higher inflation ahead. More important to policy makers now is the growing risk of …
18th May 2012
March's 1.9% m/m increase in manufacturing sales volumes supports our view that monthly GDP, after declining by 0.2% m/m in February, rebounded by at least 0.3% m/m the next month. Until we see the wholesale and retail trade figures due later this week …
16th May 2012
Canada's stronger economic performance over the last few years is largely explained by its stable banking sector, the continued boom in its housing market and, to a much lesser extent, buoyant commodity prices. As the warning goes, though, past …
14th May 2012
The recent hiking of market interest rate forecasts, which was prompted by the Bank of Canada's more hawkish policy statement a few weeks ago, looks increasingly like an over-reaction. While rate expectations do appear to have been toned down a bit …
April's surprising 58,200 gain in employment, which follows an almost equally impressive gain in the prior month (see chart), is welcomed news given the unusually weak figures that preceded it. Further increases anywhere near these magnitudes would …
11th May 2012
March's trade figures show an encouraging pick-up in both export and import volumes. With first-quarter growth in exports outpacing imports, we calculate that net trade contributed positively to GDP growth, which we still estimate was 1.5% annualised. … …
10th May 2012
The surprisingly strong surge in housing starts, to 244,900 annualised in April, is yet another sign that Canada's housing market is dangerously overheating. Admittedly, starts have only recovered to the levels seen in the mid-2000s. The crucial …
9th May 2012
We estimate that first-quarter GDP growth slowed to 1.5% annualised from 1.8% in the fourth quarter of last year. In addition to weaker growth in consumption and business investment in the first quarter, temporary supply disruptions also hindered export …
7th May 2012
