Filtered by Subscriptions: Canada Economics Use setting Canada Economics
The recent strength in housing activity indicates that housing investment has made a resurgence and is still contributing strongly to GDP growth. Against a bleak global economic backdrop, this resurgence is unsettling, as it does not appear to be based on …
16th January 2012
November's modest rebound in exports reflected more strongly the recovery in Canadian auto production and better US industrial activity. While exports rebounded, imports fell, with the trade deficit swinging to a surplus. Overall, we still figure that the …
13th January 2012
While it is widely expected that the Bank of Canada will keep its policy interest rate at 1% on Tuesday next week, we still think that further policy stimulus is around the corner and expect its policy interest rate to end this year at 0.50%. … More …
11th January 2012
Following the rebound in third-quarter GDP, with growth of 3.5% annualised, we estimate that fourth-quarter GDP grew by a more modest 2.0%. Stronger growth in consumption and, to a lesser extent, business investment were most likely the main factors …
10th January 2012
The latest quarterly business surveys indicate that, while businesses expect sales growth to slow this year, investment and employment should continue to expand. As such, we remain cautiously optimistic about the outlook for business investment. We doubt, …
9th January 2012
Last week's market rally in commodity prices, which was already flagging before the week ended, does nothing to alter our view on Canada's economic outlook. After growing by an estimated 2.4% in 2011, we forecast the economy will grow by a more modest …
December's employment gain of 17,500 jobs, following a slightly larger loss in the month before, was softer than we had expected and was not enough to prevent the unemployment rate from nudging higher, to 7.5% from 7.4%. Overall, this jobs report suggests …
6th January 2012
Consumer price inflation reached almost 3% in 2011, its highest rate in several years, with higher energy and food prices the main culprits. As a result of that pick up in inflation, the increase in real personal incomes in 2011 was, other than the …
27th December 2011
October's slightly disappointing GDP, which was largely unchanged from the month before, was not too surprising. Temporary shutdowns and maintenance work dampened output in the energy sector. Apart from the drop in construction activity, the details …
23rd December 2011
Given the worsening global economic outlook and its negative implications for the export sector, confidence among domestic households and businesses will be critical to Canada's overall economic performance in 2012 and 2013. While we are cautiously …
21st December 2011
October's surprising retail sales, which grew by 1.0%m/m, suggest that household spending began this quarter on a strong footing. For three months in a row now retail volumes have increased strongly, pointing to growth in real consumption of around 3% …
We expect the official 'core' inflation rate, which was unchanged at 2.1% in November, to stay well within the Bank of Canada's target range of 1% to 3% in the coming months. As the economy slows and unemployment drifts higher next year, however, …
20th December 2011
For the past decade households have been on a debt-financed consumption and housing investment spree, reinforced recently by historically low interest rates. This trend has been accompanied by rising household net worth, which, thanks to sharply higher …
19th December 2011
As we head into 2012, there still appears to be a sense of misplaced confidence regarding Canada's economic fundamentals and growth prospects. With the US economy set to slow again and the euro zone heading towards a break-up, external demand growth for …
14th December 2011
The drop-back in manufacturing volumes, which fell 0.9% m/m in October, suggest that the risk to our monthly GDP growth assumption of 0.1% now lie to the downside. In addition, the decline raises some doubt about the sustainability of business investment …
New regional house price data show that many metropolitan areas have seen existing house prices rise sharply from already elevated levels this year. We think these facts count towards dispelling the myth that just one or two areas such as Vancouver are at …
12th December 2011
October's international trade data suggest that fourth-quarter exports might be fizzling out faster than anticipated, despite the modest improvements in US economic indicators. The good news is that the pick-up in imported capital equipment points to …
9th December 2011
After unexpectedly contracting in the second quarter, the economy rebounded in the third quarter, with GDP growth of 3.5% annualised, thanks largely to a big boost from external trade. But given the worsening global economic outlook, trade is unlikely to …
7th December 2011
The Bank of Canada's intention to hold its policy rate at 1% for the time being does not rule out interest rate cuts early next year. External headwinds are likely to blow even harder next year and Canada’s domestic economy is poised to grow more slowly …
6th December 2011
The recent slowdown in growth of wages and salaries is fairly notable by historical standards. In the third quarter at least, overall personal income growth was also dampened by the effect of lower market-determined interest rates on investment income. In …
5th December 2011
November's surprising 18,600 decline in employment, which followed an even greater decline in the month prior, is discouraging to say the least. Given the deepening global financial crisis, an expected recession in Europe, and now a slowing Chinese …
2nd December 2011
Canada's better than estimated third-quarter GDP, which grew by 3.5% annualised, was due to one-time stronger external trade figures. Final domestic demand, however, grew at a slower pace than we had estimated, with weakness in both household spending and …
30th November 2011
Although the economy most likely rebounded in third quarter, by an estimated 2.9% annualised, it is widely expected that the Bank of Canada will hold its key policy interest rate at 1% next week. The worsening sovereign debt crisis in Europe, which the …
29th November 2011
Our calculations suggest that GDP rebounded by almost 3% annualised in the third quarter thanks to a sizable positive contribution from net exports. Unfortunately, that strong contribution from the external sector is unlikely to be repeated in the coming …
28th November 2011
Further growth in non-financial business profits is one good reason to expect continued growth in business investment and perhaps payroll employment. That said, the uncertainty surrounding what impact a protracted euro-zone recession and the potential …
24th November 2011
September's jump in retail sales is further evidence that most households were undaunted by financial market volatility and declines in equity prices last quarter. Despite the drop in consumer confidence in October, preliminary data showing higher new …
22nd November 2011
After expanding very strongly in the first half of this year, we now estimate that business investment grew at a tepid pace in the third quarter. Nevertheless, there are good reasons to expect investment growth to pick-up next year, although we are …
21st November 2011
Although the official measure of core inflation, which dipped from 2.2% to 2.1% in October, might stay slightly above the Bank of Canada's target of 2% in the near term, this is not a big concern. That measure only excludes fresh food. Excluding all food …
18th November 2011
Third-quarter GDP growth appears to have picked up to about 3.0% annualised, in part due to the rebound in industrial production, which has fully recovered from the temporary supply disruptions and weather related disasters earlier this year. This rebound …
16th November 2011
The stronger than expected increase in September's manufacturing sales bodes well for monthly GDP growth, which we estimate at 0.2% m/m. As such, we have revised up third-quarter GDP growth, from 2.5% to 3.0% annualised. In addition, the pick-up in orders …
15th November 2011
We agree that the federal government will take longer than previously thought to return to budgetary balance but, really, so what? Considering that the primary federal budget is already balanced and that the federal debt burden is relatively low, there is …
14th November 2011
September's international trade data confirm that net exports were a big positive for third-quarter economic growth, which we now estimate at 2.5% annualised. Although there are good reasons to not expect a repeat performance this quarter, indicators are …
10th November 2011
We have below-consensus forecasts for Canadian interest rates and economic growth next year. The main reasons for the difference relates to our bearish views on rest-of-world economic growth, commodity prices and domestic housing activity and prices. … …
9th November 2011
The employment figures took a lot of the gloss off the news earlier in the week that monthly GDP growth accelerated back in August. It is clear that even if energy and autos production were enjoying a late summer recovery, conditions were a lot weaker in …
7th November 2011
October's employment figures cruelly dashed any optimism that may have built up after the surprisingly good performance in September. Employment fell by 54,000 last month, reversing most of the 60,900 increase the month before. October's decline was the …
4th November 2011
The 0.3% m/m increase in real GDP in August was solely due to the continuing rebound in energy production, which is still recovering from the disruptions in the spring caused by bad weather and maintenance work. Excluding energy, GDP was actually …
31st October 2011
Although most private-sector forecasters have revised down their GDP forecasts for Canada, they still seem too high to us. The latest surveys show that consensus expectations for real GDP growth over the next year or two are close to pre-crisis historical …
The Bank of Canada now believes there is no need to remove any monetary policy stimulus anytime soon. Even this more dovish position, however, rests on the assumption that the global economy will undergo a brief soft patch before picking up during the …
26th October 2011
The respectable 0.5% m/m gain in retail sales in August suggests that most households shrugged off the recent volatility in financial markets, despite evidence showing that confidence had fallen. In addition, judging by the more recent data on new motor …
With concerns over Europe's fiscal and financial mess dominating the headlines, domestic investors largely ignored the news last week that Statistics Canada's composite leading index suggests that Canada's economic performance is about to soften …
25th October 2011
The stronger than expected increase in core CPI inflation, from 1.9% to 2.2% in September, is mostly due to higher clothing prices, reflecting the past run-up in cotton prices. Although core CPI inflation is now likely to remain somewhat above the Bank of …
22nd October 2011
We have absolutely no doubt that the Bank of Canada will hold its policy interest rate at 1% next week. Were it not for the recent declines in long-term interest rates and depreciation of the Canadian dollar, however, we think the Bank might have …
20th October 2011
The latest quarterly business survey responses indicate that the more uncertain global economic outlook is dampening business confidence, but only at the margin. While cautiously optimistic regarding the outlook for sales, the balance of opinion among …
18th October 2011
The recent surge in multi-unit housing starts indicates that new construction activity could boost overall residential investment growth for at least one or two more quarters, possibly even into early next year. How long this trend can continue, however, …
The stronger than expected increase in manufacturing sales and growth in unfilled orders is encouraging news. This provides further evidence that the economy rebounded in the third quarter, with growth of around 2.5% annualised. Moreover, sales should …
15th October 2011
September’s annualised housing starts of 205,900, combined with upward revisions to July and August, indicates that third quarter housing investment grew more strongly than we had expected. However, while this stronger momentum will probably be carried …
12th October 2011
The downward trend in the Canadian dollar, or loonie, against the US dollar over the last two months is broadly consistent with the deterioration in the global economic outlook and the resulting slide in commodity prices. We forecast that the Canadian …
11th October 2011
September's employment gain of 60,900 was a positive surprise, but the underlying details of the jobs report were less spectacular. Even so, it suggests that economic growth overall fared better in the third-quarter. … Labour Force Survey …
8th October 2011
Renewed concerns over Europe's fiscal crisis and the struggling US economy have triggered a sharp decline in commodity prices. Since peaking in April this year, the Bank of Canada's composite commodity price index has fallen by 13% and could yet fall …
5th October 2011
