Canada Economics Weekly

Bank can’t risk insurance cut with housing revival

We expect the Bank of Canada to leave its key policy rate unchanged next week, as fears of stoking the flames of the resurgent housing market outweigh the risk that economic growth will slow by more...

29th November 2019 · 5 mins read

GDP (Sep. & Q3)

GDP growth slowed sharply to just 1.3% annualised in the third quarter, but the expenditure breakdown was more encouraging than we had expected. The acceleration in domestic demand growth reduces the...

29th November 2019 · 2 mins read

Housing revival likely to keep Bank on side-lines

The labour market is starting to show cracks and GDP growth is on track to slow below the Bank of Canada’s forecast in the fourth quarter. This will increase the pressure on policymakers and means...

26th November 2019 · 7 mins read

Prospects for consumer spending slowly improving

The stagnation of retail sales volumes over the past 12 months shows that all is not well in the consumer sector, but there have been some tentative signs of improvement recently. While retail sales...

25th November 2019 · 9 mins read

Temporary factors add to uncertainty

We think that investors overinterpreted Governor Stephen Poloz’s comments this week, but we have to concede that the Bank of Canada now seems more likely to keep policy on hold in December than cut...

22nd November 2019 · 5 mins read

Retail Sales (Sep.)

September’s small fall in retail sales suggests that consumers are still cautious about their finances. But the jump in building material and garden equipment sales shows that the improving housing...

22nd November 2019 · 2 mins read

House price inflation set to surge

Following the slump in mortgage rates, the rise in the sales-to-new listing ratio suggests that house price inflation will surge. As rising houses prices will support consumption growth, the case is...

22nd November 2019 · 3 mins read

Consumer Prices (Oct.)

With headline and core inflation unchanged at close to target in October, the likelihood of the Bank of Canada cutting interest rates in December has fallen.

20th November 2019 · 2 mins read

Manufacturing Sales (Sep.)

Temporary factors help to explain the decline in manufacturing sales in September, but the business surveys suggest that growth in the sector will remain weak.

19th November 2019 · 2 mins read

Signing of CUSMA will do little for growth

There was some good news for Canada’s exporters this week, as US House Speaker Nancy Pelosi indicated that the Democrats will soon give their support to the revised NAFTA, aka CUSMA. While the...

15th November 2019 · 7 mins read

Cracks beginning to appear in the labour market

The recent softening of hiring intentions implies that average monthly employment gains will slow further, to below the sustainable rate. While base effects will keep annual hourly wage growth above 4...

13th November 2019 · 4 mins read

Keystone rupture may weigh heavily on GDP

The shutdown of the Keystone pipeline, which normally carries 15% of Canada’s oil exports, may weigh heavily on GDP in November. If the pipeline were shut for the first half of November and operated...

8th November 2019 · 4 mins read

Labour Force Survey (Oct.)

The details of October’s Labour Force Survey were worse than the modest fall in employment first suggested. Full-time and private sector positions fell, while the rise in public sector and part-time...

8th November 2019 · 2 mins read

What would make or break a December rate cut?

We think that markets are underestimating the chance of the Bank of Canada cutting interest rates in December, but we would change our view if the US and China agreed to roll back tariffs meaningfully...

6th November 2019 · 3 mins read

Heading for a December rate cut

While the Bank of Canada kept its policy rate unchanged at 1.75% on Wednesday, there were hints that an interest rate cut is coming. In his opening statement at the press conference, Governor Stephen...

1st November 2019 · 5 mins read