Canadian Economic Outlook

July 2, 2009

Manitoba’s outlook will be energized over medium term

Based on the fact that Manitoba’s unemployment rate, currently 4.9%, is 40% lower than the national average (8.4%), it is clear that the province has, to date, only been sideswiped by the recession that hit the rest of country head-on.

June 30, 2009

Office building construction markets in Toronto and Calgary

The most recent peak for office building starts in Canada occurred two years ago, in 2007. At that time, 16.0 million square feet of work was initiated across the country. This is a category of construction that can be highly cyclical. The figure this year is expected to be only 4.4 million square feet. While this is quite a drop in activity levels, the recovery phase in this market is likely to be shorter than during previous times in history.

June 29, 2009

Commodity prices and job losses – An economic world of mixed messages

It is an economic world of mixed messages at present. U.S. job losses in May were about half of what they were at their worst in January 2009. The latest weekly jobless insurance claims figure continued a trend that has been stepping down for several months. For June 6th, it was 601,000 versus 674,000 at its peak in March. But labor markets will continue to come under duress as a result of the bankruptcy filings of Chrysler and General Motors and the shock waves that will ripple out over parts makers and dealerships.

June 25, 2009

Capacity utilization rate drops in most industries, with a few key exceptions

The combination of rising inventories, a restrictive credit climate and plummeting commodity prices encouraged an unprecedented number of industrial firms to put the brakes on their production in the first quarter. This observation is based on the fact that the industrial capacity utilization rate fell by 19.3% year over year to its lowest level on record.

June 24, 2009

Canada’s May housing starts ascend partway out of the basement

The nation’s housing starts ascended partway out of the basement in May, according to the latest report from Canada Mortgage and Housing Corporation (CMHC). In the most recent month, they were 128,000 units on a seasonally adjusted annualized basis, versus only 118,000 in April. In the first five months of this year, they have averaged 133,000 units annualized, which is -42% versus the same January-to-May time frame last year.

June 23, 2009

Vancouver Island’s prospects are not as bleak as they first appear

After having outperformed the country as a whole for more than a year, there is clear evidence that most of Vancouver Island’s key industrial drivers have been effectively knee-capped by the direct and indirect effects of the global recession.

June 22, 2009

Manufacturing and construction drag down labour markets in the U.S. and Canada

May labour market reports have been released by government statistical agencies on both sides of the border. U.S. employment fell by 345,000 in May on a month-to-month basis. Canada’s total jobs fell by 42,000. These numbers are roughly in line on a proportional population basis (i.e., the usual “ten times” factor for the U.S. versus Canada).

June 18, 2009

June 18, 2009

Canadian rental markets have softened over the past year but not by much

Across Canada’s 35 largest metro areas, the average rental apartment vacancy rate edged up slightly in April of this year to 2.7% from 2.6% in April of 2008. This small increase in the average vacancy rate for the country as a whole masks considerable regional variation.

June 17, 2009

Key indicators point to better economic and construction prospects in the U.S. and Canada

The United States economy appears poised for recovery and Canada’s economy is in a holding pattern, which is better than the free fall of earlier this year. The good-news indicators are tentative and fragile, but they are encouraging nonetheless. In the U.S., there are two key measures that look at how consumers are feeling and what is happening in manufacturing. These are published by the Conference Board and the Institute of Supply Management (ISM). In both cases, the primary yardsticks have turned up again over the last several months, after setting historical lows during the past winter.

June 16, 2009

The economic climate, like the weather, is improving – but very slowly

Although the economic news on the Canadian economy is definitely more upbeat than it was three months ago, it is still mixed.

June 15, 2009

The retail sales decline stabilizes but CanaData’s retail construction forecast is marked down

According to Statistics Canada, total retail sales nationally in March 2009 advanced 0.3% on a month-to-month basis, but fell back 4.8% year over year.

June 11, 2009

The HST will likely cause Toronto’s construction slump to be protracted

However it is measured, the economic pulse of the Toronto census metro area (CMA) has slowed significantly over the past twelve months. Probably the best gauge of this deterioration in economic health is the growth rate of total employment. Since May 2008, year-over-year job growth has slowed from +2.5% to -2.9% in May of this year. This dramatic drop in the rate of job creation has caused Toronto’s unemployment rate to jump from 6.6% to 9.1%, the highest level in over 12 years and the seventh highest unemployment rate among the country’s 27 CMAs.

June 11, 2009

April CPI on the cusp of deflation in U.S. and Canada – Expect moderation through July

The graph that accompanies this report tells it all. The peak for consumer prices in both the United States and Canada occurred last summer - July in the U.S. and August in Canada. There was a specific reason and it had to do with commodity prices that crested in July. The world price of oil rose to its highest level ever of $145 USD per barrel. Many commodity prices fell dramatically after that. Oil prices reached their bottom in February of this year at $34 USD per barrel. Therefore, year-over-year percentage changes can only be mild until both economies move past the summer of this year.

June 10, 2009

Latest construction data shows signs of struggle south and north of the border

The April 2009 housing starts number for the United States was a continuation of the bad news in the residential sector that extends back several years. Singles (+2.8%) increased month to month, but multiples plummeted by almost 50%. Multiple-unit starts are a more volatile series. Multi-unit starts in April of this year were -72% versus April of last year. The net effect yielded total unit starts of only 458,000 in the latest month (SAAR), the lowest point so far and -80% versus the January 2006 peak of 2.273 million.

June 9, 2009

Business investment exhibits record drop in first-quarter 2009

If there were ever a perfect storm for business investment in Canada it happened in the first quarter of 2009.

June 8, 2009

The swing in Canada’s housing starts becomes exaggerated in April

Feeling sorry for oneself comes naturally to an economist. We are a much maligned lot. Our forecasts are often seemingly wrong. But that is because we are aiming at a moving target or some dramatic event drops down from out-of-the-blue. Or the forecasts cause policy or behavioral changes that alter the outcome. Plus there is one other factor. The rest of society simply refuses to behave in a rational way – witness the housing market.

June 4, 2009

Alberta and Ontario lead retreat in construction employment

According to the most recent payroll employment statistics published by Statistics Canada, the two industries hardest hit in the current downturn are manufacturing and construction.

June 3, 2009

Two improving news stories – U.S. retail trade and Canada’s Foreign trade

Figures have just been released by government statistical agencies on both sides of the border with respect to U.S. retail trade (for April 2009) and Canada’s foreign trade (for March 2009). Neither set of numbers contains hop-up-and-down good news. Just the same, both reports are considerably less negative than they have been in the recent past.

June 2, 2009

IMF and Economist Intelligence Unit give Canadian economy high marks

Two external rating agencies, the International Monetary Fund (IMF) and the U.K.-based Economist Intelligence Unit (EIU), recently reported on Canada’s economic health. According to both reports, the country is in excellent shape.