September 2009

[Ally]

Bank of Canada keeps Interest Rates at bottom, says Economy bouncing back

OTTAWA - Canada`s economy is bouncing back faster than previously thought, the Bank of Canada said Thursday.

Backing up its controversial declaration last July that the recession is over, the central bank now says that not only has growth returned to the Canadian economy after three quarters of sharp contraction, it is growing faster than even it thought likely.

In July, the bank had projected the economy would rebound by 1.3 per cent in the current quarter and another three per cent in the final three months of the year - or about 2.15 per cent on average.

It gave no new estimates, but the revision means that the central banks believes the economy will perform better than the 2.3 per cent contraction it had earlier forecast, and possibly better than the three per cent growth it expected for next year.

The new projections, however, haven`t made the bank change its mind about keeping interest rates at the lowest possible level of 0.25 per cent until at least July, despite repeating its now familiar warning that the persistent strength of the loonie could throw an unwelcome spanner into the works.

Read the full article here.

 

[Ally]

Canadian Economy Growing Again, but Barely

OTTAWA — It`s official: the Canadian economy is growing again.

The question, now, is how it will fare once its government-installed training wheels are removed.

After shrinking for 10 straight months, the economy finally grew again in June, albeit by a meagre 0.1 per cent, Statistics Canada reported Monday. On an annual basis, gross domestic product shrank 3.4 per cent in the second quarter.

The data confirms what most economists have been saying for weeks: the recession is ending, if not over.

If the recession is indeed behind us, it would go down in history as painful but relatively short. In output terms, the economy has shrunk roughly the same amount as the recession of the early 1990s but not as much as the longer downturn of the early 1980s, TD Economics economist Diana Petramala wrote in a research note.

Read the full article here.

 

[Ally]

Canadian Home Sales dip from July, up from a Year ago

TORONTO (Reuters) - Sales and prices of existing homes in Canada rose in August from a year ago, but broke their monthly streak of gains, data from the Canadian Real Estate Association showed on Tuesday.

The industry group said a total of 42,483 homes changed hands in August, up 18.5 percent from the same month last year. The average price rose 11.3 percent nationally from a year earlier to C$324,779 ($300,721), CREA said.

But sales fell 0.6 percent from July when they topped a record 50,000 units, snapping six consecutive monthly gains. August prices were also a touch lower than a month earlier.

Still, economists were unfazed by the month`s dips in an otherwise unexpectedly quick rebound in the housing market this year, with the balance of 2009 expected to see a more modest pace of recovery. Last month, CREA revised its 2009 residential property outlook, saying home prices will rise and sales will stabilize.

Read the full article here.

 

[Ally]

Most Expensive Cities in Canada to Buy a HomeSales and prices of existing homes in Canada rose from a year ago in August, according to the Canadian Real Estate Association (CREA). Which cities boast the most expensive homes in the country? Click to find out.Canada
August `09 average price: $324,779
August `08 average price: $291,788
Change: + 11.3%
Unit sales: 42,483
Change from August `08: + 18.5%
Source: CREA

Click the link to view the most expensive cities in Canada.

 

[Ally]

Poof, the Global Recession is History

So now, according to the latest interpretation of the latest numbers, the Canadian branch of the Great Recession is more or less officially over.

The recession ended in June, economists declared Monday after looking at a Statistics Canada report that the economy grew at a thin 0.1% rate during the month. July, they said, will be a lot stronger as auto production increases and other economic activity - real estate, inventory accumulation - picks up. Look for a "big bounce" in July, said CIBC World Markets.

We`re all in favour of big bounces, just so long as we understand where they came from and where they`re going. The rapid turnaround in economic sentiment, in Canada and abroad, is taking place with amazing speed but without much in the way of explanation as to how we got from the brink of what was going to be a depressionary economic apocalypse to sitting pretty through a minor disturbance.

It turns out there was nothing "great" about this recession in Canada; it`s been just another downturn no worse than the 1991 slowdown.

Oh what a piece of cake it has been, and not just in Canada. In the United States, where the slowdown has been more severe, Ben Bernanke last week was appointed for another term at the Federal Reserve by President Obama on a wave of optimism that the U.S. recession is over.

Read the full article here.

 

[Ally]

Get Ready for Steep Rate Hikes in 2011: Economist

OTTAWA -- When the Bank of Canada does start raising its key policy interest rate in either late 2010 or early 2011, Canadians should brace for "aggressive" increases of up to a percentage point at a time, says a report from the chief economist at Laurentian Bank Securities.

The call, from Carlos Leitao, adds a new wrinkle to the debate as to whether the central bank will be able to keep its pledge to leave its key policy rate at 0.25%, or the lowest level possible, until June 2010 in an effort to stimulate the economy. This analysis kicks off a debate in terms of how aggressively the central bank needs to act once it believes rate increases are in order.

The Montreal-based economist said he believes Mark Carney, the Bank of Canada governor, will be able to keep his June 2010 promise, based on the amount of spare capacity in the economy and continuing job losses that are likely to peak early next year.

The Bank of Canada is likely to begin hiking rates after unemployment peaks (in early 2010) and before inflation hits the preferred 2% target (sometime in mid-2011). Once that period comes, Canadians should prepare for steep rate hikes.

"An aggressive tightening – rather than a gradual one -- will be necessary because rates are extremely low," Mr. Leitao said in LBS`s weekly note to clients released Wednesday. "A `measured pace` would not be appropriate to `normalize` rates when the starting point is virtually zero."

Read the full article here

 

[Ally]

Canada`s Economy set to shine on World Stage

OTTAWA -- Canada`s economy is set to outperform nearly all industrialized countries this year and next, the International Monetary Fund said Wednesday, leading analysts to declare the country does not need additional stimuli as advocated by certain world leaders at this week`s Group of Eight summit.

The latest IMF outlook suggested the world economy is "beginning to pull out" of the deepest recession since the Second World War. The global economy will shrink 1.4% this year, it said, but growth of 2.5% is now expected in 2010, an improvement of just over a half-percentage point from its previous forecast in April.

As for Canada, the IMF said the economy would contract the least among industrialized nations this year, with a drop of 2.3%, compared with the 3.8% shortfall expected among all advanced economies. In 2010, the Canadian economy is set to post growth of 1.6%, or second-best among advanced nations after Japan`s expected 1.7% gain. In contrast, the U.S. economy is seen recording meagre growth of 0.8%, or half the Canadian output.

China and India, which crave Canadian-produced raw goods, are expected to be global growth leaders in 2010, with gains of 8.5% and 6.5%, respectively.

"Financial conditions have improved more than expected, owing mainly to public intervention, and recent data suggest that the rate of decline in economic activity is moderating," the IMF said, adding, however, that the recovery would likely be sluggish.

Read the full article here.

 

[Ally]

Recession was tamer than last two, RBC says

RBC Economics has declared in its latest outlook that "the tide is turning" for the Canadian economy and that the current recession will actually be tamer than the previous two.

Craig Wright, chief economist at RBC, said he now expects the recession will be the least severe of the past three.

"In terms of GDP, our expectations for the current recession recovery period is it will be only three quarters in length, shorter than previous recessions," he said. "So shallower in terms of depth and duration."

The peak-to-trough figure for the current recession will be -3.3%, he said.

By contrast, the 1990-1991 recession lasted four quarters and saw a peak-to-trough of -3.4%, while the 1981-1982 recession saw a peak-to-trough of -4.9% over six quarters.

Read the full article here.

 

[Ally]

What Ever Happened to the Great Recession?

OTTAWA -- As optimism over the economy grows by the day, the notion that Canada may be swept up in the deepest global downturn since the great Depression is looking overwrought.

In fact, if forecasters are correct, it will turn out that pronouncement was a tad premature.

It appears once all is said and done, the recent recession — nearly every reputable domestic forecaster, with the exception of the Organization for Economic Co-operation and Development, believes it ended this quarter — was shorter and tamer than what this country experienced in the 1980s and 1990s.

In the latest forecast from Bay Street, economists at Royal Bank of Canada suggested Wednesday the economy will expand 2% and 2.4% in the third and fourth quarters, respectively, and 2.6% in 2010. As a result, this recession, from its peak to its trough, will likely be "the shallowest and shortest" of the past three even after the hefty drops in GDP output in late 2008 and early 2009 are incorporated, the bank said.

Further, various forecasters, including the Royal Bank, reckon Canada is set to outperform the United States economically starting in the fourth quarter. You can mark this up in part to emerging economies, which are in expansion mode as opposed to recovery, craving our vast natural resources. But, perhaps more crucial, it is attributable to the country`s solid domestic fundamentals that were two decades in the making and have, for the most part, insulated us from the worst of the U.S. shocks and positioned Canada as a global economy.

Read the full article here.

 

[Ally]

Oil Back Above $70 a Barrel

LONDON (AFP) - Oil prices climbed back above 70 dollars on Tuesday as the US currency fell in value but trading was cautious ahead of this week`s Group of 20 summit on the global economy, analysts said.
Investors are also closely watching the results of the US Federal Reserve`s latest interest rate meeting, they added.

New York`s main contract, light sweet crude for October delivery, was up 82 cents to 70.53 dollars a barrel, after shedding 2.33 dollars on Monday.

Brent North Sea crude for November climbed 68 cents to 69.37 dollars.

"Oil has continued to take its cue from the value of the US dollar," said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.

Read the full article here.

 

[Ally]

TD Bank says Canadian Economy will grow 2.5% in 2010 due to Exports

TORONTO — Canada`s economy will grow by a robust 2.5 per cent next year due to improvements in the housing sector, consumer spending, exports and commodity prices, a report by TD Bank (TSX:TD) predicts.

The bank`s forecast, released Wednesday, is substantially higher than its previous prediction of 1.4 per cent GDP growth next year.

In 2011, the Canadian economy is forecast to grow by 3.1 per cent.

TD chief economist Don Drummond said exports will contribute to Canada`s growth for the first time in two years beginning in the third quarter of this year. TD estimates Canadian exports will be up 25 per cent in the July to September quarter.

This is because global demand for manufactured goods has come back much more quickly than expected, Drummond said.

"The vigour, particularly in some of the emerging Asian markets, as they came back in the second quarter has definitely caught us by surprise," Drummond said.

"I didn`t think the emerging economies would come back quite that soon and when they did come back would come back with quite that vengeance."

The rebound from the global economic downturn, particularly in developing countries, caused TD to raise its global growth forecast for 2010 by a full percentage point to 3.8 per cent, making it one of the most optimistic projections among economists.

Read the full article here.

 

[Ally]

TD lifts its Global Economic growth Forecasts

OTTAWA -- Economists at Toronto-Dominion Bank revised upward their forecast for global economic growth, citing a combination of inventory restocking and stimuli provided by central banks and legislators.

Further, TD economists suggest the U.S. economy is headed toward its "strongest" post-recession recovery since the 1980s. In Canada, meanwhile, there are signs of a "budding" recovery, but it will not be as "fast and furious" as would generally be expected following a downturn.

The updated forecast, released Wednesday, represents a sea-change of sorts for TD`s economics team, which up until now had been among the most bearish in terms of forecasts.

"Significant economic damage was done, but the worst fears were not realized," TD said in its quarterly forecast of the recession just passed. "The focus is now on the shape of the recovery. … [And] we believe that the recovery is for real."

TD now envisages the global economy expanding by 3.8% in 2010, a full percentage more than its previous forecast. It said governments` fiscal stimulus programs -- such as Canada`s two-year, $46-billion scheme -- will continue to drive growth in the coming quarters, while record low interest rates should "keep pushing on the economic accelerator."

Read the full article here.

 

[Ally]

Demographics Drive Real Estate Prospects

Please see the attachment for an article on how demographics drive real estate prospects.

 

[Amber]

Bank of Canada`s Mark Carney worried about Canadian dollar`s strength

VICTORIA — Bank of Canada Governor Mark Carney renewed a warning Monday about persistent strength in the Canadian dollar and its possible effects on returning inflation to the Bank of Canada`s target range.

In a speech, he allowed that some of the currency`s rise is justified by higher commodity prices and improved economic conditions, but in a question-and-answer session afterward he voiced concern about currency appreciation preventing inflation from returning to the bank`s one- to three-per-cent target range.

"The currency is a major risk to the achievement of the inflation target, so we worry about that," Carney said, adding that he would be concerned by any persistent deviation from fundamentals.

"Other things being equal, a persistently strong Canadian dollar would reduce real growth and delay the return of inflation to target," he said in his speech

read full article here

 

[Amber]

Sun setting on Alberta`s natural gas empire

Alberta`s natural gas industry is fading more rapidly than expected as it faces "significant and growing" risks, TD Economics says in a report issued Monday.

"The potential for an accelerated long-term decline of an industry that does so much of the heavy lifting in the Alberta economy is arguably the No. 1 risk facing the province`s standard of living," said Derek Burleton, director of economic analysis.

Prices running at seven-year lows just above $3 US per million BTUs, the industry`s standard measure, have humbled a once-bulging provincial treasury, sending it into a $7-billion deficit.

While prices have rebounded lately, and are expected to rise to between $5 and $6 US by early 2010, the industry`s heady days of $13 gas are a thing of the past, Burleton said in the report.

It is not just the fact that North American storage levels are bulging at the seams, but a larger structural change is at work, the report said.

read full article here

 

[Ally]

Nation`s Home Prices rise for the Third Straight Month

OTTAWA — Home prices in Canada rose 1.6 per cent in July, the third straight monthly increase after eight consecutive declines, according to the Teranet-National Bank house price index.

Prices rose in all of the six metropolitan areas surveyed, the first time that has happened in 13 months, the report stated.

Moreover, in three of the six areas — Halifax, Ottawa and Montreal — prices rose to levels above their pre-recession peaks

Nationally, prices were still down from a year earlier, off 5.1 per cent in July, representing the eighth consecutive 12-month decline.

Nevertheless, the recent monthly gains indicate "the market correction is behind us," said National Bank senior economist Marc Pinsonneallt.

Read the full article here.

 

[Ally]

There`s more to a Mortgage than a Low Rate

(Special) - Homeowners and buyers are in a rather enviable position these days. Interest rates are at historic lows and the cost of borrowing for a home is about as low as it can get.

That`s great news. But it`s not the only thing homeowners and purchasers need to think about their mortgage.

There are a number of other features to consider before signing up for a mortgage and what is probably the largest debt that most Canadians will ever take on in their lives.

"When it comes to choosing a mortgage, getting a good rate is just the tip of the iceberg," says Mary Gronkowski, regional sales director with Mortgage Intelligence Inc., a national mortgage brokerage company. "You have to be aware of all the other features that may lie below the surface. All features of a mortgage should fit a homebuyer`s personal goals, both now and down the road."

One type of mortgage to consider is an assumable mortgage.

An assumable mortgage means it can be transferred to another borrower. It allows a purchaser to take on your mortgage`s terms and payments as part of the sale of your home. With extremely low interest rates today, that could be a big selling feature to a potential buyer in the future.

Read the full article here.