May 2012 Canadian Economic Fundamentals

[Ally]

More Canadian and U.S. office markets ride wave of high-tech hiring






SAN FRANCISCO, May 7, 2012 /PRNewswire/ -- Strong growth in high-tech sector hiring and increasing competition between firms for talent created new tech-oriented submarkets around the U.S. and Canada in the first quarter of 2012, according to Jones Lang LaSalle's High Tech Industry Report.




"Despite high-tech's relatively small footprint in office markets, accounting for just 8.5 percent of all jobs using office space, it has had a tremendous impact on the absorption of office space in the top five tech-oriented markets. Additionally, the sector's recent employment growth ` roughly three times the overall U.S. employment rate ` has begun to affect a growing number of other markets around the U.S. and Canada," said Colin Yasukochi, Northwest Director of Research, Jones Lang LaSalle.





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[Ally]

Condos drive Canada's housing start surge




Canada`s condo building frenzy showed no sign of abating last month, as housing starts surged to their highest level since 2007.




While some analysts had predicted housing starts would weaken after a particularly strong March, starts in April rose to an annualized rate of 244,900, readily beating predictions of 204,000 made by most economists.







`This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing Canadian condo craze,` said Scotia Capital economist Derek Holt.





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[Ally]

CMHC considered selling mortgage insurer as housing bubble fears grew




Anyone trying to understand the concern over a potential housing bubble in Canada need look no further than the debate among government officials over whether to exit the mortgage insurance business.




The board of Canada Mortgage & Housing Corp. considered selling the home loan insurer last year, according to former Chairman Dino Chiesa, who`s term ended in March. CMHC, set up in 1946 to promote home ownership, also studied the sale of Australia`s government-owned insurer and presented the findings to the Bank of Canada, according to documents released to Bloomberg News under Canada`s Access to Information Act.





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[Ally]

Mulcair's bad economic perscription





In a recent appearance on the CBC Radio program The House, NDP leader Thomas Mulcair rolled out shopworn arguments about how the oilsands are inflicting unreasonable costs on other parts of the country. Although he piously maintained he is not opposed to oilsands development and is not trying to inflame regional conflict, he then went on to do both.




Like King Canute, Mulcair is demanding that the tides of global economic change be rolled back. Canute, however, was trying to demonstrate to his countrymen the limits of human power, whereas Mulcair is trying to restore the Canadian economy of the past.






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[Ally]

Canadian condo craze gets crazier





The fevered pace of building in Toronto, Vancouver and Montreal is fuelling fears that the condo market is dangerously close to overheating.




A surge in condominium construction helped drive overall construction starts up 14 per cent last month to a seasonally adjusted annual rate of 244,900, the highest since September, 2007, and an increase from the March pace of 214,800, according to Canada Mortgage and Housing Corp. data released Tuesday.





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[Ally]

Housing starts beat April expectations




Housing starts in Canada increased more than expected in April, fuelling concerns that an oversupply of properties, especially condominiums in big cities, could lead to a housing bubble.




But the property market in Atlantic Canada remained stable, with rental unit construction continuing to outpace condos.




The Canada Mortgage and Housing Corp. reported Tuesday that the seasonally adjusted annual rate of housing starts was 244,900 units last month, up from 214,800 in March.





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[Ally]

Housing starts shoot higher on back of condo boom





If Canada is on the cusp of a soft landing in housing someone forgot to tell condo builders.



Housing starts shot up 14 per cent to a seasonally adjusted annual rate of 244,900 in April, Canada Mortgage and Housing Corp. reported Tuesday. That compares to 214,800 starts in March.




And virtually all of the increase was due to construction of multi-unit homes in urban centres ` read: condos.





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[Ally]

West Coast pipeline key to Canada's interests




EDMONTON ` With Alberta`s Western Canadian Select crude trading at $30 a barrel less than world oil prices, Canada must build a new pipeline to the West Coast for the sake of its economic health, says Scotiabank economist Patricia Mohr.




`Imagine the cost to the economy. We have a lot of congestion (at Cushing, Okla.) and are overly reliant on U.S. Midwest refineries. If they go down there is no where for the crude to go,` Mohr told the Canadian Institute of Mining, Metallurgy and Petroleum national conference on Wednesday.





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[Ally]

RBC Chief Nixon weighs in on housing bubble furor




The head of Canada`s biggest bank and one of the country`s leading developers said the housing market is not in a bubble, even as one economist said Toronto is caught in a `condo craze.`






Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said Tuesday. The annual pace of home starts rose 14% to 244,900, Ottawa-based CMHC said.




Participants at Bloomberg`s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.




`When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,` said Gordon Nixon, chief executive officer of Royal Bank of Canada `Frankly, I`d like to see the rhetoric come down a little bit.`





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[Ally]

Canada must invest $50 billion to stay in LNG race







CALGARY ` Canada must speed development of liquefied natural gas export projects to compete with emerging international players also vying to supply growing Asian economies, Ernst & Young argues in a new report that puts the tab for infrastructure needed over the next decade at $50 billion.




Low natural gas prices across North America are forecast for years to come, amounting to an erosion of Canada`s primary market south of the border, which means moving quickly on gas exports across the Pacific is critical, said Lance Mortlock, senior manager in the consultancy`s oil and gas advisory practice.






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[Ally]

Canadian job market exhibits enormous disparities



Canada`s youth are still struggling with a recession, even as the country`s job picture is improving, says a new study.





The under-25 crowd lost 195,400 jobs in 2009 and 2010, and only 19,300 of those came back in 2011, according to a report from People Patterns Consulting.





The report paints a picture of a jobs market that has huge disparities, not only in terms of age, but in terms of almost everything else.





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[Ally]

Banks talk down consumer debt hysteria




The Bank of Canada may be thinking about raising interest rates but there`s apparently no need because Canadians are hunkering down to cool debt obligations on their own.




`The pace of growth in household credit is no longer a reason for the Bank of Canada to move from the sidelines any time soon,` says Benjamin Tal, deputy chief economist at CIBC World Markets.




He wrote a report released Wednesday that suggests central bank intervention is not needed, especially with consumers already seeing interest payments on debt eating into 7.3% of their disposable income as of the fourth quarter of 2011, even at today`s low rates.





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[Ally]

New home prices continue to rise



OTTAWA`Statistics Canada says new home prices are continuing to rise in most metropolitan areas.





The agency`s new housing price index rose 0.3 per cent in March, building on a similar increase the previous month, with Winnipeg, Toronto, Ottawa-Gatineau, Edmonton and Calgary leading the way.





Over the past year, the new price index was up 2.6 per cent, with Toronto and Oshawa, a community outside Canada`s largest city, recording 6.2 per cent increases.





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[Ally]

What a Canadian energy strategy might look like




Albertans have been presented with three proposals to export very large volumes of raw bitumen from the Alberta oilsands. The proposed Keystone XL pipeline to the U.S. Gulf Coast and the Northern Gateway pipeline and the recently proposed TransMountain pipeline expansion to the west coast are all unacceptable from Albertan and Canadian economic, environmental and energy security perspectives.




The case for a far superior proposal to use existing pipeline rights-of-way to build oil pipelines to ship upgraded bitumen to refineries on Canada`s east and west coasts for domestic consumption, and for export of refined products, is presented here along with the outline of a comprehensive Canadian Energy Strategy.





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[Ally]

Would you sell your home to lock in profits before real estate prices drop?




OTTAWA - For most Canadians their home is the biggest investment they'll ever make - but they might be surprised to learn you can use if for more than just sleeping.




People generally don't think of their homes as a potential pile of cash in the bank, but experts say it's something worth pondering now that home prices in Canada may have hit their peak.




In fact, analysts say if finance is the only consideration, conditions now and into next year or so form a seldom seen sweet spot for using home equity as a type of asset for investment.





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[Ally]

Canada adds 140,500 jobs in April, March: StatsCan





OTTAWA - Defying market expectations, Canada added 58,200 jobs in April, mostly full-time, after a whopping gain of 82,300 new positions in March, according to Statistics Canada data released on Friday.




Nonetheless, the unemployment rate rose to 7.3 percent from 7.2 percent in March, because more people were looking for work. Statscan said it would be 6.4 percent if reported in the way the United States calculates its rate. The U.S. rate for April was 8.1 percent.




Economists surveyed by Reuters had on average forecast the job market to settle back to an increase of only 7,000 new jobs after March`s jump. However, the median forecast for the unemployment rate, at 7.3 percent, proved correct.





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[Ally]

Economy boasts biggest back-to-back job gain in 30 years




Canadian employers have churned out more than 140,000 jobs in the past two months, a welcome change after half a year of little job creation. The key question is whether the hiring burst will last.




April's 58,200 jobs gain show demand is picking up on the goods side of the economy as the construction, manufacturing, natural resources and agriculture industries add to headcount.





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[Ally]

Carney trumpets the triumph of inflation targeting







Bank of Canada Governor Mark Carney is in the op-ed section of the Financial Times Friday, boasting that his monetary policy framework is better than yours.




`In an unpredictable world, policy makers need a robust framework, one that remains appropriate no matter the circumstances,` Mr. Carney writes. `Flexible inflation targeting is that framework, a policy for all seasons.`





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[Ally]

China moving up Canada's energy value chain




The billions of dollars Asian energy firms have invested in Canada in recent years have flowed almost exclusively into oil and gas fields, the raw reserves of the energy patch.




Now, the second act is beginning. On an eight-acre property in Nisku, Alberta`s manufacturing heartland, a Hong Kong-based company is building a new plant. When it`s running later this year, the Hilong Holding Ltd. plant, its first in North America, will coat the inside of drilling pipes with anti-corrosion material.





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[Ally]

What Canadian property markets are most at risk?




The oft-repeated axiom in real estate is `location, location, location.` Even housing `bears` recognize that there is no such thing as a Canadian real estate market. Granted there are macro factors that affect all regions equally, most notably the cost and availability of credit, but regional markets vary widely in terms of their fundamentals and, by extension, their vulnerability to a price correction.





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