Bank of Canada Watch Bank to call time on QE We expect the Bank of Canada to call time on its net asset purchases next week by transitioning to the “reinvestment phase” of QE. Widespread labour shortages suggest economic slack is being rapidly... 21st October 2021 · 7 mins read
Canada Economic Outlook Supply shortages limiting economic growth We now expect GDP growth to be 4.8% in 2021, rather than 5.0%, and 3.5% in 2022, down from 4.0%. Worsening labour shortages imply that spare capacity has been rapidly absorbed and point to a sharp... 20th October 2021 · 19 mins read
Canada Data Response Consumer Prices (Sep.) Inflation rose further to 4.4% in September due to both renewed supply disruptions and the easing of travel restrictions. We do not expect the various supply disruptions that are pushing up goods... 20th October 2021 · 2 mins read
Canada Data Response Business Outlook & Consumer Expect. Surveys (Q3) The Bank of Canada’s quarterly surveys point to significant upside risks to wage growth. That said, as wage growth was still low in September and the surveys suggest that longer-term inflation... 18th October 2021 · 2 mins read
Canada Economics Weekly Higher oil prices not a game-changer for the Bank We are not convinced that the further rise in oil prices this week will be sustained. Even if we are wrong, we doubt that higher oil prices will cause the Bank of Canada to become much more hawkish. 15th October 2021 · 5 mins read
Canada Economics Update Labour shortages now widespread The expiry of the CRB this month may help to alleviate the shortages of unskilled labour, but there is little chance that the shortages of skilled labour will ease until immigration picks back up. And... 14th October 2021 · 4 mins read
Canada Data Response Manufacturing Sales (Aug.) Manufacturing sales volumes were a bit stronger than we expected in August, but the renewed cuts to production at auto production plants in September suggest that sales volumes fell again last month. 14th October 2021 · 2 mins read
Canada Economics Weekly Heading off a fiscal cliff? There have been rumours this week that the government will extend some of the emergency spending measures that are soon due to expire. They are unlikely to be extended in their current generous form... 8th October 2021 · 5 mins read
Canada Data Response Labour Force Survey (Sep.) The surprisingly strong gain in September means that employment is now back in line with its pre-pandemic level, but the still elevated unemployment rate and only moderate pace of wage growth suggests... 8th October 2021 · 2 mins read
Canada Economics Update What might prompt the Bank to take a hawkish turn? The sharp slowdown in economic growth in the past couple of quarters suggests that the probability of the Bank of Canada following other central banks in becoming more hawkish is low. The risk will... 6th October 2021 · 5 mins read
Canada Data Response International Trade (Aug.) The large improvement in the trade surplus in August was much better than the consensus estimate of a small deterioration, but we are wary about suggesting that there are upside risks to our third... 5th October 2021 · 2 mins read
Canada Economics Weekly CMHC sounds the alarm (again) It’s hard to argue against the Canada Mortgage and Housing Corporation’s (CMHC) latest warning that house prices look vulnerable to a correction. Indeed, we expect prices to fall in several cities by... 1st October 2021 · 6 mins read
Canada Data Response GDP by Industry (Jul.) Despite the smaller-than-expected decline in GDP in July and the strong preliminary estimate for August, third-quarter GDP growth still looks to be much weaker than the Bank of Canada predicted, which... 1st October 2021 · 3 mins read
Canada Economics Update Withdrawal of CRB a risk to consumption Due to the still high household saving rate, we have so far been sanguine about the risks posed by the winding down of benefit payments to households. But with goods shortages limiting the scope for... 30th September 2021 · 3 mins read
Canada Chart Pack Labour shortages getting worse Labour shortages have intensified in recent months, which could both act as a brake on the recovery and lead to a stronger acceleration in wage growth. According to the CFIB Business Barometer, the... 27th September 2021 · 8 mins read
Canada Economics Weekly Election solidifies larger role for government The federal election confirms that the government will continue to play a larger role in the economy than before the pandemic, which is one reason to think that inflation will be higher in the coming... 24th September 2021 · 4 mins read
