July 2012 Canadian Economic Fundamentals

[Ally]

Analysis: Nexen deal should get approved by Ottawa





OTTAWA (Reuters) - A friendly $15.1 billion Chinese bid for a big Canadian energy company gels with government pleas for foreign money to develop the costly oil sands of northern Alberta -- a possible sign that the deal could win Ottawa's approval.




The Canadian government said only that it would review state oil company CNOOC's bid for Nexen Inc, based on its laws on foreign investment. But lawyers, analysts and insiders say there are good reasons for the deal to go ahead, and few reasons to block it.




"It so far appears to be a mutual two-way street. Canada has made it clear that it is looking for Chinese investment ... And China is now in a way reciprocating that interest by investing in a Canadian company," said Oliver Borgers of law firm McCarthy TÃtrault LLP in Toronto.





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[Ally]

Canadian home resales drop in June in what could be a cooling market





Canada's real estate market is showing signs of cooling off with national home sales and the average home price down year over year, indicators that have at least one senior economist wondering if the once red hot market is entering a "Big Sleep."




The new data from the Canadian Real Estate Association follows several reports saying some real estate markets and some types of housing are overvalued, although there's a range of opinions about how much and how quickly prices will decline.




That's left economists and consumers watching closely for signs that demand has softened to the point where prices will start going down.





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[Ally]

Canada's economy in for a rough ride





VANCOUVER, BC, Jul 24, 2012/ Troy Media/ ` This summer marks the third anniversary of the economic recovery that began following the 2008 global financial crisis and recession that descended upon much of the world in its wake. By any measure it has been a subdued economic rebound, particularly for many of the `advanced` countries that belong to the Organization for Economic Cooperation and Development (OECD).




Although a few OECD countries, including Canada and the U.S., have seen output surpass the pre-recession peak, most have yet to re-attain their pre-2008 levels of gross domestic product. This is the situation in the UK, Japan, and most of continental Europe.





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[Ally]

Our long term goal: balance Canada's budgets





As the Council of Federation prepares to convene along Halifax`s beautiful waterfront, I wish them a successful and productive set of meetings. Indeed, the Premiers meet at an important time in the global economic recovery. World economic growth remains sluggish and the downside risks emanating from uncertainty in Europe and elsewhere are real.




What does this mean for Canada, and what should all governments here be doing to protect Canada`s relative economic strength? Let me reiterate what I advised my provincial and territorial counterparts on a recent conference call.




All governments in Canada must recognize the lessons from the European crisis. Long-term deficit spending creates a heavy debt burden that limits a government`s ability to keep taxes low and to support job creation and economic growth. We are now forced to confront a case study in the consequences of unsustainable public finances across parts of Europe.





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[Ally]

BMO says now is a good time to invest in commerical property





Low interest rates, low vacancy rates and tight supply are a cue to look at buying a building for your business, according to the Bank of Montreal.




`Now may be a particularly good time for businesses to invest in commercial property for their own use,` said Steve Murphy, senior vice-president of commercial and treasury management at BMO. `There is strong demand for these properties by users, who are often able to lease out part of the property for additional rental income.`




BMO says overall the real estate market continues to show signs of strength and that will likely continue to in the face of low interest rates over the medium term.





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[Ally]

CAPREIT completes acquisition of 3,562 suites





Canadian Apartment Properties Real Estate Investment Trust recently announced it has completed an acquisition of 3,562 suites in 14 residential properties. The properties are located across Eastern Canada; Toronto, Southwestern Ontario, the Montreal Region, Quebec City and Halifax.







CAPREIT paid a purchase price of $455 million for the acquisition which was satisfied by the assumption of roughly $184 million in mortgages and roughly $271 million from the proceeds of CAPREIT`s recent equity offering.



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[Ally]

Teranet house price index up 5.4% year-over-year in June





The latest Teranet National Bank Composite House Price Index report indicates that home prices in the Canadian markets surveyed went up 5.4 per cent year-over-year in June.



`The June increase takes the index to a new high for the third month in a row. June was also the second consecutive month in which none of the 11 metropolitan markets surveyed showed a price decline from the month before,` the report stated.




Monthly changes tend to be greater in May and June, according to Teranet. The latest statistics bear out this tendency, showing monthly gains of 1.1 per cent and 1.2 per cent respectively.





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[Ally]

Labour shortages in Canada lure U.S. workers





Skilled U.S. workers are coming to Canada in ever greater numbers, driven out by high unemployment at home, and tempted in by job shortages in key sectors like Alberta's growing energy sector.







Government figures show that Canada issued 34,185 temporary work permits to Americans last year, just shy of the record 35,060 handed out in 2010, and officials expect that number to keep growing.






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[Ally]

Canada home price index at new record, but may cool




TORONTO (Reuters) - Canadian home prices hit a third straight record high in June, but a slowdown in the pace of price increases suggested the red-hot housing market is cooling, the Teranet-National Bank Composite House Price Index showed on Wednesday.




The index, which measures price changes for repeat sales of single-family homes, showed overall prices climbed 1.2 percent in June from a month earlier. From a year earlier, the index was up 5.4 percent. But it was the seventh straight month in which year-on-year price gains slowed.





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[Ally]

Canada again a focus of a new great scramble for oil





Immediately after the First World War, the lesson of victory from the use of oil, a new wonder fuel, wasn`t lost on any of the bruised combatants. `He who owns the oil will own the world,` said French senator Henri Berenger, `by reason of the fantastic wealth he will derive from oil, the wonderful substance which is more sought after and more precious today than gold itself.`






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[Ally]

Dragon's Den star reveals why he's still bullish on real estate




While he is becoming more of a household name as one of the dragons on TV`s Dragon`s Den and has a venture capital firm helping smaller entrepreneurs, you might not necessarily think of Bruce Croxon as a real estate investor. And yet, while living in Whistler, BC in the late 1990s, Croxon took it upon himself to get into the real estate game after having realized the value real estate can bring.





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[Ally]

Canadian wage gains outpace inflation







On average, Canadians brought home more cash in May, and earnings continued to grow faster than inflation.




Statistics Canada reported Thursday that average weekly earnings crept up 0.5 per cent in May compared with April, and that gains were felt in all provinces. The average worker made $894.61 per week -- a 2.5 per cent increase compared with last year, and well above the 1.2 per cent rate of inflation recorded for May, 2012.






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[Ally]

Ottawa's deficit shrinks as tax income rises





OTTAWA ` The federal government ran a deficit of $832-million in the first two months of fiscal 2012-13, down from $2-billion for the same period a year earlier, the Finance Department said Friday.







Revenue rose by $2-billion, or 5%, to $42.2-billion during April and May as income from personal and corporate taxes rose, along with employment insurance premium increases.







Expenses during the same period were up by $1.2-billion, or 3.4%, to $37.8-billion, with transfer payments accounting for much of the increase.






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