October 2011 Canadian Economic Fundamentals

[Ally]

Canada outshines the U.S. with stunning job growth





Adjusted to take account of the relative sizes of the two economies and slightly different statistical methods, Canada's stunning gain of 60,900 new jobs, reported by Statistics Canada on Friday, would be comparable to half a million new U.S. positions.




U.S. employment rose 103,000 in September.




"It's a blockbuster report," said TD Securities macro strategist Mazen Issa.




Though Canada's economy contracted marginally in the second quarter, largely due to temporary factors, the country, the world's 10th largest economy, emerged from the last recession in a stronger position than the United States and many other mature economies.





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[Ally]

Canada's dollar rises most in two months on added risk demand




Oct. 12 (Bloomberg) -- Canada`s dollar gained the most in more than two months versus its U.S. counterpart as optimism that European officials will agree a plan to recapitalize the region`s banks sparked advances in higher-yielding assets.




The currency strengthened along with commodity-linked peers the Australian and New Zealand dollars as crude oil futures topped $86 a barrel and stock markets in Europe and North America rose. The greenback and yen were among the worst performing of the 16 most-traded currencies against the Canadian dollar.





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[Ally]

Canadian new home prices rise for a fifth month on Toronto gain




Oct. 12 (Bloomberg) -- Canada`s new-home price index rose for a fifth month in August led by a gain in Toronto, the government statistics agency said.




The index advanced 0.1 percent matching the July increase, Statistics Canada said today in Ottawa. The August increase was also the same as the median estimate in a Bloomberg survey with 14 responses.




Prices in Toronto and Oshawa, which make up 27 percent of the index, rose 0.2 percent. Vancouver prices fell 0.4 percent, tempering its rise.





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[Ally]

Canadian dollar higher amidst rising oil prices, moves to help European banks



TORONTO - The Canadian dollar jumped almost a full U.S. cent Tuesday as the currency drew strength from moves by Germany and France to shore up Europe's banks.





The loonie jumped 0.98 of a cent from Friday's close to 97.29 cents US.





German Chancellor Angela Merkel and French President Nicolas Sarkozy announced over the weekend that they would finalize a "comprehensive response" to the debt crisis by the end of the month, including a plan to make sure that Europe's banks have adequate capital.





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[Ally]

Canadian housing starts jump, ease recession fears




TORONTO (Reuters) - Canadian housing starts jumped a higher-than-expected 7.3 percent in September , helped by a surge in the condominium sector, suggesting Canada's property boom stayed intact last month and should help the economy avert recession.




Canada Mortgage and Housing Corp said on Tuesday that starts rose to a seasonally adjusted annualized rate of 205,900 units last month. August starts were revised up to 191,900 from 184,700.




The median forecast in a Reuters poll was for 188,000 starts in September .




"Canadian housing remains quite healthy. Tailwinds including low mortgage rates and a solid job market will continue to be offset by headwinds including shaky consumer confidence and high housing valuations, pointing to only a slightly softer pace of activity in the year ahead," Robert Kavcic, an economist with BMO Capital Markets, said in a note to clients.





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[Ally]

Canada's trade deficit widens, but revisions point to healthier economy



OTTAWA - Canada's merchandise trade deficit widened in August as import growth outpaced exports in response to softening U.S. demand and a strong loonie, but analysts saw a positive side to Thursday's report from Statistics Canada.





The raw numbers were mildly negative and in line with expectations following a big exports surge in July. Merchandise imports grew 0.7 per cent, while exports rose 0.5, taking Canada's trade deficit to $622 million in August from a downwardly revised $539 million in July.





In volume terms, when currency fluctuations are factored out, exports declined 1.1 per cent, the agency said.



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[Ally]

Canada confident that U.S. will approve oil pipeline




TORONTO (AP) ` Canada's natural resources minister said Thursday he is confident the Obama administration will approve a Canadian company's plan to build a massive oil pipeline from western Canada to the Gulf Coast despite "noise" from environmental opposition groups.




Minister Joe Oliver said Thursday the pipeline is more likely to be approved since the State Department recently released its positive final Environmental Impact Statement.




Oliver said the Canadian government is making strides in lobbying U.S. officials.





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[Ally]

Home start boost good for economy




New home starts across Canada increased 7.3% in September, leading analysts to suggest Canada`s property boom stayed intact last month and should help the economy avoid slipping back into a full-blown recession.




Starts rose to a seasonally adjusted annualized rate of 205,900 homes in September, according to Canada Mortgage and Housing Corp., surpassing the 188,000 starts forecast in a recent Reuters poll.




Going forward, the new housing market should show signs of slowing, said Robert Kavcic, an economist with BMO Capital Markets.





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[Ally]

Canada a bright spot in G7, poll suggests




Canada should see some of the strongest rates of growth compared with its G7 peers this year and next, a Reuters poll of about 350 economists showed Thursday.




Although the outlook for growth has darkened in common with other major markets, Canada's healthy banking sector and commoditydriven economy should give it an edge, with growth of around 2.2 per cent seen this year and 2.4 per cent in 2012.




The outlook is less rosy elsewhere. Stagnation is probably the best many of the world's biggest developed economies can hope for over the next year, with several facing a significant chance of recession.





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[Ally]

Strong EU trade deal will 'open new doors'




A strong trade agreement with the European Union is vital if Canada wants to remain relevant in global trading as anything but a rich source of natural resources, says a study released Thursday by the C.D. Howe Institute.




Canada's $104-billion annual trade with the EU is already more heavily weighted to services than its trade with other countries, including the United States, says author Daniel Schwanen, associate vice-president of trade and international policy for the think-tank.




"The size and sophistication of the market represented by the EU - whose GDP exceeds that of the United States - and the importance of services and investments in the Canada-EU relationship suggest that a comprehensive agreement would open new doors for Canada beyond its traditional resource and manufacturing base," writes Schwanen in the paper, titled Go Big or Go Home: Priorities for the Canada-EU Economic And Trade Agreement.





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[Ally]

Canada's housing 'like the fountain of youth' - for now




Canada`s banks, which emerged from the financial crisis mostly unscathed, stole the spotlight as they were recognized as the world`s strongest, but there`s a good argument to be made that our real estate market deserves some glory, too.







Consider: for the better part of a decade house prices have been on the rise ` apart from a brief decline in early 2009 ` in most major cities across the country. If you zoom in on certain regions like Calgary or, say, Ontario cities like Windsor that have been hit by troubles in the auto industry, the curve gets a bit bumpy, but on a national basis Canadian real estate looks pretty good. Compared to the rest of the world, it`s a bastion of stability.







The U.S. market is a basket case. Since 2006 prices have tumbled more than 30% across the country and even now distressed sales account for more than one-third of total transactions, according to Moody`s.





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[Ally]

Regional mayors see need for affordable housing




Fourteen regional mayors explored ideas on how to encourage more entry-level homes in communities such as St. Albert and Fort Saskatchewan on Thursday.




But they are fighting inertia and the not-in-my-backyard syndrome all the way, Fort Saskatchewan Mayor Gale Katchur said.




"It's going to be a generational change," she said, examining the blend of row houses and duplex units in south-side Ellerslie that Fort Saskatchewan doesn't have.





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[Ally]

Housing market still economy's 'bright spot'




Existing home prices in Canada continued to increase last month, although the gains recorded were the smallest since January.




The Canadian Real Estate Association said the average price of a home sold in September was $352,581, a 6.5% jump from a year earlier.




The continued strength of the market in the face of a battered world economy was on display last month as sales rebounded from August, increasing by 2.7% on a seasonally adjusted basis. For the first three-quarters of the year, existing home sales are now 1.2% ahead of last year`s pace.





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[Ally]

'Time running out,' Flaherty warns Europe






OTTAWA ` Finance Minister Jim Flaherty tore a strip off European political leaders Monday for dithering while their economy has faltered, putting the entire world in jeopardy of another recession.




But Germany warned markets not to expect a miracle cure to Europe`s debt crisis by next Sunday`s European Union summit, sending stock markets tumbling.




In a blistering speech delivered in Dublin, Ireland, Mr. Flaherty called on Europe to finally make the tough decisions that are needed to gain control of the crisis and restore confidence in the markets.





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[Ally]

True test of investor confidence yet to come?




Foreign investors continued to seek the safety of Canadian securities in August, but a bigger test of confidence is likely yet to come.




Non-residents bought a net $7.9-billion in Canadian assets in August, with the majority coming from $6-billion in net bond purchases, Statistics Canada said Monday. This comes after a total net inflow of $12.1-billion in July.




`As we expect to see in next month`s release, however, September provided a sterner test, as broad-based risk aversion saw many foreign investors park their money in the U.S. dollar,` Warren Lovely, a fixed income and currency strategist with CIBC World Markets Inc., said in a note Monday.





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[Ally]

West bests rest of Canada




While both Alberta and Saskatchewan can once again lay claim to Canada's top entrepreneurial city thanks to Lloydminster's unique border-straddling geography, the overall theme of the latest regional rankings fom the Canadian Federation of Independent Business remains the dominance of western Canada.




Lloydminster, which is home to about 24,000 people and sits on the border between the two provinces, reclaimed the top spot in the CFIB's 2011 annual ranking Monday from Grand Prairie, Alta.





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[Ally]

West will lead growth as expectations drop: BMO





OTTAWA . Global market turmoil has tarnished the economic outlook for 2012, but in an era of diminished expectations, Canada's Western provinces will lead all others in growth, BMO Capital Markets said Wednesday.




In its Provincial Monitor, deputy chief economist Douglas Porter said global financial market uncertainty has caused BMO to slash its outlook for national growth to a meagre 1.8% in 2012 from its previous forecast of 2.2%.




This compares with a longterm average growth rate of 2.5%.





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[Ally]

Average resale home price rises 6.5%




A September surge in home buying helped boost the number of Canadian homes sold in the first nine months of this year an unexpected 1.2 per cent compared to the same period last year, according to figures compiled by the Canadian Real Estate Association.




Sales of existing homes rose 2.7 per cent in September compared with August, according to a monthly report released Monday by CREA. On a year-over-year basis, home sales in September were up 11 per cent from the same month in 2010.





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[Ally]

Surge in condo construction boosts housing starts



Canadian housing starts jumped a higher-than-expected 7.3 per cent in September, helped by a surge in the condominium sector, suggesting Canada`s property boom stayed intact last month and should help the economy avert recession.





Canada Mortgage and Housing Corp said Tuesday that starts rose to a seasonally adjusted annualized rate of 205,900 units last month. August starts were revised up to 191,900 from 184,700.





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[Ally]

How the HGTV effect is affecting home sales




When realtor Desmond Brown walks into a house that`s just too stunning to be someone`s home, he heads to the fridge.




An empty fridge is his second clue that the home has been super staged to appeal to a new generation of buyers who are looking for more of a showcase than a sound house to call their home.




`Gone are the days that you walk into a house and think, `Wow, they really lived in this place,` says Brown.




Brown has seen first-time buyers walk out of well-priced condos because the appliances aren`t stainless steel. Even classic old homes graced with original wood trim and hardwood floors are taking longer to sell, he finds, than those that have `the look.`





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