June 2011 Canadian Economic Fundamentals

[Ally]

Carney says may need to keep rates low




Canada`s central bank may need to keep interest rates low as the economy faces `substantial headwinds,` Bank of Canada Governor Mark Carney said in an interview published on Friday.




`Monetary policy may still need to be stimulative in order to close the output gap and in order to get inflation back to target,` Carney is quoted as saying in an interview with the Wall Street Journal.






The bank has kept its key interest rate on hold at 1 percent since last September, after lifting the it from a rock-bottom 0.25%. Its next rate decision is July 19.




Most market players surveyed by Reuters on May 31 forecast the bank would resume rate increases in September, but some have since pushed their forecasts even further out.




Carney named the U.S. economic slowdown and the strong Canadian dollar as two major factors that could hinder Canada`s economic expansion.





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[Ally]

EI rolls continue to fall in April




OTTAWA ` The number of people receiving regular employment insurance benefits fell 1.1 per cent in April, the seventh straight monthly decline, Statistics Canada said Thursday.







The federal agency said 598,400 people were on the EI rolls in April, down 6,500 from the previous month. Beneficiaries were down in six provinces, with the biggest declines seen in British Columbia and Alberta.







On a yearly basis, the number of people receiving regular benefits fell by 76,600, or 11.3 per cent, between April 2011 and April 2010. Declines were recorded in 125 of the 143 centres in Canada with a population of 10,000 or more.





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[Ally]

External risks to economy rising, Bank of Canada warns




The European crisis and the United States` high debt and sputtering rebound are straining the global financial system and complicating Canada`s recovery, showing that the chief risks to the economy lie outside Canadian borders.




Top policy makers indicated Wednesday that they are on heightened alert for a deeper crisis in Europe that spreads beyond Greece and, potentially, hurts Canadian banks or the wider economy. Though the direct exposure of Canadian banks to countries such as Greece is low, the Bank of Canada warned that Canada`s financial institutions are vulnerable through links to the United States and other countries that are much more exposed.





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[Ally]

Internet more popular as homebuying tool





CALGARY ` The Internet has become a valuable resource for homebuyers, according to the 2011 Mortgage Consumer Survey by Canada Mortgage and Housing Corp., released Wednesday.




Among recent buyers using an online search engine, the most popular search terms included interest rates (86 per cent), mortgage options (76 per cent) and mortgage calculators (69 per cent). Of those who noted using the Internet during their research, 86 per cent used an online mortgage calculator, 56 per cent printed information, 54 per cent did a financial self assessment and 50 per cent researched other financial products.




The CMHC said Canadians take, on average, 11 months to plan their purchase while the majority of homebuyers (88 per cent) indicated they had a good sense of how much mortgage they could afford before purchasing a home.




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[Ally]

Lump-sum mortgage payments up




Despite concerns of rising household debt and insufficient savings, a growing proportion of first-time buyers made lump-sum payments to their mortgage this year, said a Canadian Mortgage and Housing Corp. survey published Wednesday.




This year, 20 per cent of first time buyers said they made lump-sum payments, up from 15 per cent last year, results from the CMHC Mortgage Consumer Survey show. Three quarters of the 3,500 respondents from across the country said they felt it was important to pay off their mortgage as soon as possible.




"Everyone has great intentions to pay off their mortgage," said Pierre SerrÃ, the CMHC's vice-president, insurance product and business development. "I am happy that 20 per cent are making lump-sum payments."





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[Ally]

Asia moves to tap oil reserves





TOKYO ` Asian nations moved to release emergency oil stockpiles on Friday as part of a rare global coordinated action by consumer countries to prevent high energy prices from stunting a stuttering economic recovery.




The move, led by Washington and criticized by the oil industry as an unnecessary distortion of markets, suggests a fundamental shift on the part of industrialized nations toward intervention in commodity markets as an economic policy tool.




Brent oil prices tumbled to a four-month closing low on Thursday and after rallying early on Friday, turned and fell again.






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[Ally]

Hiring outlook bodes well for economy




Canadian small-business owners say they plan to expand or maintain their pay rolls, a trend that is expected to give the economy a boost over the next several months.




South of the border, the outlook is less rosy. The U.S. National Federation of Business last week reported deteriorating hiring prospects and anticipated a higher unemployment rate in the coming eight months, with a significant number of small businesses planning to delay or reduce their work forces.





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[Ally]

Deregulate housing





Bank of Canada governor Mark Carney may have to raise interest rates on all Canadians to stop a potentially catastrophic housing bubble, even though higher interest rates could abort our still-shaky economic recovery. Prime Minister Stephen Harper and the provincial premiers should stop him, not by telling him how to do his job but by doing their own jobs and setting the distorted Canadian housing sector aright.



Canada`s housing sector ` far from operating on free-market terms ` has been a creature of federal industrial policy since the 1930s, when Ottawa passed the Dominion Housing Act to subsidize housing, kick-start the economy and improve Canada`s social values. Home ownership, then as now, was seen by many as a promoter of social stability.





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[Ally]

Saskatchewan ranked as top Canadian spot for energy investment





OTTAWA ` Saskatchewan is the top-ranked Canadian jurisdiction for oil-and-gas investments, according to an annual survey from the Fraser Institute.







The Canadian-based public policy research group said Monday that Saskatchewan has surpassed Manitoba, the top-ranked region last year, which finished second this year.







Saskatchewan was applauded for its government's long-term stability in energy policy, low royalties and "clear regulatory frameworks."







"Saskatchewan understands the petroleum industry and how important it is to maintaining a prosperous economy," said Gerry Angevine, the Fraser Institute's senior economist.






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[Ally]

Worst is yet to come for hard-hit Canadian stocks: Analysts




Canada's sliding stock market may not hit bottom for months as weakening economic growth and an unresolved debt crisis in Europe turn off more investors before a modest year-end rebound.







The majority of more than 20 strategists and fund managers polled by Reuters over the last two weeks expect the Toronto Stock Exchange's S&P/TSX composite index to fall further from its close of 12,908.89 on Friday.







Many think it could slip another 5 to 10 percent between July and October, before a modest recovery begins later this year.







"The worries are not over, particularly with the concerns about when the euro zone and the IMF help provide Greece with its money," said Kate Warne, Canadian market strategist at Edward Jones.





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[Ally]

Don't be afraid to leave your bank for a better rate




Are the banks doing an incredible job of retaining customers or are Canadians just too lazy to shop around when renewing their mortgages?




One finding of a survey by Canada Mortgage and Housing Corp. released this week was that 89% of consumers renewing their mortgage stay with the same financial institution. And 68% stay when they are doing a refinancing.




`They stay with the lender because of rate and they leave the lender because of service,` says Pierre SerrÃ, vice-president, insurance product and business development, with CMHC.





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[Ally]

How to avoid bad stocks




Inlight of the recent questions surrounding Sino Forest Corp. and other companies this summer, we thought it might be a good idea to review some of the things you should watch out for when investigating companies for a stock investment.




Investing in the stock market is hard enough. The last thing you need is to find yourself owning a company that has questionable accounting, disclosure or other policies.




Most investors, however, find accounting boring. That's too bad, because the financial statements of a company can predict problems or opportunities long in advance. However, sometimes problems take a while to surface. Investors get bored waiting. They assume that if nothing has been wrong at a company for a few years then everything must be okay, despite earlier warning signs, weak accounting or other questionable aspects at the company. A rising stock price is often a great excuse for investors to assume everything is fine.





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[Ally]

Canadians' economic confidence drops in second quarter





OTTAWA ` Canadians' confidence in the economy declined over the past three months, according to a quarterly sentiment index released Tuesday.







Nanos Research's latest "economic mood index" was at 113, based on surveys taken in June. That was down from 115.7 in March.







The "pocketbook" sub-index, measuring Canadian views on their current job security and financial progress over the last year, fell to 104.9 from 107.5.







The "expectations" index, assessing people's views on economic momentum and how their local property values will fare over the coming six months, was down to 112.8 from 125.6 three months earlier. The marked the lowest score for this part of the survey since the second quarter of 2009.




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[Ally]

Why renting can be the right choice for aging boomers




Sell your house and rent: If you`re a baby boomer entering retirement, that could be the financial move of a lifetime.




The case for selling the family home starts with the fact that years of strong price increases have hugely increased the value of homes across the country over the amount paid for them. What to do with the proceeds after you sell? Invest them conservatively and rent your next home.





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[Ally]

Vacation property: Emotional buy or sensible investment




Lisa Windsor remembers almost to the day when she decided she wanted to buy a cottage. It was two summers ago, when her aunt died and her family went to back to the Muskoka cottage country where her aunt had lived year-round.




`The north has always called to me,` says Ms. Windsor, a 43-year-old single mother who lives in Guelph, Ont. `But [that summer], I realized that the last time my family ` my mother and her sisters and my siblings ` were together was when I was a little girl and we went cottaging up there.





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[Ally]

Canadian businesses lead the world in optimism




Not only are Canadians polite as a general rule, but they're also optimistic, at least according to the Global Entrepreneur Indicator.





The WSJ blog In Charge reports that Canadians, Caribbean and Latin-American entrepreneurs have the most positive economic outlook out of 1,200 business owners from 38 countries polled in the survey. In fact, 90 per cent of Canadian entrepreneurs expect improvement in the economy in the coming six months, while the outlook for U.S. business owners is much more dismal, with fewer than 60 per cent expecting improvement.




The lead researcher of the Global Entrepreneur Indicator suggests Canada's rosier outlook is due to "the stability [it is] is experiencing relative to the financial crises in Europe, the political and social turmoil in the Middle East, and the continued unease in the U.S. markets.`





Read the full article here.