April 2012 Canadian Economic Fundamentals

[Ally]

Fixed mortgages win over variable, says BMO economist





As the federal government warned it may again tighten mortgage rules, a Bank of Montreal economist says fixed mortgages `clearly trump` variable mortgages in today`s economy.




There are two reasons for the change of heart by Douglas Porter, deputy chief economist at BMO: the intense competition among lenders and the economic recovery in the U.S.






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[Ally]

Employment rate posts biggest jump since 2008




OTTAWA -- After months of stagnant or even falling employment, Canada's economy has just had its biggest surge since before the last recession, adding 82,300 workers to the labour force in March.




That's six times more than the previous seven months combined and the biggest monthly jump since September 2008, just before the Canadian economy was hit with fallout from a U.S. credit crisis that sparked a global recession.




March's gain, almost all in full-time work, dropped the unemployment rate two-tenths of a point to 7.2 per cent.




In Manitoba, 6,100 jobs were added in March and the unemployment rate fell to 5.3 per cent from 5.6 per cent in February.





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[Ally]

Harbingers of doom




Even by Maclean`s standards, the cover was alarming. `You`re about to get burned,` screamed the headline, over a picture of a house that was literally on fire. `Canada looks like the us before its devastating housing crash ` maybe even worse.` And the kicker, for those still hesitating: `Why it`s officially time to panic.`




This last was doubtless something of a little in-joke. For my old colleagues at Canada`s newsweekly, it is always time to panic, especially about house prices. The magazine`s editors inhabit a world beset by all manner of hitherto undetected demons, from more expensive groceries (`sudden shortages, riots over prices, the world food crisis is about to hit home`) to insomnia (`the truth about a modern epidemic`) to, well, `The Return of Hitler.`





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[Ally]

Why Spain is in much worse shape than anyone thinks




The cost of borrowing for Spain spiked on Tuesday, just as a new report suggested the country is actually in much worse shape economically than the headline numbers suggest.




Carmel Asset Management released a presentation Tuesday that argues that Spain`s debt is under-reported, that the country`s banks are so-called `zombies` and more worryingly, the country`s economy is no where close to finishing its downward spiral.





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[Ally]

IMF says household debts cast long economic shadow




WASHINGTON ` Housing busts and recessions are more severe and last for at least five years when they follow a big run-up in household debt, according to a study released on Tuesday by the International Monetary Fund.




The findings suggest that economies of the United States, the UK and other European countries that saw consumer debt balloon along with house prices ahead of the onset of the financial crisis in 2007 may only just be starting to see the light at the end of the tunnel.





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[Ally]

Canadians ready to tackle debt




More Canadians acknowledge they may be reaching the upper limits on borrowing, even though they believe they are in the safe zone now, a new survey shows.




The annual survey, released by accounting firm PwC and conducted by Leger Marketing, found that almost two-thirds of respondents believed their current debt levels were about right.





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[Ally]

The widening gap in Canada's labour market




A fault line is splintering Canada`s labour market into those who can`t find work and those who can`t find workers.




There`s no shortage of people looking for work. Some 1.4 million Canadians are unemployed, the jobless rate is still above pre-recession levels and youth unemployment is nearly 14 per cent. Despite this, employers across the country say they can`t find the right workers for all kinds of available jobs.





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[Ally]

Canadian economy: Caution ahead




Canada`s economy has given off mixed signals in the first three months of the year, prompting economists to raise a flag of caution for the coming months.




For instance, despite strong auto sales and a blockbuster labour market report from Statistics Canada on Thursday, wholesale trade has dipped, and housing starts were flat across Canada in February.




There are also worries about consumer spending and sky-high household debt levels ` reiterated by Bank of Canada governor Mark Carney.





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[Ally]

National housing starts beat expectations, except in BC





OTTAWA ` Housing starts were up more than expected in March, Canada Mortgage and Housing Corp. said Wednesday.







The federal agency said the annual rate of new construction on housing units was 215,600 last month, up 10,300, or five per cent, from the month before.







That beat the median estimate of 200,000 from economists polled by Bloomberg.






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[Ally]

Canada one of the worst places to invest in 2012





OTTAWA ` The Canadian stock market has been one of the worst places to invest in 2012 and, despite improving valuations, that weakness could linger on, warns a research report Tuesday from National Bank Financial.







The report blames weakness in the resource sectors and companies' recent inability to meet earnings expectations for the underperformance of Canada's S&P/TSX composite index.







The S&P/TSX 60 index, comprising the 60 highest-capitalization stocks on the broader index, ranked 21st on the list of developed country indexes with its 0.7 per cent year-to-date return. Only Spain's Ibex 35 and Portugal's PSI-20 indexes delivered worse returns.






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[Ally]

Canada's condo craze continues




OTTAWA ` Housing starts were up more than expected in March, Canada Mortgage and Housing Corp. said Wednesday.




The federal agency said the annual rate of starting construction on new housing units was 215,600 last month, up 10,300, or 5%, from the month before.




That beat the median estimate of 200,000 from economists polled by Bloomberg.





Read the full article here.

 

[Ally]

Resources fuelling B.C. economy and housing demand





The resources sector is not only fuelling British Columbia`s economy but also its housing market, the Vancouver Real Estate Forum heard Wednesday.




There is a high level of anxiety in the housing market, Scotiabank`s chief economist Warren Jestin said in the forum`s morning keynote address. And that anxiety is based on price increases, especially in Vancouver and Toronto.






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[Ally]

Playing the visa card





WHEN trying to lure foreign students to its business schools, Canadian universities used to find it hard to draw attention away from their boisterous cousins south of the border. No longer. Over the last two years, Canadian full-time MBAs have seen the biggest increase in applications of any region, according to the Graduate Management Admission Council (GMAC), a business school association.



Several things have happened to persuade more overseas students to consider Canada. Firstly, the US, in response to a tough job market, has tightened up its visa policy, making it more difficult for foreigners to stay and work in the country once they graduate. The number of H1-Bs, as the relevant visas are called, is now capped at 65,000. In 2003 it was 195,000. This is a puny number given that in 2011 there were around 723,000 foreign students in the US, according to the Institute of International Education. Furthermore, students are only awarded an H1-B if they already have a job offer. To make matters harder, this must be directly related to their field of study. MBAs have been particularly affected by the clampdown because the raison d`Ãtre of many business students is to get a new job at the end of the course.





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[Ally]

Pain in Spain: It's back






`SPAIN is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn`t understand that is fooling themselves.` Thus Mariano Rajoy, Spain`s prime minister, as he tried to shore up support today for an austerity budget presented last week.






Mr Rajoy has plenty of evidence to rally the faint-hearted. A bond auction today raised `2.6 billion ($3.4 billion), well below the `3.5 billion maximum target. The average yield on the five-year bonds auctioned this morning rose by almost a full percentage point compared with the previous auction at the start of March. That led other euro-zone sovereign debt downward, too.





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[Ally]

Is Canada witnessing a 'Western Spring'?




Ever since Prime Minister Stephen Harper took power in 2006, the left has tried to paint him as a dangerous extremist. When the Conservatives cemented their hold on power last year, opposition reached a fever pitch, with our institutes of higher learning and other bastions of left-wing thought espousing the view that the Conservatives must be stopped ` at any cost.




Last spring, Senate page Brigette DePape held up a `Stop Harper` sign on the Senate floor and went on national media advocating a `Canadian version of an Arab Spring.` Notwithstanding the fact that Arabs have been fighting for democracy, and that we`d just had an election, DePape and her ilk have been calling for a grassroots movement that will reshape the Canadian political landscape. A communist revolution of sorts, right here in our own back yard. And they might just get their wish, although the revolution is not being led by communists.





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[Ally]

March 2012 housing starts




OTTAWA - The seasonally adjusted annual rate(1) of housing starts was 215,600 units in March, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 205,300 units in February.




"The upward movement in March was largely due to an increase in multiple starts, particularly in Ontario and the Prairies. This was partly offset by a decrease in multiple starts in British Columbia and Quebec, while single-detached starts decreased marginally country-wide," said Mathieu Laberge, Deputy Chief Economist at CMHC's Market Analysis Centre."





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[Ally]

Time to lock in your mortgage, experts say




Christina and John Boggan are moving from their current home, built in the 1960s, into a stunning century-old home in Markham. They couldn`t resist the 12-foot ceilings and sense of history the heritage home offers.




In the process, they will also move from a variable-rate mortgage to a 10-year fixed term. They couldn`t resist the security and peace of mind for their household budget.





Read the full article here.

 

[Ally]

Canada's red hot condo market could spell doom for sellers




Looking to sell your condo? Good luck. A potential glut in multi-unit dwellings may mean a soft resale market in the very near future.




Construction of condominiums and apartments continues at a furious clip -- most notably in Ontario and the Prairies -- according to the latest report on national housing starts from the Canada Mortgage and Housing Corporation (CMHC).




Multiple unit starts in Toronto alone shot up 50.4 per cent in March, while the number of existing condos left unsold also rose sharply.





Read the full article here.

 

[Ally]

Slow growth the new normal, Conference Board says




Most economic indicators have bounced back since the recession, save one: Canada's jobless rate.




In fact, it will take another four years for the country's unemployment rate to return to pre-recession levels of 6 per cent, according to the Conference Board of Canada's long-term economic outlook.





Read the full article here.

 

[Ally]

Canada economic recovery 'well advanced', but risks still out there, warns IMF



OTTAWA - Canada is benefiting from generally improved global conditions, but there are still plenty of risks external and internal that could derail the fragile recovery, the IMF warns in a new forecast.





The International Monetary Fund's spring global economic outlook predicts Canada economy will expand by 2.1 per cent this year and 2.2 in 2013 ` an upgrade from January's 1.7 and two per cent predictions.





Although still moderate by historical standards, the expected growth rates puts Canada along with the U.S. in the top tier of the Group of Seven industrial nations.





Read the full article here.