GDP by Industry (May)

The stronger-than-expected 4.5% m/m rise in GDP in May provides further evidence that the initial rebound from the lockdowns was strong. We expect the pace of recovery to slow over the rest of the...

31st July 2020 · 2 mins read

Canada Economics Update

Bank of Canada too downbeat on growth and inflation

We think the Bank of Canada’s GDP forecasts are too weak given it assumes there will not be a second wave of the virus. Even if there is one, the Bank is likely underestimating the potential for...

29th July 2020 · 4 mins read

Retail sales overstate recovery in consumption

Retail sales rebounded to near pre-virus levels in June, but this partly reflects a shift in spending from services to goods. Accordingly, the strong recovery in sales overstates the health of total...

27th July 2020 · 3 mins read

Virus case growth rising from low level

The renewed rise in Covid-19 case growth is not yet a big cause for concern, but there is clearly a risk that a second wave of infections will cause further economic disruption later this year.

24th July 2020 · 5 mins read

Bank to reduce pace of asset purchases

Operational changes announced by the Bank of Canada this week mean the pace of expansion of its balance sheet is set to slow. The Bank’s assets have surged by $420bn, or 350%, since February, a rise...

23rd July 2020 · 9 mins read

Consumer Prices (Jun.)

The re-opening of the economy and the rise in Hydro prices in Ontario caused inflation to increase by more than expected in June. An average of the three core inflation measures ticked up to 1.7%, but...

22nd July 2020 · 2 mins read

Retail Sales (May)

The 18.7% m/m rebound in retail sales in May still left them 20% below the pre-virus level, but Stats Can also said today that its preliminary data point to a further 24.5% m/m rise in June. While...

21st July 2020 · 3 mins read

Teranet House Prices (Jun.)

House prices have continued to edge up in recent months despite the lockdown and, as the economy recovers, we think they will remain resilient over the rest of the year.

20th July 2020 · 2 mins read

Bank’s forward guidance to help support house prices

In his first press conference as Bank of Canada governor, Tiff Macklem said this week that “our message to Canadians is that interest rates are very low and they're going to be there for a long time”...

17th July 2020 · 7 mins read

Bank signals it will not raise rates until at least 2023

The Bank of Canada’s pledge today to keep the policy rate unchanged until the “2 percent inflation target is sustainably achieved” implies that it has no plans to raise interest rates until at least...

15th July 2020 · 3 mins read

Manufacturing Sales (May)

Following the 10.7% m/m rise in May, manufacturing sales are set to record further strong gains in the next few months. But given the likelihood that demand will remain weak, we doubt they will return...

15th July 2020 · 2 mins read

Unemployment rate to drop back but remain elevated

The unemployment rate, which at 12.3% is the highest among the major developed economies, should drop below 9% by December. We expect progress beyond then to be much slower, unless the hinted...

14th July 2020 · 4 mins read

Higher fiscal spending good news for the Bank

The government confirmed this week that it is committing a further $58bn to direct spending measures to support the economy, bringing the total direct stimulus to a striking 9.5% of GDP. The...

10th July 2020 · 5 mins read

Labour Force Survey (Jun.)

The 950,000 rise in employment in June supports our view that the majority of the pandemic-related job losses will be regained by the end of the summer. That said, while we expect the unemployment...

10th July 2020 · 2 mins read

Huge deficit but more spending still to come

The government confirmed today that it is allocating additional funds to various COVID-19 related programs that will cause the deficit to widen to $343bn this fiscal year, or 16% of GDP. And with...

8th July 2020 · 3 mins read