Canadian Economic Outlook

May 13, 2008

Canada in 2007: Marginally slower but regionally balanced growth

According to the recently released Provincial Economic Accounts, growth in Canada was regionally more balanced in 2007 than it was in 2006.

May 12, 2008

Canada's industry-based GDP -0.2% in February

Statistics Canada has just released Gross Domestic Product (GDP) results on an industry basis for February 2008. On the heels of a 0.6% advance in January, month to month, Canadian GDP was -0.2% in February. There have been other recent periods of weakness – for example, December 2007 was -0.7% - but the latest number adds to growing concern that Canada is following the United States into a period of slowdown.

May 8, 2008

"Green" solutions can have hidden costs

It seems that Canada is not alone in introducing taxes with the stated purpose of reducing carbon-dioxide emissions. In the United Kingdom (UK), the Chancellor (Finance Minister) Allen Darling has just introduced a “green levy” that will double the tax on motor vehicles yet reduce total vehicle emissions by less than 1%.

May 7, 2008

Bank of Canada cuts overnight rate by 50 basis points

On April 22, 2008, the Bank of Canada cut its key benchmark interest rate, the overnight rate, by 50 basis points to 3.00%. The most recent peak for the overnight rate was 4.50% in the fall of last year. It appears that the BOC considers Canada’s economy to be at a turning point.

May 6, 2008

Bank of Canada adopts "wait-and-see" approach to further interest rate cuts

In its most recent policy interest rate announcement on April 22, 2008, the Bank of Canada (BOC) cut its benchmark overnight rate by 50 basis points, to 3.00%.

May 5, 2008

Three key measures of consumer spending ease in February

Year-over-year total Canadian retail sales were +5.7% on an actual basis in February 2008 and +6.2% on a three-month smoothed basis. However, they did decline -0.7% on an actual month-to-month basis versus January and this was the first such drop in seven months going back to July 2007.

May 1, 2008

Still strong fundamentals should sustain commercial construction through 2009

On a national basis, there are clear signs that office-based employment, a key driver of commercial construction, is slowing. Over the past eighteen months, its year-over-year rate of growth has dropped from a high of 4.8% to its current (March 2008) rate of 2.5%.

April 30, 2008

There can be soft landings on the moon, but rarely for housing starts

In its latest housing starts forecast package (see accompanying tables), CanaData has revised the 2008 total Canada figure up from 200,000 units to 210,000 units. This may still prove to be conservative. According to Canada Mortgage and Housing Corporation (CMHC), housing starts through the first quarter of this year have averaged 246,000 units (seasonally adjusted at an annual rate), which is 9.0 versus the same period last year.

April 29, 2008

Prospects for growth dim in many developed countries

In its April World Economic Outlook, the International Monetary Fund (IMF) again downgraded its expectations for global economic growth in 2008 and 2009.

April 28, 2008

Energy prices +5.4% in Canada and +17.0% in the U.S.

As of March 2008 results, both the “all-items” and “core” inflation rates in Canada have been on downward paths for about half a year or more. The U.S. all-items inflation rate has been stuck at 4.0% or slightly higher for the past five months. U.S. core inflation has exceeded 2.0% for the past seven months. Core inflation leaves out items (mainly food and energy) with high and uncontrollable (e.g., due to the weather or international geopolitics) price volatility from the Consumer Price Index (CPI).

April 24, 2008

First-quarter housing starts up in majority of Canada's cities

Through the first quarter of this year, housing starts increased in 20 Census Metropolitan Areass and declined in the other 13.

April 24, 2008

Canada’s sanitary and storm sewer system: Out of sight, out of mind

Canada’s stock of sanitary and storm sewers is at 53.3% of its useful life of 33.6 years and is the third oldest of the five major classes of public infrastructure.

April 23, 2008

Canada's inflation rate continues to slide

Consumer Price Index (CPI) results for March 2008 were recently released in both Canada and the U.S. The “all-items” inflation rate for Canada in the latest month was only 1.4% year over year. The corresponding U.S. figure was nearly three times as high at 4.0%. While U.S. inflation, absent food and energy, was more restrained than the overall rate (2.4% versus 4.0%), Canada’s “core” inflation rate was still a good deal lower at only 1.3%.

April 22, 2008

Latest Bank of Canada survey shows cooler outlook for construction

The most recent (Q2/2008) Bank of Canada Business Outlook Survey reinforced the view that construction activity in Canada will slow in 2008 compared to 2007.

April 21, 2008

Construction starts in first-quarter 2008 are not encouraging

CanaData’s construction starts statistics in first-quarter 2008 versus first-quarter 2007 were decidedly weak. Grand total starts (i.e., residential, plus ICI, plus engineering) for the country as a whole were -25% in square footage and -18% in dollar volume. Furthermore, every construction category showed a downturn, some considerably steeper than others.

April 17, 2008

Canada's merchandise trade surplus bounces back in February

Canada’s merchandise trade surplus increased in February 2008 to nearly $60 billion CDN, while the balance of trade in goods and services in the U.S. deteriorated to nearly -$750 billion US.

April 16, 2008

Multiple-unit housing starts remarkably resilient in first quarter

Total housing starts in March 2008 are ahead 9% on average in the first quarter of this year versus the same period in 2007 according to recently released figures from the Canada Mortgage and Housing Corporation.

April 15, 2008

Canadian food prices may heat up soon

At first glance, news that February food prices were up by 0.2% compared to the same month in 2007 appears to be an error because, despite higher oil prices and rising weekly wages, mid-winter food prices in Canada exhibited their lowest year-over-year increase since February 2000.

April 14, 2008

Manufacturing is the weakest link

Within manufacturing, 18 of 21 industrial groupings saw lower capacity utilization rates in the latest quarter versus the previous quarter (Q3 07). Further verifying problems in this sector was the 5% decline in year-over-year employment in the latest month. (South of the border, where the manufacturing utilization rate was 79.3% in February, the picture is not really any brighter.)

April 10, 2008

St. Catharines-Niagara's economy chugs along despite pressures

Despite the economic headwind caused by the significant slowdown in U.S. growth, employment in the St. Catharines-Niagara metropolitan area was up by 5.9% year over year in February 2008.