April 2011 Canadian Economic Fundamentals

[Ally]

Higher Canadian gas prices could cost households an extra $950 this year: CIBC





OTTAWA ` The recent surge in gasoline prices, if sustained, will cost the average Canadian household an extra $950 this year, according to a report issued Monday.







CIBC World Markets said the 25 per cent rise in pump prices since September would, at current levels, cost Canadian consumers an extra $12 billion over the course of 2011, equivalent to a tax hike of about seven per cent.







According to data from Kent Marketing Services, the average price of regular gasoline in Canada is more than $1.25 a litre, compared to about $1 last September.







"Higher-income households are better able to absorb the increase in energy spending without much sacrifice to their non-energy spending," said Benjamin Tal, deputy chief economist for CIBC World Markets. "In other words, the extra cost is largely borne by their savings.




Read the full article here.

 

[Ally]

Rate of home price appreciation stablilizes after post-recession recovery






TORONTO, Ontario, April 12, 2011 ` The Royal LePage House Price Survey released today showed the average price of a home in Canada increased between 3.5 and 4.3 per cent in the first quarter of 2011, compared to the previous year, as markets continued their post-recession recovery. While the rate of year-over-year price appreciation slowed slightly in the first quarter, home values continued the upward climb, which first began late in the second quarter of 2009.




Low interest rates and a recovering economy continued to fuel activity in Canada`s housing markets over the past year, which has led to country-wide increases in average home prices. In the first quarter of 2011, the national average price of a detached bungalow rose 4.3 per cent year-over-year to $341,355, while standard two-storey homes rose 3.5 per cent to $379,388 and standard condominiums rose 4 per cent to $237,919.




`The rate at which Canadian homes are appreciating may well have peaked for the next year or so,` said Phil Soper, president and chief executive of Royal LePage Real Estate Services. `We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied, and affordability continues to erode slowly, allowing the listings supply to catch up. In most markets, lower single digit percentage increases are more likely for the balance of the year.`


In the first quarter of 2011, certain markets such as Vancouver, Montreal and Halifax continued to experience significant price gains compared to the same period a year earlier, largely due to favourable regional demographic shifts and healthy local economies.





Read the full article here.

 

[Ally]

Loonie set to slam growth, BoC warns




OTTAWA ` Economic growth in Canada is set to tail off sharply after a robust first-quarter burst and could remain modest for years as momentum in exports fades in the face of a strong dollar, the Bank of Canada said Wednesday.




`It is an issue in terms of our trade performance and our competitiveness ` and an additional risk to the outlook to growth and inflation in Canada,` Mark Carney, the central bank governor, told reporters after the release of bank`s quarterly economic outlook.




`What we are seeing on the trade side is still quite a challenging situation for our exporters ` and it could be more difficult.`




The central bank revised upward its projection for first-quarter real GDP growth to 4.2% annualized, which is closer to private-sector estimates and nearly two percentage points above its previous forecast.





Read the full article here.

 

[Ally]

BMO survey reveals Canadians are all about location





The busiest season for the housing market is underway and Canadians are all about price and location.







A Leger Marketing survey conducted last month for the Bank of Montreal shows 91 per cent and 92 per cent of Canadians value the location and price of a home over it's resale value.







It also shows 67 per cent base their decision on 'a good feeling' or their intuition.







BMO Mortgage Specialist Frances Hinojosa tells 660News, the numbers show people are taking longevity into account more than profitability.







"They're looking at longevity. Will their family be able to grow in that home? Are there schools close by?"







Read the full article here.

 

[Ally]

Energy security and environmental change could radically alter society: military report





KINGSTON, Ont. ` The planet is running out of oil and heading toward a future that could trap Canada in a violent spiral of decline in the economy and the environment, a special research unit within the Canadian military is predicting.







This "global quagmire" is one of four possible future scenarios advanced by the six members of the team who are developing a plan for the army of tomorrow based on existing scientific research and analysis.







In a best-case scenario, they predict that Canada could be at the forefront of a prosperous green economy, in which clean energy and environmental protection are priorities and living standards improve around the world.







Two other scenarios fall in between, but all four alternatives conclude that energy security and global environmental change are the most serious and unpredictable factors that could radically alter society as well as the role of Canada's army.




Read the full article here.

 

[Ally]

Why renting is beginning to look like a great deal




The housing market has entered a period of stability ` those who think the market will fall and those who think everything`s fine have neutralized each other.




And so we have a resale home market that is headed more or less sideways in terms of sales activity and showing only mild price increases. At least, that`s with the crazy Vancouver market set aside.





Read the full article here.

 

[Ally]

Rising food prices: It's no small potatoes




Food prices are flaring up in Canada.




The cost of food picked up to 3.3 per cent in March, much higher than the 2.1-per-cent rate of food inflation a month earlier. The price of food bought from stores rose 3.7 per cent -- the biggest increase in a year and a half.




Factors driving food costs range from bad weather to rising energy prices.





Read the full article here.

 

[Ally]

Most Canadian millionaires are self-made




A new report shows that Canada's rich didn't get there the old-fashioned way through inheritance, they earned it.




The study by BMO Harris Private Banking finds that 94 per cent of Canadians with over $1-million in investable assets are self-made.




Only 6 per cent say they owe the majority of their wealth to inheritance.




As well, the survey of 459 Canadian millionaires finds that 80 per cent are wealthier than their parents were, and 77 per cent say they are better off today than they were before the 2008 recession.





Read the full article here.

 

[Ally]

Border delays cost Canada up to $30 billion a year




It is difficult to overstate the importance of Canada-U.S. trade flows: roughly one-quarter of what Canada produces is exported to the United States, and the volume of imports from the U.S. is only slightly smaller.




The increased border security in the wake of the Sept. 11 attacks may be only a minor irritant in the context of a single border crossing, but a small cost multiplied by a large number of crossings can still end up being a very big number. Even a small perturbation in trade flows of this magnitude can have a significant effect on the Canadian economy.





Read the full article here.

 

[Ally]

Why we should set own energy path





For the better part of five years, Canadians have heard from political leaders that setting a climate change -or energy -strategy for this country cannot happen until the U.S. first determines its path.




But Russ Girling, president and chief executive of TransCanada, has a decidedly different take on that perspective.




Canada should chart its own course because its energy market dynamics are decidedly different than those of the US.




On a snowy morning last week, Girling made the point that aligning the policies of the two countries actually doesn't make sense.




"We can have the same underlying objectives," he said, "but Canada, as a net exporter of energy, is going to have different array of constraints compared with the United States, which is a net a importer of energy," he said.






Read the full article here.

 

[Ally]

National home sales fall in March




The Canadian existing home market saw year over year sales drop in March, but experienced a sharp uptick in pricing thanks largely to activity in the Vancouver market.




National average prices increased by 8.9 per cent in March rising to an all time high of $366,081, compared with $335,638 a year earlier according to figures released by the Canadian Real Estate Association Friday.




Seasonally adjusted sales in March over February were relatively flat, up by 0.1 per cent, but down by an unadjusted 6.6 per cent from a year ago.





Read the full article here.

 

[Ally]

National home sales hold steady in March






OTTAWA ` April 15th, 2011 ` According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity held steady in March 2011 compared to February.






Seasonally adjusted national home sales activity in March came in one tenth of a percentage point above levels for the previous month, with stable demand in most large urban centres.






With national sales in each of the first three months of 2011 running close to their five- or ten-year monthly averages, seasonally adjusted national sales activity in the first quarter of 2011 was up 4.5 per cent from levels recorded in the fourth quarter of last year, and reached the highest quarterly level in a year.






Most of the quarterly increase in seasonally adjusted national sales activity was due to demand in Vancouver and Toronto. Recent changes to mortgage regulations may have caused a number of sales in some of Canada`s more expensive housing markets to be brought forward into the first quarter that would have otherwise occurred later in the year.




Sellers looking to tradeup before changes to mortgage regulations took effect made their move early, resulting in a significant rise in newly listed homes in January and February of this year. With changes to mortgage regulations looming in March, seasonally adjusted new residential listings for the month dropped five per cent month-to-month.





Read the full article here.

 

[Ally]

CPR hiring 1,500 across country as shipping 'ramps up'




EDMONTON ` If you love the outdoors and have always wanted to hit the rails, Canadian Pacific may have a job for you.




Canada`s iconic railway hopes to hire about 1,500 future conductors, locomotive engineers, railcar and diesel mechanics and rail traffic controllers across Canada this spring. Some 300 of those jobs will be in Alberta, including about 100 in the Edmonton-to-Red Deer region.




`We are responding to the shipping needs of our customers, and are ramping up resources across our network,` spokesman Ed Greenberg said.




The hiring push comes after 1,500 staff who were laid off in the recession of 2009 returned to work in 2010.





Read the full article here.

 

[Ally]

Loonie soars to highest since 2007




The Canadian dollar surged above US$1.05 Wednesday for the first time since November 2007, as strong inflation, higher commodity prices and a renewed slump in the greenback amid worries over the U.S. fiscal outlook.







Wednesday`s climb was a continuation of the previous day`s gains for the Canadian dollar, which climbed on news the annual inflation rate jumped to 3.3% in March. By 8 a.m. the loonie was trading at US$1.0501 against the U.S. greenback, the highest level since mid-November 2007.







`The USD should weaken further as the combination of U.S. monetary and fiscal policy weighs heavily on the outlook,` Camilla Sutton, chief currency strategist at Scotia Capital said in a note.





Read the full article here.

 

[Ally]

OECD upbeat on Canada's growth




Canada is expected to lead growth among G7 economies in the first and second quarter of this year, a new forecast predicts.




The Canadian economy likely grew 5.2 per cent in the first quarter of this year and 3.8 per cent in the second quarter, the OECD said in an economic outlook Tuesday. That prediction is much higher than most Canadian first-quarter forecasts of about 4 per cent.





Read the full article here.

 

[Ally]

National monthly unemployment rates





See the graph here.

 

[Ally]

OECD warns Canada on rise in long-term employment




The Organization for Economic Co-operation and Development threw a challenge into the federal election campaign today, suggesting that Canada and some other countries maintain jobless benefit extensions for now.




Unemployment, the OECD warned in a lengthy report, remains a scourge on the global economy in the wake of the brutal recession and financial crisis.




"A main concern in countries most severely hit is that persistently high levels of unemployment ` and a rising share of unemployed workers facing long spells without a job ` will eventually result in widespread deterioration of human capital, discouragement and labour market withdrawal," the OECD said.





Read the full article here.

 

[Ally]

Real Estate: Comparing Canada to the U.S.




KUOW radio in Seattle this morning had a discussion about home ownership around the world, comparing Canada, the United States and Europe. As it turns out Canada has one of the largest percentages of home ownership - between 60 to 70 per cent.




In prepping to take part in the discussion (as the Canadian voice) I discovered a few interesting stats.




The main thing is that while insurance is available (and usually mandatory) for borrowers who have less than 20 per cent of a down payment, the insurance isn't automatic. In fact, according to mortgage broker Feisal Panjwani the Canada Mortgage and Housing Corp, as well as the other mortgage insurers like Genworth, still have pretty stringent rules about what mortgages they will insure. So borrowers still need to have a good credit rating, good income to make the payments and an acceptable debt service ratio. That's probably the biggest difference between the Canadian and US housing markets. In the US one of the problems was that insurers were insuring sub-prime mortgages, where the lenders didn't have good credit, and whose income may have been sketchy. Then when the borrower defaulted the insurer was left holding the bag (or the bank if the insurer - and there were many of them - didn't have the money).





Read the full article here.

 

[Ally]

Inflation shock revives rate hike talk






OTTAWA (Reuters) - Inflation in Canada soared in March, stunning markets, and when combined with signs of frothy first-quarter growth raised the likelihood the central bank will soon resume interest rate hikes.





Due to sharp rises in gasoline and food prices, the annual inflation rate shot up to 3.3 percent in March, Statistics Canada said on Tuesday, the highest level since September 2008 and above the Bank of Canada's comfort zone.





On a month-on-month basis, the consumer price index climbed 1.1 percent from February, the sharpest rise since January 1991.





"I was definitely surprised by the numbers. Everyone was surprised. (It was) quite a bit stronger than expected," said Jacqui Douglas, a senior currency strategist at TD Securities in Toronto.





Read the full article here.

 

[Ally]

How StatsCan determines shelter costs




When it comes to calculating inflation, housing costs pose a peculiar challenge.




The consumer price index is meant to show how a basket of goods has changed in value over a month or a year. But most people don`t buy houses all that often and when they do they usually don`t pay with cash.




So in attempt to have the cost of housing included in the CPI, Statistics Canada treats housing differently than the other items being measured. Rather than a straight measure of the cost of houses, the agency looks to measure `a selection of costs that are specific to homeowners.`





That leaves economists measuring rent (1.2 per cent higher year-over-year), mortgage interest cost (-2.2 per cent), replacement cost (3.2 per cent), property taxes (3.5 per cent), home and mortgage insurance (4.9 per cent), maintenance and repairs (1.5 per cent), electricity (4.3 per cent), water (6.3 per cent), natural gas (-2 per cent) and fuel oil (31 per cent).





Read the full article here.