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The unexpected 0.2% m/m decline in February's monthly real GDP means that overall first-quarter GDP growth was probably no more than 2.0% annualised, whereas we had previously hoped for a gain of at least 2.5%. … GDP by Industry …
30th April 2012
The Bank of Canada's recent heavy hint that interest rates may need to rise soon already looks badly timed. Little more than a week after the release of its latest Monetary Policy Report, which suggested that the outlook for global economic growth had …
The 0.2% m/m decline in February's retail sales values was disappointing but, given the news yesterday that wholesale sales increased by a much bigger than expected 1.6% m/m in that month, it still looks like first quarter GDP growth will come in around …
24th April 2012
The Bank of Canada's April Monetary Policy Report paints a fairly upbeat picture for GDP growth this year and next. We think that this is unlikely to materialise, however, mainly because of the unsustainable borrowing habits of households whose incomes we …
23rd April 2012
March's sharp drop in headline consumer price inflation, to 1.9% from 2.6%, and the decline in the official 'core' inflation figure, to 1.9% from 2.3%, supports our view that the Bank of Canada is unlikely to raise interest rates any time soon. … …
20th April 2012
The Bank of Canada's policy statement, which pledged to keep interest rates at 1.0% for now, signalled that some small increases might soon be needed. This hawkish change from last month’s fairly dovish statement seems to have been directed at households, …
17th April 2012
Canada's export and overseas investment performances over the last two decades or so indicate in our view that Canadian businesses/exporters have actually done fairly well. This broader take on 'trade' suggests that they are already well aware of the …
16th April 2012
Despite February's 2.9% m/m decline in export volumes, the past growth in monthly exports still indicate that first-quarter net exports managed to contribute positively to GDP growth. We estimate the economy grew by 2.5% annualised, though the weakness in …
12th April 2012
We think the Bank of Canada is unlikely to raise interest rates from the current 1% anytime soon. Not only does the marginal improvement in current economic conditions partially reflect temporary factors, external downside risks to the outlook have not …
11th April 2012
The upswing in commodity prices since the global economic slump over three years ago has been an important part of Canada's recent economic performance. This is highlighted by the positive relationship between provincial resource-sector intensity and …
9th April 2012
The 82,300 increase in employment in March, which was the biggest monthly gain in three-and-a-half years, goes a long way towards making up for the disappointing run of jobs reports going back to the middle of last year. Over the seven months between July …
5th April 2012
Although gasoline prices have risen over the last few months, the year-on-year rate of gasoline inflation is still set to fall over the next few months. Given that other energy and non-energy commodity prices have already declined substantially from a …
3rd April 2012
Fiscal austerity measures across various levels of government will dampen economic growth this year. While the federal government's 2012 budget will have a relatively minor impact, the fiscal adjustment now needed by some provincial governments will be …
2nd April 2012
January's 0.1% m/m increase in monthly GDP and upward revision to the final month's growth of last year supports our view that Canada's economy grew more strongly this quarter. Our calculations suggest that growth accelerated to 2.5% annualised from 1.8% …
30th March 2012
Despite an already modest deficit, the new federal budget includes plans to forge ahead with austerity measures that are likely to restrain economic growth. We doubt that the economy will perform as strongly as the government hopes, however, mainly due to …
We expect GDP growth to slow after the first quarter, as consumption growth fades and housing investment begins to decline. Only a pick-up in business investment growth and a positive contribution from net exports will prevent a more severe slowdown in …
27th March 2012
Our calculations suggest that Canada's economy, after growing by 1.8% annualised in the fourth quarter of last year, will grow this quarter by 2.5%. The main reason for this pick-up in economic growth is much stronger export growth, reflecting an …
26th March 2012
February's rise in the official core inflation figure, to 2.3% from 2.1%, will possibly elicit talk of higher interest rates to come. Considering the increasing slack in labour markets and moderate labour costs, however, we do not think that this uptick …
23rd March 2012
January’s 0.5% m/m increase in retail sales, which was mainly due to sharply higher new vehicle sales, was much weaker than the 2.0% increase we had estimated. The decline in spending elsewhere, which may reflect stagnant employment, suggest that the …
22nd March 2012
According to fourth-quarter financial flows and balance sheet data, household borrowing continues to expand at a pretty rapid pace. Even though the debt-to-income ratio may have fallen slightly in the fourth quarter household leverage continued to rise, …
19th March 2012
Although the disappointing 1.1% m/m drop in January's manufacturing sales volumes bodes poorly for GDP, the recent surge in auto sales at least points to much stronger retail and wholesale trade activity. As such, we estimate that January's GDP still grew …
16th March 2012
This year's surprising strength in new auto sales bodes well for first-quarter consumption, which could have risen by as much as 5% annualised. Even if sales faltered a little towards the end of the current quarter, consumption growth would still probably …
12th March 2012
January's 2.3% m/m decline in exports, mostly due to lower energy and metal prices, trimmed Canada's trade surplus to C$2.1bn from C$2.9bn. More importantly, export volumes, after increasing strongly in December, only dipped slightly. Overall, the data …
9th March 2012
February's surprising 2,800 decline in employment, which continued a run of disappointingly weak jobs reports, is at odds with the better economic growth figures. Although we expect some improvement in employment in the coming months, slower economic …
The Bank of Canada's policy statement, which pledged to keep interest rates at 1.00%, retained its cautious wait-and-see approach, despite the improvement in economic data. Given the strength of the Canadian dollar and financial troubles abroad, the …
8th March 2012
Canada's economy grew by 2.5% in 2011, down from the 3.2% rebound in the year before. Both households and businesses contributed 1.5 percentage points to overall growth last year. While the government sector added very little to growth, weak foreign …
7th March 2012
With oil prices riding high, the outlook for business investment this year looks pretty good. We would feel more comfortable, however, if investment plans were not so dependent on the fate of one commodity. Although global political tensions are likely to …
5th March 2012
Despite the slowdown in fourth-quarter GDP growth, to 1.8% annualised from an upward revised 4.2% in the third quarter, the details on household spending and business investment were more encouraging than we had assumed. These details suggest similar GDP …
2nd March 2012
While it is widely expected that the Bank of Canada will maintain its policy interest rate at 1% next week, with the same decision now likely at the next meeting in April too, we still think that the longer-term consensus view regarding interest rates is …
29th February 2012
The low rental vacancy rate in Canada is often linked to strong immigration growth and presented as a reason why the current strength in new condo sales and multi-unit construction can be sustained in the near future. Low vacancy rates during the US …
27th February 2012
The 9.0% q/q increase in fourth-quarter corporate operating profits, following two consecutive quarterly declines, is encouraging with respect to growth prospects for business investment and payroll employment. Although we expect slower global economic …
23rd February 2012
December's 0.2% m/m decline in retail sales, which was largely due to weaker auto-related sales, follows several months of strong sales. This decline might be the first sign that this recent strength won't be sustained for much longer with employment …
21st February 2012
Despite more upbeat fourth-quarter net exports, our calculations suggest that softer business investment, particularly inventories, held back fourth-quarter GDP growth. From what we can tell, growth slowed to, at best, 1.5% annualised, from 3.5% in the …
20th February 2012
January's increase in consumer price inflation, to 2.5% from 2.3%, is mostly a reflection of some recent noise in new motor vehicle and electricity prices. Since these prices are also included in the official definition of core CPI inflation, that also …
17th February 2012
Despite the relatively strong 1.2% m/m increase in manufacturing volumes in December, we doubt that wholesale and retail trade were anywhere near as strong and suspect that overall monthly GDP growth was a much more modest 0.2% m/m. For the fourth-quarter …
16th February 2012
The price of detached new houses rose by just 2.5% in 2011, slightly below the average annual increase of around 4.0% over the last ten years, which is not that much higher than average annual personal disposable income growth. These relatively modest …
13th February 2012
December's 5.1% m/m increase in export volumes reflects the recovery in Canadian auto production and, more generally, improvement in US economic activity. This surprising strength means that net export's contribution to fourth-quarter GDP growth was …
10th February 2012
The latest building permits and housing starts data indicate that new housing construction is not slowing down much. Although this is good for economic activity this quarter, we are still concerned about the associated over-building and rising likelihood …
8th February 2012
The Canadian dollar has attracted plenty of attention again as it moved back to parity with the US dollar, reflecting increased optimism about prospects for the global economy. We suspect, however, that the Canadian dollar's renewed strength will …
7th February 2012
Recent remarks by government officials suggest that the upcoming Federal budget, expected in March, will deliver spending cuts that are deeper and sooner than those already outlined in last year's budget. We think this tougher fiscal stance is unnecessary …
6th February 2012
January's dismal employment gain and rise in the unemployment rate are further signs that the economy ended last year on a weaker footing. Given the headwinds confronting Canada's economy, we doubt economic growth is about to rebound significantly anytime …
3rd February 2012
November's surprising 0.1% m/m contraction in GDP was caused by a sharp drop in energy output. All things considered, we now figure that fourth-quarter GDP grew by 1.5% annualised, below our previous estimate of 2.0%. Even allowing for a rebound in oil …
1st February 2012
November's disappointing 0.1% m/m contraction in GDP was due entirely to a large drop in energy output. While we expect this important sector to rebound down the road, we now estimate that fourth-quarter GDP grew by closer to 1.5% annualised, possibly …
31st January 2012
The latest retail sales data indicate that fourth-quarter real consumption grew by over 3% annualised and we think there is a good chance that this strength might be sustained this quarter as well. Admittedly, consumer confidence has been slipping, but we …
30th January 2012
November's non-farm payroll survey data, which showed little change in average weekly wages and only a modest increase in employment of 12,261, was somewhat discouraging at first glance. Nonetheless, we estimate that fourth-quarter wages and salaries …
26th January 2012
November's modest 0.2% m/m increase in retail sales masks the real good news, which was that sales volumes grew by an even stronger 0.5% m/m. For four months in a row retail volumes have increased strongly, pointing to growth in fourth-quarter real …
24th January 2012
We think the Bank of Canada's latest projections for economic growth this year and next are too high, mainly because they rely more heavily on sustained growth in household expenditures, particularly on new and existing housing. While we have no doubt …
23rd January 2012
December's drop in consumer price inflation, to 2.3% from 2.9%, reflects a trend that is likely to continue this year. As further declines in underlying inflation coincide with slower economic growth and rising unemployment in the first half of this year, …
20th January 2012
The rebound in November's manufacturing volumes, which rose by 1.7% m/m, more than offset the previous month's decline and points to monthly GDP growth of around 0.3% m/m, which is broadly consistent with our fourth-quarter GDP growth assumption of 2.0% …
19th January 2012
In its policy statement today the Bank of Canada maintained both its key policy interest at 1% and its wait-and-see policy approach. Although the Bank judges that weaker external factors are offset by stronger domestic activity, we think it is still too …
17th January 2012
