November 2010 Canadian Economic Fundamentals

[Ally]

Gain in personal finances snaps decline in consumer confidence, board says

OTTAWA — Canadians` improving personal finances have snapped a four-month slide in consumer confidence, the Conference Board of Canada reported Thursday.

The board`s confidence index rose 1.5 per cent in October to a reading of 79.7 per cent, despite weakness in three of the four measures that make up the survey. An even reading for the index is 100.

The gain was apparent across the country, with the exception of the Atlantic region.

"The share of respondents expressing a positive view of their current finances increased dramatically in October," the report said.

When asked if their financial situation had improved over the past six months, 17.5 per cent responded positively, a gain of 4.3 percentage points from September and the highest reading of the year.

The advance comes on the heels of a fall stock market surge that has lifted the TSXcomposite index by more than 13 per cent since early July.

Read the full article here.

 

[Ally]

Boom Town: Waterloo

Waterloo Region isn`t the centre of the universe, but it holds many of its secrets.

Read the full article here.

 

[Ally]

Loonie strengthens for Fifth Day on optimism over fed stimulus measures

Canada`s dollar strengthened for a fifth day as the U.S. currency weakened against all of its major counterparts as the Federal Reserve said it planned to increase bond purchase to shore up the economic recovery.

The currency traded near parity with the greenback on expectations a faster expansion will increase demand in nations such as Canada that depend on commodities for growth. Prices fluctuated after the Fed announced $600 billion in purchases of Treasuries, lower than some economists forecast.

"Some in the market were expecting a Hail Mary, and what we got here was more like a 20-yard pass," said Firas Askari, head currency trader in Toronto at Bank of Montreal, Canada`s fourth-largest lender. "This is in line with what the Fed had been hinting at of late, but things are still quite choppy."

The Canadian currency rose 0.3 percent to $1.0052 per U.S. dollar at 5 p.m. in Toronto, compared with C$1.0082 yesterday, after touching C$1.0049, the strongest level since Oct. 15. One Canadian dollar buys 99.48 U.S. cents.

The Fed said today new purchases of U.S. debt will be about $75 billion a month in a bid to reduce unemployment and avert deflation. The U.S. is Canada`s biggest trading partner.

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[Ally]

Provincial Debt in `Huge Run` with best returns since 2002: Canada Credit

Canada`s provincial bonds are headed for the highest returns since 2002, beating other fixed-income classes, as investors speculate the debt is undervalued on a historical basis and to the regions` economic prospects.

The Bank of America Merrill Lynch Canadian Provincial and Municipal Index, with C$469 billion ($464 billion) outstanding, have returned 8 percent this year, including reinvested interest. That`s an annualized return of 9.6 percent, the most since 2002`s 10 percent gain.

Average long-term spreads on 10-year bonds of Ontario, Quebec and British Columbia, Canada`s three largest provinces, were 40 basis points over federal benchmarks before the financial crisis. That compares with 80 basis points to 110 basis points now, Montreal-based BCA Research said on its website. Canada`s output is the highest among major economies, Bloomberg data show.

Spreads on provincial bonds at more than double long-term averages are "unjustified given the favorable fiscal outlook in all provinces," BCA said in its report, citing stable ratings outlook, ample liquidity and tight bid-ask spreads. "The implication is that spreads in the 10-year area have more potential to narrow."

"We`ve had a huge run," Benoit Lalonde, vice president of fixed income in Montreal at Laurentian Bank of Canada, said by phone. "The returns are due to the tightening of provincial spreads. Spreads are still pretty wide on a historical basis."

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[Ally]

2010 Canadian Housing Observer

The Canadian Housing Observer presents a detailed annual review of housing conditions and trends in Canada and of the key factors behind them. It is an ideal resource for housing planners; researchers; policy makers; home builders; mortgage and real estate professionals; and municipal, provincial/territorial, and federal housing specialists.

Read the full report here.

 

[Ally]

For realtors, `business as usual`

The head of the Canadian Real Estate Association is blaming "misreporting" for confusion about its recent deal with the federal Competition Bureau to avoid an anti-competition tribunal.

Delegates from Canada`s 101 local real estate boards ratified the 10-year agreement in St. John`s, N.L., last month.

"Some of the confusion was caused by misreporting before the agreement was ratified," association president Georges Pahud said Tuesday in an interview from Vancouver.

The agreement satisfied bureau concerns by allowing consumers to choose and pay only for the real estate services they want when selling their homes, including Multiple Listing Service properties.

Pahud, whose organization represents about 100,000 realtors across Canada, said the agreement won`t force realtors to change their business models.

"This agreement is about ensuring that real estate boards didn`t discriminate against mere postings."

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[Ally]

Canadian car sales surge

TORONTO — It was a mixed bag for Canada`s major automakers last month, with some like Ford and Honda reporting their best October in years, while Toyota and General Motors saw an overall slump in sales.

Ford said its sales were up eight per cent from a year ago to 19,664 vehicles, putting it on track to be the market leader in Canada. It was the company`s best October since 1999.

Honda Canada said it just had the best October in five years, selling a total of 12,856 vehicles in the month, up 14 per cent from last year.

Toyota Canada reported October sales of 14,540 vehicles across all three brands — Toyota, Lexus and Scion — down 24.7 per cent from last year. However, truck sales were up 2.2 per cent for what Toyota said was its best October ever for truck sales.

Scion Canada, which launched in Montreal, Toronto and Vancouver at the end of September, generated sales of 247 vehicles in its first full month of business.

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[Ally]

Current Trends Update - Canada: RBC

Real GDP expanded at a 0.3% pace in August as the economy picked up pace again after stalling in July when real GDP output contracted by 0.1%. The year-over-year growth rate jumped to 4.1%. Both the goods-producing and servicesproducing industries increased output by 0.3% in August. On the goods side, all industries, outside utilities and agriculture, posted gains in August. In the services industries, it was wholesale, retail, finance, insurance and real estate as well as accommodation and food services that showed growth. Many service sector industries stalled in the month while education, health, and arts and entertainment contracted. Industrial production increased by 0.4% in August and was running almost 10% faster than in August 2009. The August data showed generally broad-based growth after a disappointing July. This combination sets the economy on a course to expand at a 1.8% annualized pace (assuming another 0.3% rise in September) in the third quarter of 2010, just slightly slower than the second quarter`s 2% increase and is in line with the forecast issued by the Bank of Canada. This slower pace of growth resulted in a slight increase in the size of the output gap in the third quarter, according to the Bank of Canada`s estimates. Core inflation also geared down to average 1.6% in the third quarter from 1.8% in the first six months of the year.

Read the full report here.

 

[Ally]

RBC: Provincial Outlook

As if to quash any risk of becoming overconfident about the recovery in the Canadian economy, a new round of economic uncertainty made its way from the United States, where performance has disappointed lately. After a strong start to 2010, when growth nationally reached an impressive 5.8% at an annualized rate in the first quarter, the pace of the Canadian economy slowed noticeably in the second quarter to just 2.0%. While much of this deceleration can be chalked up to a significant net trade drag, therefore less a reflection of softening underlying domestic demand, it confirmed signs visible across the country that the recovery`s ride hit a few bumps as we entered the middle part of 2010.

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[Ally]

European politicians praise oilsands

Some European politicians are praising Alberta`s oilsands operations after a tour of the region.

A 12-member delegation from Europe ended a visit to the province Wednesday morning.

The European Union is currently considering an initiative that would impose a negative label on oil from Alberta.

Europe does not buy oil from Alberta, but the European Parliament`s influence could damage the province`s reputation.

The delegation met with politicians at the Alberta legislature earlier this week and toured a number of oilsands sites Tuesday.

Read the full article here.

 

[Ally]

Canada places eigth in UN quality of life survey

UNITED NATIONS — The going only seems to get better in Norway which on Thursday was named by the United Nations as the country with the best quality of life for a record-matching eighth time. Australia, New Zealand, the United States and Ireland took the following places in the top five. Canada placed eighth, ahead of Sweden and Germany.

The UN`s annual A-to-Z of global wealth, poverty, health and education highlighted in its 20th anniversary edition though that despite "growth surges" in the Asia-Pacific region, it is becoming ever more difficult to break into the rich club of nations.

Oil-rich Norway -- with its 81.0 years of life expectancy, average annual income of 58,810 dollars and 12.6 years of schooling -- has now topped the Human Development Index (HDI) for all but two years since 2001.

It is not the best in any individual category -- average income in Liechtenstein for example is a wallet-busting 81,011 dollars -- but Norway`s all-round performance gave it a crushing superiority in the UN Development Programme (UNDP) annual rankings.

Read the full article here.

 

[Ally]

Provincial accounts confirm widespread real GDP declines in 2009

This morning, Statistics Canada released its real GDP estimates from the provincial accounts for 2009 and provided revised figures for 2006 to 2008. As was previously indicated in the real GDP by industry numbers released in April 2010, today`s estimates confirmed that the contraction of activity last year was widespread across the country with all provinces but one (Manitoba) experiencing a decline in real GDP. The provincial accounts, which calculate real GDP from expenditures, typically serve as the official measures of economic activity for provinces and are the basis on which RBC presents its forecasts.

Read the full report here.

 

[Ally]

Record debt levels in Canada: Scotia study

Fears about record high Canadian consumer debt may be overblown because Canadians are also beginning to save more and increasing their household wealth, says a Scotia Economics study released Thursday.

"Households today are comfortable carrying a higher debt load relative to their annual income flow in part because they have greater wealth," Scotiabank`s chief economist Warren Jestin wrote in the report.

Canadian households have come under fire from top economists — and the Bank of Canada — recently for taking on record high debt levels as consumers become accustomed to easy borrowing in the current low interest rate environment.

The central bank has estimated that Canadian debt- to-income ratios hover around 147 per cent. That means that for every dollar earned, consumers owe $1.47.

Read the full article here.

 

[Ally]

7 things to know about buying a resale condo
A condominium is like a small town. It has a board of directors made up of its residents much like a local council, it has rules, restrictions, bylaws and even fines for misbehavior. The condo across the street that looks the same, but it may be a completely different community.

That`s why it pays to keeping a handful of things to keep in mind when it comes to finding the right unit for you.

1. The 3P`s – Pets, People and Parking

Many condos prohibit or restrict pets from dogs and cats, to goldfish and snakes. There may also be rules restricting the number of people that can occupy a unit, whether you can barbecue on the balcony or put a satellite dish on the outside wall. Other restrictions include the time of day when you can play musical instruments, use the pool or the party room.

Read the full article here.

 

[Ally]

Banks that hiked rates will have to cut them: RBC

Banks that enraged Canadians by hiking base rates on secured personal lines of credit during the financial crisis will be forced to slash those borrowing costs very soon, predicts the country`s largest bank.

Royal Bank of Canada — the only big bank that did not hike base rates on secured home equity lines of credit — says its rivals will be forced to claw back prices or risk losing customers.

At the same time, however, RBC is openly musing about charging consumers "modest" fees for certain features that it now provides for free.

Those potential fees could be applied to popular online banking tools such as RBC`s "myFinanceTracker," an online financial management tool. A mobile application that the bank is planning for iPhones and BlackBerrys might also be subject to a fee.

Read the full article here.

 

[Ally]

Jobs returning but slow pace still a concern

NEW YORK — The good news: The United States added 151,000 jobs in October, the first increase since May and more than double the gain economists were anticipating.

The bad news: The country`s overall unemployment rate failed to budge from its stubbornly high 9.6% and nearly 15 million Americans are still out of work.

Friday`s report may be encouraging, but unemployment probably won`t start coming down until at least 200,000 new jobs are created each month. At that pace, the recovery will be a tough slog, lasting years before the level gets down to a more manageable 5%, the rate of "full" employment when most of those willing and able to work have jobs.

"One upbeat employment report does not change the picture that this will be a slow and long-drawn-out recovery," said Nigel Gault, chief U.S. economist with IHS Global Insight. "But [Friday`s] news does further reduce the likelihood of the dreaded "double dip," and as that risk is seen to recede, businesses and households may become more confident to hire and spend."

In Canada, meanwhile, data released yesterd ay showed employment remains on the upswing with 3,000 jobs added last month. While that was considerably fewer than the 15,000 jobs economists anticipated, the underlying figures in the report — including a surge in full-time positions, strong private-sector hiring and a reduction in the overall unemployment rate to 7.9% from 8% in September — show Canada`s job market is recovering.

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[Ally]

Gains in job quality unsustainable

Employment quality in Canada has regained all the ground lost during the recession, but is unlikely to sustain those advances in the months ahead, according to CIBC`s employment quality index, released Thursday.

The index shows employment quality rose four per cent as the economy churned out 330,000 new jobs in the first nine months of the year.

"This is a much better performance than a similar measure in the U.S., with the American quality of employment index continuing to soften alongside subdued job growth," said CIBC senior economist Benjamin Tal, the report`s author and creator.

The quality index gauges employment on a mix of factors, including compensation, full-time over part-time work and self-employment versus paid employment.

Despite the growth in part-time employment, which has risen three times faster than full-time employment and would normally cause employment quality to fall, the index gained, thanks to a strong increase in paid employment over self-employment, Tal said.

Read the full article here.

 

[Ally]

Profit from a cruise on the QE2

QE2, the most anticipated sequel of the year, finally arrived this week, when the U.S. Federal Reserve announced its plan to purchase US$600-billion in U.S. Treasuries by the middle of next year.

So far, the Fed`s second stab at quantitative easing as a means of stimulating the moribund recovery south of the border has been well received in the markets and has helped push equities around the world to their highest levels since Lehman Brothers collapsed in September 2008.

For many analysts the rally is nothing more than a temporary sugar rush and QE2 will ultimately fall short of its goal. As Aaron Fennell, a senior market strategist with Lind-Waldock says, "This is not a good news story at all. Certain traders on certain sides may benefit in the short term and you might see a slight shift in some of the economic numbers, but it is not dealing with the country`s fundamental problem — a lack of productivity and overconsumption."

Read the full article here.

 

[Ally]

Canada ranked as the top brand in the world

Canada has taken over from the United States as the most respected country brand in the world, the Canadian Tourism Commission said Friday, thanks to an aggressive $26-million ad campaign focused on the Vancouver Winter Olympics earlier this year.

The ranking is based on the annual Country Brand Index from New York-based branding consultancy and research firm FutureBrand, which includes a survey of more than 3,000 international business and leisure travellers.

Canada, in 12th place in 2006, had leapfrogged to second place by 2008 before getting a shot at the top spot.

Michele McKenzie, chief executive with the Canadian Tourism Commission, will pick up the award at an awards ceremony on Nov. 11 in London, England.

Read the full article here.

 

[Ally]

Repairs & Maintenance vs. Capital Expenditures
Frequently, real estate investors try to differentiate between repairs they can deduct immediately and capital expenditures which are deducted over a long period of time. Typically taxpayers want their deductions now, thus reducing their taxes. But Canada Revenue Agency (CRA) knows that this is an area subject to significant debate.


Generally speaking if you incur an expenditure that will benefit you for greater than 12months, you have a capital asset. With this extended benefit, CRA wants you to deduct the cost of the asset over a period of time instead of all at once. For example, if you add a new room to your rental property, you cannot deduct these costs in the year incurred. Rather, you add the cost to the building itself and slowly deduct over time as permitted. In practice this simplification becomes difficult.

CRA Factors
CRA provides guidance to taxpayers through IT-128R Capital Cost Allowance — Depreciable Property. In section 4, they describe factors to consider.

Read the full article <A href="http://www.georgedube.com/writing/repairsmaintenancevscapitalexpenditures">here.