CMHC sounds the alarm

A closer look at the house price forecasts from the Canada Mortgage and Housing Corporation (CMHC) shows they are not as alarming as they first seem. The worry, however, is that the very public...

22nd May 2020 · 5 mins read

Retail Sales (Mar.)

The 10% m/m slump in March retail sales appears to have been followed by a fall of 15% in April, taking the total drop since February to 24%. The better news is that sales seem to be rebounding in May...

22nd May 2020 · 2 mins read

Tumbling rents a big risk for house prices

Rents in the major cities seem to be falling fast. With property investors basing their price expectations on the assumption that rents would instead keep rising strongly, this represents a big risk...

21st May 2020 · 3 mins read

Consumer Prices (Apr.)

As energy prices are now rebounding, inflation is unlikely to fall much below the -0.2% recorded in April. Nevertheless, we do not expect it to rise back above 0.5% until at least the end of the year.

20th May 2020 · 2 mins read

Financial System Review highlights policy impact

The Bank of Canada’s Financial System Review (FSR) highlights the positive effect that its actions have played in reducing stress in the financial system, as well as the effect that the government’s...

15th May 2020 · 5 mins read

Negative rates a possibility but not a priority

Canadian banks and households are in some respects better placed to deal with the side-effects of negative interest rates that their peers elsewhere have faced. But in contrast to the banking sectors...

15th May 2020 · 7 mins read

Overall policy response close in size to the US

The federal government’s spending measures are dwarfed by those in the US, and the Bank of Canada’s plans look underwhelming compared to those of the Federal Reserve. But the overall fiscal packages...

13th May 2020 · 6 mins read

Labour market conditions even worse than they look

The labour market is in a far worse place than even the bleak headlines suggest. The unemployment rate rose to 13% in April, but it would be 30% if we included all the people that lost jobs or did not...

8th May 2020 · 4 mins read

Labour Force Survey (Apr.)

April’s employment slump was only half as bad as feared. While the worst for GDP seems to be behind us, the unemployment rate could still rise in May, as the 1.7 million people who have dropped out of...

8th May 2020 · 2 mins read

Saving rate to remain elevated

The household saving rate is set to surge from 3% to a 25-year high of 11% in the second quarter, but higher savings are unlikely to prompt a splurge in spending once the restrictions on activity are...

7th May 2020 · 3 mins read

GDP to rise from May as provinces start re-opening

There are signs that activity was already rebounding in the second half of April and this week some provinces began the slow process of re-opening. It is likely to be a long time before most...

6th May 2020 · 5 mins read

International Trade (Mar.)

Business closures from the middle of the month contributed to the sharp falls in trade in March. As many manufacturers remained closed for the whole of April and oil prices fell even further, exports...

5th May 2020 · 2 mins read

Canada Economics Weekly

Bank welcomes its newest asset

The government confirmed this week that former Senior Deputy Governor Tiff Macklem will take the helm from Governor Stephen Poloz in June. We doubt the change will materially affect the way the Bank...

1st May 2020 · 6 mins read

Bank of Canada Governor Announcement

This Update was originally sent to clients as a Rapid Response immediately after the Bank of Canada’s announcement on 1st May. The confirmation that Tiff Macklem will take over from Governor Stephen...

1st May 2020 · 2 mins read

Households suffering unprecedented loss of income

Based on the seven million CERB applications so far, we estimate that households have lost up to 40% of their combined wage income since February. CERB payments alone will close less than half of the...

30th April 2020 · 4 mins read