August 2011 Canadian Economic Fundamentals
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Would-be homeowners renting
Homeownership has long been a symbol of prosperity and a means to save money for a child's education, personal retirement and other expenses.
But the dream has faded for many as massive foreclosures, high unemployment and tight credit drive former and potential owners to become renters.
The homeownership rate hit a record 69.2% in 2004 as government policies and ultraloose credit encouraged people who otherwise wouldn't ` and often shouldn't ` to buy a home. With values soaring during the boom, homeownership shifted from a way to steadily build wealth over decades to a seemingly surefire get-rich-quick scheme.
Read the full article here.
Homeownership has long been a symbol of prosperity and a means to save money for a child's education, personal retirement and other expenses.
But the dream has faded for many as massive foreclosures, high unemployment and tight credit drive former and potential owners to become renters.
The homeownership rate hit a record 69.2% in 2004 as government policies and ultraloose credit encouraged people who otherwise wouldn't ` and often shouldn't ` to buy a home. With values soaring during the boom, homeownership shifted from a way to steadily build wealth over decades to a seemingly surefire get-rich-quick scheme.
Read the full article here.
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Canadian economy shrinks
OTTAWA ` The Canadian economy contracted unexpectedly in May, led lower by the mining and oil and gas sector, Statistics Canada said Friday.
The country`s gross domestic product fell 0.3% during the month, following a flat performance in April and a 0.3% increase in March.
Most economists had expected an advance by between 0.1 and 0.2% in May.
Read the full article here.
OTTAWA ` The Canadian economy contracted unexpectedly in May, led lower by the mining and oil and gas sector, Statistics Canada said Friday.
The country`s gross domestic product fell 0.3% during the month, following a flat performance in April and a 0.3% increase in March.
Most economists had expected an advance by between 0.1 and 0.2% in May.
Read the full article here.
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June housing starts stronger than expected
The seasonally adjusted annual rate of housing starts was 197,400 units in June, according to the Canada Mortgage and Housing Corporation (CMHC). This was up 1.7 per cent from a revised 194,100 units (from 183,600) units in May and was well ahead of consensus forecast of 185,000. April was also revised to 194,100 units from 178,700. Overall, housing starts gained 11.6 per cent quarter to quarter, which was the best three month showing since last fall.
"Housing starts increased in June due to an increase in single and multiple starts in Ontario," said Bob Dugan, chief economist at CMHC. "The revised numbers show that housing starts have been above their trend line since March. However, we expect housing starts to move back towards levels consistent with demographic fundamentals in the near term."
Read the full article here.
The seasonally adjusted annual rate of housing starts was 197,400 units in June, according to the Canada Mortgage and Housing Corporation (CMHC). This was up 1.7 per cent from a revised 194,100 units (from 183,600) units in May and was well ahead of consensus forecast of 185,000. April was also revised to 194,100 units from 178,700. Overall, housing starts gained 11.6 per cent quarter to quarter, which was the best three month showing since last fall.
"Housing starts increased in June due to an increase in single and multiple starts in Ontario," said Bob Dugan, chief economist at CMHC. "The revised numbers show that housing starts have been above their trend line since March. However, we expect housing starts to move back towards levels consistent with demographic fundamentals in the near term."
Read the full article here.
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Moody's reaffirms Canada's triple-A rating
Bond rating agency Moody's Investor Services is maintaining Canada's debt rating at triple-A, the highest possible.
The firm said Thursday the AAA rating was warranted, citing among other things, the country's "high degree of economic resiliency" and deficit-cutting efforts by the federal and provincial governments.
It based its assumption about resiliency on Canada's "high per capita income, the large scale of the economy and its diversity, including natural resource industries and a competitive manufacturing sector, as well as a well-developed and well-regulated financial market."
Read the full article here.
Bond rating agency Moody's Investor Services is maintaining Canada's debt rating at triple-A, the highest possible.
The firm said Thursday the AAA rating was warranted, citing among other things, the country's "high degree of economic resiliency" and deficit-cutting efforts by the federal and provincial governments.
It based its assumption about resiliency on Canada's "high per capita income, the large scale of the economy and its diversity, including natural resource industries and a competitive manufacturing sector, as well as a well-developed and well-regulated financial market."
Read the full article here.
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Q2 Home ownership and vacancy rates
The Census Bureau released the Housing Vacancies and Homeownership report for Q2 this morning.
As Tom Lawler has been discussing (see posts at bottom), this is from a fairly small sample, and the homeownership and vacancy rates are higher than estimated in other reports (like Census 2010). This report is commonly used by analysts to estimate the excess vacant supply for housing, but it doesn't appear to be useful for that purpose.
It does show the trend, but I wouldn't rely on the absolute numbers.
Read the full article here.
The Census Bureau released the Housing Vacancies and Homeownership report for Q2 this morning.
As Tom Lawler has been discussing (see posts at bottom), this is from a fairly small sample, and the homeownership and vacancy rates are higher than estimated in other reports (like Census 2010). This report is commonly used by analysts to estimate the excess vacant supply for housing, but it doesn't appear to be useful for that purpose.
It does show the trend, but I wouldn't rely on the absolute numbers.
Read the full article here.
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Forget productivity, our incomes are rising
It is generally understood that sustained economic growth depends ultimately on sustained growth in productivity, so Canada`s low levels of productivity and weak rates of productivity growth have worried economists for decades. Like so many results in economics, the relationship is one that holds when everything else is kept constant.
But there is an important case in which a fall in productivity will increase incomes, and recent Canadian experience appears to be consistent with this exception. Our preoccupation with productivity may be misplaced.
One of the more widely-used productivity yardsticks is `multifactor productivity` (MFP), which measures the increases in output that cannot be attributed to the simple accumulation of productive inputs such as labour and capital. Statistics Canada produces MFP estimates (see here for details), and the most recent data suggest that business sector MFP has fallen by 5 per cent since 2002. But we also know that this was also a period in which real wages grew by almost 6 per cent.
Read the full article here.
It is generally understood that sustained economic growth depends ultimately on sustained growth in productivity, so Canada`s low levels of productivity and weak rates of productivity growth have worried economists for decades. Like so many results in economics, the relationship is one that holds when everything else is kept constant.
But there is an important case in which a fall in productivity will increase incomes, and recent Canadian experience appears to be consistent with this exception. Our preoccupation with productivity may be misplaced.
One of the more widely-used productivity yardsticks is `multifactor productivity` (MFP), which measures the increases in output that cannot be attributed to the simple accumulation of productive inputs such as labour and capital. Statistics Canada produces MFP estimates (see here for details), and the most recent data suggest that business sector MFP has fallen by 5 per cent since 2002. But we also know that this was also a period in which real wages grew by almost 6 per cent.
Read the full article here.
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The second great contraction
Why is everyone still referring to the recent financial crisis as the `great recession`? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.
The phrase `great recession` creates the impression that the economy is following the contours of a typical recession, only more severe ` something like a really bad cold. That`s why, throughout this downturn, forecasters and analysts who have tried to make analogies to past postwar U.S. recessions have got it so wrong. Moreover, too many policy-makers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts.
Read the full article here.
Why is everyone still referring to the recent financial crisis as the `great recession`? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.
The phrase `great recession` creates the impression that the economy is following the contours of a typical recession, only more severe ` something like a really bad cold. That`s why, throughout this downturn, forecasters and analysts who have tried to make analogies to past postwar U.S. recessions have got it so wrong. Moreover, too many policy-makers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts.
Read the full article here.
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Ontario Liberals announce highest rent increase rate in years
Ontario`s governing Liberals say if they are re-elected this fall they will change the way the province`s rent increase rate is set after it took one of the biggest jumps in years Friday.
Municipal Affairs and Housing Minister Rick Bartolucci made the promise after announcing the rate by which landlords would be able to increase tenants` rents in 2012 would be 3.1 per cent.
That`s more than four times higher than the 2011 rate of 0.7 per cent.
Read the full article here.
Ontario`s governing Liberals say if they are re-elected this fall they will change the way the province`s rent increase rate is set after it took one of the biggest jumps in years Friday.
Municipal Affairs and Housing Minister Rick Bartolucci made the promise after announcing the rate by which landlords would be able to increase tenants` rents in 2012 would be 3.1 per cent.
That`s more than four times higher than the 2011 rate of 0.7 per cent.
Read the full article here.
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Canadian home prices surge to new high
OTTAWA ` Home prices measured by a major national index surged for a sixth straight month to new highs in May but are expected to ease in the months ahead.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, rose 1.3% in the month, the second consecutive month in which it gained more than one per cent and the largest gain since July 2010.
The month-over-month gains were spread across all six cities covered, with all but Halifax reporting gains of 0.5% or more.
Read the full article here.
OTTAWA ` Home prices measured by a major national index surged for a sixth straight month to new highs in May but are expected to ease in the months ahead.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, rose 1.3% in the month, the second consecutive month in which it gained more than one per cent and the largest gain since July 2010.
The month-over-month gains were spread across all six cities covered, with all but Halifax reporting gains of 0.5% or more.
Read the full article here.
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Rent-to-own a sensible strategy for some
When Judy Brown (not her real name) went to her bank to see about getting pre-approved for a mortgage, the news was devastating. A recent job loss and associated expenses put the boots to her finances and credit rating.
`Come back and see us in a year ` maybe,` summarized the bank`s position.
Already upset and now insulted on top of it, Judy turned the moment into a tipping point in her life.
`I had had a good job, was there for years and doing well ` until a company restructuring eliminated my position. And my friendly banker, with whom I`d done business for years ` credit cards, car loans ` turned me down flat.
Read the full article here.
When Judy Brown (not her real name) went to her bank to see about getting pre-approved for a mortgage, the news was devastating. A recent job loss and associated expenses put the boots to her finances and credit rating.
`Come back and see us in a year ` maybe,` summarized the bank`s position.
Already upset and now insulted on top of it, Judy turned the moment into a tipping point in her life.
`I had had a good job, was there for years and doing well ` until a company restructuring eliminated my position. And my friendly banker, with whom I`d done business for years ` credit cards, car loans ` turned me down flat.
Read the full article here.
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In-depth housing analysis for Canada, the provinces, and nine metropolitan areas
Canada`s 3.1 per cent real gross domestic product growth was among the strongest in developed nations in 2010. Low interest rates boosted residential construction activity and consumer spending. Meanwhile, recovering resource prices lifted profits and spurred mining activity. Not to be left out, governments boosted real spending 4.9 per cent in 2010, a near-record pace, for a second consecutive year. Modestly lower growth is on tap, with real GDP forecast to grow by 2.4 per cent this year. Slowing spending increases by both consumers and governments will temper the thrust provided by strong employment gains and escalating consumer confidence. GDP growth of 2.7 per cent is our call for 2012, as exports will continue to rebound in the face of anticipated stronger U.S. demand.
Read the full report here.
Canada`s 3.1 per cent real gross domestic product growth was among the strongest in developed nations in 2010. Low interest rates boosted residential construction activity and consumer spending. Meanwhile, recovering resource prices lifted profits and spurred mining activity. Not to be left out, governments boosted real spending 4.9 per cent in 2010, a near-record pace, for a second consecutive year. Modestly lower growth is on tap, with real GDP forecast to grow by 2.4 per cent this year. Slowing spending increases by both consumers and governments will temper the thrust provided by strong employment gains and escalating consumer confidence. GDP growth of 2.7 per cent is our call for 2012, as exports will continue to rebound in the face of anticipated stronger U.S. demand.
Read the full report here.
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Canada jobless rate lowest since 2008
TORONTO, Aug 5 (Reuters) - Canada's unemployment rate fell to 7.2 percent in July, its lowest level since December 2008, from 7.4 percent in June, though this was more due to people dropping out of the labor market than to new employment.
COMMENTARY
MARK CHANDLER, HEAD OF CANADIAN FIXED INCOME AND CURRENCY STRATEGY, RBC CAPITAL MARKETS:
"The headline was a disappointment but all the details for the most part were quite good."
"Unfortunately, things have changed a lot in recent times so the market reaction is very muted. At least before this recent bout hit you could say things were in decent shape."
Read the full article here.
TORONTO, Aug 5 (Reuters) - Canada's unemployment rate fell to 7.2 percent in July, its lowest level since December 2008, from 7.4 percent in June, though this was more due to people dropping out of the labor market than to new employment.
COMMENTARY
MARK CHANDLER, HEAD OF CANADIAN FIXED INCOME AND CURRENCY STRATEGY, RBC CAPITAL MARKETS:
"The headline was a disappointment but all the details for the most part were quite good."
"Unfortunately, things have changed a lot in recent times so the market reaction is very muted. At least before this recent bout hit you could say things were in decent shape."
Read the full article here.
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Canada added jobs in July, Ontario saw losses
OTTAWA`The Canadian economy added 7,100 jobs in July, about half of what economists had expected, but the scant gain was enough to build on three consecutive months of growth.
Statistics Canada said Friday the country`s unemployment rate fell last month to 7.2 per cent as fewer people entered the workforce. There were 25,500 more full-time workers and 18,400 fewer part-time workers in July.
`Not exactly what the doctor ordered, but not bad,` BMO Capital Markets deputy chief economist Doug Porter wrote in a note to investors.
Read the full article here.
OTTAWA`The Canadian economy added 7,100 jobs in July, about half of what economists had expected, but the scant gain was enough to build on three consecutive months of growth.
Statistics Canada said Friday the country`s unemployment rate fell last month to 7.2 per cent as fewer people entered the workforce. There were 25,500 more full-time workers and 18,400 fewer part-time workers in July.
`Not exactly what the doctor ordered, but not bad,` BMO Capital Markets deputy chief economist Doug Porter wrote in a note to investors.
Read the full article here.
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U.S. to decide on Canadian oil pipeline by year's end
U.S. Secretary of State Hillary Clinton gave little indication Thursday as to whether the Obama administration would approve a controversial Canadian proposal to build a $7-billion oil pipeline from Alberta's oilsands to the Texas coast.
Clinton and Foreign Affairs Minister John Baird emerged from their first bilateral meeting in Washington noting the approval process for the TransCanada Keystone XL pipeline was ongoing and that a decision was expected by the end of this year.
"We are leaving no stone unturned in this process," Clinton said.
Read the full article here.
U.S. Secretary of State Hillary Clinton gave little indication Thursday as to whether the Obama administration would approve a controversial Canadian proposal to build a $7-billion oil pipeline from Alberta's oilsands to the Texas coast.
Clinton and Foreign Affairs Minister John Baird emerged from their first bilateral meeting in Washington noting the approval process for the TransCanada Keystone XL pipeline was ongoing and that a decision was expected by the end of this year.
"We are leaving no stone unturned in this process," Clinton said.
Read the full article here.
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Canada has elbow room in any crisis
If the United States slid into another recession, as many investors seemed to fear on Thursday, Canada would not be far behind, economists say. But the country still has a few policy levers at its disposal that could help offset the blow.
The Bank of Canada could refrain from raising interest rates well into next year ` and even has room to cut them again if the outlook gets really ugly ` while the federal government could reconsider stimulus initiatives rather than measures to balance the country`s books.
`Unlike a lot of other countries, there is a little leeway for Canadian policy makers to support the economy if things get heavy,` said Doug Porter, deputy chief economist at Bank of Montreal. `There`s a little more room to move on the monetary and fiscal policy front.`
Read the full article here.
If the United States slid into another recession, as many investors seemed to fear on Thursday, Canada would not be far behind, economists say. But the country still has a few policy levers at its disposal that could help offset the blow.
The Bank of Canada could refrain from raising interest rates well into next year ` and even has room to cut them again if the outlook gets really ugly ` while the federal government could reconsider stimulus initiatives rather than measures to balance the country`s books.
`Unlike a lot of other countries, there is a little leeway for Canadian policy makers to support the economy if things get heavy,` said Doug Porter, deputy chief economist at Bank of Montreal. `There`s a little more room to move on the monetary and fiscal policy front.`
Read the full article here.
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Canada jobs rise, unemployment lowest since 2008
OTTAWA, Aug 5 (Reuters) - Canada's unemployment rate fell to 7.2 percent in July, its lowest since December 2008, from 7.4 percent in June, though this was due more to people dropping out of the labor market than to job creation.
[pre]
Statistics Canada said on Friday the economy managed to eke out 7,100 new jobs while holding on to the 28,400 jobs that were picked up in June.
The increase was less than half that expected in a Reuters survey of analysts but was marked by a healthy switch to full-time and private-sector employment.[/pre]
Read the full article here.
OTTAWA, Aug 5 (Reuters) - Canada's unemployment rate fell to 7.2 percent in July, its lowest since December 2008, from 7.4 percent in June, though this was due more to people dropping out of the labor market than to job creation.
[pre]
Statistics Canada said on Friday the economy managed to eke out 7,100 new jobs while holding on to the 28,400 jobs that were picked up in June.
The increase was less than half that expected in a Reuters survey of analysts but was marked by a healthy switch to full-time and private-sector employment.[/pre]
Read the full article here.
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Small Canadian job gains in July keep upward momentum as unemployment rate falls
OTTAWA - Slower job growth in July took some wind out of the Canadian economy's sails, with a scant gain that was about half what economists expected but still enough to build on three consecutive months of increases.
There was good news out of the United States too, but even though the job numbers from Canada's largest trading partner were stronger than expected, it wasn't enough to settle the frayed nerves of jittery investors still reeling from the worst stock-market sell-off since the 2008 financial crisis.
The Toronto stock market was down again Friday morning following Thursday's 436-point dip, the worst one-day loss in more than two years.
Investors may have been unimpressed by a slowing Canadian economy that added just 7,100 jobs in July ` economists had expected roughly double that ` following strong gains of 28,400 in June, 22,300 in May and 58,300 in April.
Read the full article here.
OTTAWA - Slower job growth in July took some wind out of the Canadian economy's sails, with a scant gain that was about half what economists expected but still enough to build on three consecutive months of increases.
There was good news out of the United States too, but even though the job numbers from Canada's largest trading partner were stronger than expected, it wasn't enough to settle the frayed nerves of jittery investors still reeling from the worst stock-market sell-off since the 2008 financial crisis.
The Toronto stock market was down again Friday morning following Thursday's 436-point dip, the worst one-day loss in more than two years.
Investors may have been unimpressed by a slowing Canadian economy that added just 7,100 jobs in July ` economists had expected roughly double that ` following strong gains of 28,400 in June, 22,300 in May and 58,300 in April.
Read the full article here.
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Church pew tips for real estate investing
Warren Buffet one of the worlds smartest investors recently commented on Real Estate investment, saying "It's a totally sound premise that houses will become worth more over time because the dollar becomes worth less,"
Banks allowed people with small down payments to buy homes which they could not afford but were willing to speculate on rising house values. This created the Housing Bubble.
Stock investment has out performed property investment according to Investor Warren Buffet, who stated, "All things considered, the third-best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks,"
Barrie and Orillia have again been identified as among the most promising places in Ontario to invest in real estate. The list appears in Top Ontario Investment Towns, a 102-page report prepared by Real Estate Investment Network (REIN), a Western-Canadian based research organization. The report analyzes the current and future prospects for real estate investment opportunities in Ontario.
Read the full article here.
Warren Buffet one of the worlds smartest investors recently commented on Real Estate investment, saying "It's a totally sound premise that houses will become worth more over time because the dollar becomes worth less,"
Banks allowed people with small down payments to buy homes which they could not afford but were willing to speculate on rising house values. This created the Housing Bubble.
Stock investment has out performed property investment according to Investor Warren Buffet, who stated, "All things considered, the third-best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks,"
Barrie and Orillia have again been identified as among the most promising places in Ontario to invest in real estate. The list appears in Top Ontario Investment Towns, a 102-page report prepared by Real Estate Investment Network (REIN), a Western-Canadian based research organization. The report analyzes the current and future prospects for real estate investment opportunities in Ontario.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
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Debt crisis could keep mortgage rates low
If the mortgage meltdown that nearly laid waste to the global economy a few years ago taught us anything, it's that you should never base your decision to buy a home on cheap rates.
But if you have to get a mortgage, there may no better time to sign on the dotted line -- at least if you live in Canada.
Despite widespread speculation that, by now, world markets would be chugging along and inexpensive borrowing costs would be a distant memory, economic uncertainty is once again prompting investors to seek refuge in government debt, including Canadian bonds. That could push mortgage rates to historic lows.
Quite simply, says Canadian Mortgage Trends editor Robert McLister, "Now is literally one of the best times in history to get a mortgage."
Read the full article here.
If the mortgage meltdown that nearly laid waste to the global economy a few years ago taught us anything, it's that you should never base your decision to buy a home on cheap rates.
But if you have to get a mortgage, there may no better time to sign on the dotted line -- at least if you live in Canada.
Despite widespread speculation that, by now, world markets would be chugging along and inexpensive borrowing costs would be a distant memory, economic uncertainty is once again prompting investors to seek refuge in government debt, including Canadian bonds. That could push mortgage rates to historic lows.
Quite simply, says Canadian Mortgage Trends editor Robert McLister, "Now is literally one of the best times in history to get a mortgage."
Read the full article here.