Filtered by Subscriptions: Canada Economics Use setting Canada Economics
Housing market struggling to bloom The April housing market data show that the spring season is shaping up to be vastly different than last year, with sales dropping back despite higher listings and house prices unchanged. This has caused us to trim our …
15th May 2024
We held an online Drop-In session today to discuss the Biden administration’s new tariffs on goods from China. (See a recording here .) This Update answers several of the questions that we received about the direct effects of the tariffs and what they say …
Our forecast that the Bank of Canada will cut interest rates earlier and more aggressively than the Federal Reserve means that the loonie is likely to depreciate, but we doubt the move will be large enough to push up imported goods inflation …
2nd May 2024
Although Finance Minister Chrystia Freeland stuck to her previous pledge to keep the budget deficit below $40bn in the new fiscal year, she nonetheless spent the small windfall afforded to the government thanks to stronger-than-expected revenue growth. …
16th April 2024
New housing policies to provide only modest support The government’s policies to boost affordability for first-time buyers will have only a modest impact on demand, but they still add to our sense that house prices will rise in the coming years. While …
Governor Tiff Macklem sounded relatively dovish in the Bank of Canada’s press conference today, leaving the door open to an interest rate cut at the next meeting in June. While the Bank left the policy rate at 5.0% today, the policy statement and …
10th April 2024
The Bank of Canada’s quarterly business and consumer surveys remain consistent with weak GDP growth and generally show that inflation expectations are normalising, but the latter are still too high and raise the risk that the Bank will wait to see …
1st April 2024
We still expect the Canadian dollar to depreciate against the US dollar as interest rate differentials relative to the US widen and Canada’s terms of trade worsen. The Canadian dollar has held up well against the greenback relative to other G10 currencies …
27th March 2024
The government’s plan to cut temporary resident numbers over 2025 to 2027 will result in the weakest three years for population growth in Canada’s 157-year history. While it might not be enough to persuade the Bank of Canada to start its loosening cycle …
25th March 2024
Stretched affordability limits future price gains House prices stabilised in February and, despite emerging signs of financial stress among households, we believe that the risk of renewed price declines is limited. Nonetheless, with affordability so …
18th March 2024
The key risk for Canada’s economy from the US presidential election is that a Trump administration could pull out of the USMCA, leaving Canada subject to any US import tariffs. To avoid that, Canada may have to grant concessions such as increased market …
11th March 2024
The Bank of Canada gave little away about the potential timing of interest rate cuts today, although its communications suggest that it is gaining a bit more confidence that inflation is moving in the right direction. We continue to expect the first rate …
6th March 2024
A fall in the participation rate has kept a lid on unemployment in recent months but, given rapid population growth, we continue to expect the unemployment rate to rise to 6.5% later this year. Despite the surge in the population, labour force growth has …
5th March 2024
Although house prices continued to fall in January, lower mortgage rates are beginning to support affordability and stimulate home sales. With the sales-to-new listing ratio now pointing to positive house price inflation, we expect house prices to be …
15th February 2024
To mark the addition of Canada to our Regional Climate Databank , this Update takes a closer look at the sub-national climate-related data in the country. Our Global Climate Databank and Green Transition Scores are the places to go to compare climate …
5th February 2024
The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts, particularly as the Bank also hinted that it may be willing to look through elevated mortgage interest costs and rent inflation. We continue to …
24th January 2024
The new cap on international student visas is another reason to expect population growth to slow sharply. That will give the Bank of Canada confidence that CPI rent inflation will ease later this year, providing a clearer path for headline inflation to …
23rd January 2024
Lower mortgage rates supporting demand The decline in mortgage rates appears to be supporting demand, with home sales rebounding last month. While prices continued to fall in December, the sales-to-new listing ratio is now pointing to positive house price …
16th January 2024
The Bank of Canada’s quarterly business and consumer surveys continue to flash warning signs about the outlook for the economy and labour market. The normalisation of inflation expectations remains painfully slow, however, presenting a risk to our view …
15th January 2024
A version of this article appeared in the Globe and Mail on 3 rd January, 2024. Read that version here . The giant leap forward for artificial intelligence has inevitably led to concerns about the potential for mass unemployment. Tripping over …
3rd January 2024
It is no secret that strong immigration is pushing up rents but, as rent growth for new tenancies was little changed last year, this does not fully explain the surge in CPI rent inflation. The CPI measure is picking up unusually large rent increases on …
A weak November but lower mortgage rates ahead November was a weak month all round for housing, with prices falling at a faster pace and starts plunging. Lenders are already cutting mortgage rates in response to the recent drop in bond yields, which could …
15th December 2023
The Bank of Canada is clinging on to the idea that restrictive policy is still needed to get inflation back to 2%. Nonetheless, with core inflation pressures muted, GDP and house prices falling, and labour market conditions loosening rapidly, it won’t be …
6th December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
Faced with much higher interest costs, Finance Minister Chrystia Freeland outlined very little in the way of new spending measures in the Fall Economic Statement today. Most of the focus was on non-monetary housing-related policies that will have little …
21st November 2023
House price declines likely to worsen The fall in new listings in October may ease some concerns about forced home sales but, with the sales-to-new listing ratio declining again, it is still likely that the pace of house price declines will accelerate. …
16th November 2023
There are increasing signs that the most leveraged borrowers are struggling to refinance their mortgages with traditional lenders. The small but meaningful number of insured mortgage holders who took out a two-year fix when house prices peaked in early …
6th November 2023
The government today confirmed that it intends to welcome an increasing number of permanent residents in the next couple of years. Even if the number of permanent residents continues to rise, however, the record number of temporary residents currently in …
1st November 2023
Although the Bank of Canada maintained its tightening bias today, the rest of its communications suggest that the Bank is growing more confident it has done enough to eventually get inflation back to 2%. We continue to expect the Bank to cut interest …
25th October 2023
The weakness of GDP growth in the second and third quarters means that the Bank of Canada is likely to make a marked re-assessment of its output gap estimates in its October Monetary Policy Report (MPR). Some indicators suggest that output has already …
18th October 2023
House prices heading lower again The renewed increases in mortgage rates and new listings mean we now expect house prices to fall by 5% over the next six months. The big risk, however, is that we are underestimating the degree to which forced sales are …
17th October 2023
The Bank of Canada’s quarterly surveys show that businesses’ inflation expectations continue to decline, albeit slowly, and point to a growing risk that the economy will fall into recession. Accordingly, we continue to doubt that the Bank will raise …
16th October 2023
The recent strength of core inflation compared to that in the US is mainly due to a rebound in durable goods prices. That has little to do with demand, which has weakened to a greater extent in Canada, suggesting that either the earlier depreciation of …
11th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
House price inflation turned positive in August, but the smaller monthly price gain combined with signs of easing demand and increasing supply show that the housing market continues to cool. The 0.4% y/y increase in the MLS House Price Index in August was …
18th September 2023
CPI food inflation has remained elevated in recent months but, with wholesale price growth easing rapidly, we are confident it will soon fall sharply. That will help to offset the impact of higher oil prices on energy inflation and means there is still …
14th September 2023
Although the Canadian dollar has held up relatively well among G10 currencies, we think it will weaken in the coming quarters as investors discount a more dovish policy path for the Bank of Canada (BoC). Despite the broad-based strength in the US dollar …
7th September 2023
The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and labour market conditions loosening, we continue to think that …
6th September 2023
This page has been updated with additional analysis since first publication. Economy may already be in recession The surprise contraction in second-quarter GDP leaves little doubt that the Bank of Canada will keep interest rates unchanged next week. With …
1st September 2023
GDP in those sectors normally most sensitive to interest rates has weakened over the past year and is now well below the pre-pandemic trend. The resilience of overall economic growth to higher interest rates is mainly due to ongoing recoveries elsewhere. …
23rd August 2023
Housing market coming back into balance The decline in the home sales-to-new listing ratio in July supports our forecast that house price growth will slow over the rest of the year. While housing starts remained high in July, they still look likely to …
17th August 2023
Despite some recent high-profile labour strikes, it still seems likely that overall wage growth will slow sharply during the next 12 months, as labour demand cools and elevated immigration boosts supply. Some commentators have argued that the recent …
2nd August 2023
Rebound in sales spreads to pre-construction sector The pick-up in existing home sales this year has spread to the pre-construction market, with new home sales in Toronto rebounding strongly. Together with the surge in housing starts in June, that …
18th July 2023
The Bank of Canada’s 25bp hike today, taking the policy rate to 5.0%, is likely to be the last in this cycle. With the labour market loosening, core inflation falling and the survey indicators implying that inflation expectations are normalising, we …
12th July 2023
The recent US experience seems to suggest that the household saving rate could fall further as Canadians draw down the savings they built up during the pandemic, supporting consumption. A closer look suggests that the saving rate overstates the health of …
10th July 2023
The Bank of Canada’s quarterly business and consumer surveys showed a broad decline in inflation expectations and are consistent with a renewed slowdown in GDP growth. The Bank could use those developments to justify keeping interest rates unchanged at …
30th June 2023
Housing continues to shrug off high interest rates The recovery in house prices continued in May, with the sales-to-new listing ratio pointing to further gains ahead. Rising interest rates will have a more limited impact on home purchases than existing …
19th June 2023
The Bank of Canada’s 25bp interest rate hike today is unlikely to be the last, with the rapid turnaround in the housing market and concerning underlying inflation dynamics raising the case for at least one more hike in July, to take the policy rate to …
7th June 2023
The rapid turnaround in the housing market and the upside surprise to CPI inflation in April have raised the case for another interest rate hike from the Bank of Canada, which we now judge is slightly more likely than not. The potential for US debt …
17th May 2023
Housing continues to shrug off high interest rates House prices rose by even more than we anticipated in April and the sales-to-new listing ratio points to further gains ahead. Housing starts also jumped last month, but the rising inventory of newly …
15th May 2023
