September 2011 Canadian Economic Fundamentals
- Thread starter Ally
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Waiting for sustainable growth
Three years after the onset of the global financial crisis the G7 economies are still in recovery mode from the global downturn. However, Canada is the only economy in this group that has recouped all the output it lost during the recession. Between 2007 and 2010, Canada`s GDP increased at an average annual rate of 0.3 per cent and is now one percentage point above its 2007 peak. It`s nothing to brag about for sure, but when viewed against the travails of the other major economies it is certainly an accomplishment.
Despite the return to growth, the level of output in all the other G7 economies remains below pre-crisis levels. Italy`s GDP is still 5.3 per cent below its pre-recession level and the economies of the United Kingdom and Japan are both 3.7 percentage points smaller than they were at the start of the recession. And although Germany has had a robust recovery powered primarily by its export sector, its economy is still 0.6 percentage points smaller than it was in 2007 (see table below).
Although Canada has moved from recovery to expansion, its foray into the expansionary phase of the cycle looks like it could be short-lived. Incoming data shows that the economy contracted by 0.4 per cent in the second quarter and two key risks -- the withering of growth in the U.S. and the strong Canadian dollar -- will weigh on the country`s economy in the future.
Read the full article here.
Three years after the onset of the global financial crisis the G7 economies are still in recovery mode from the global downturn. However, Canada is the only economy in this group that has recouped all the output it lost during the recession. Between 2007 and 2010, Canada`s GDP increased at an average annual rate of 0.3 per cent and is now one percentage point above its 2007 peak. It`s nothing to brag about for sure, but when viewed against the travails of the other major economies it is certainly an accomplishment.
Despite the return to growth, the level of output in all the other G7 economies remains below pre-crisis levels. Italy`s GDP is still 5.3 per cent below its pre-recession level and the economies of the United Kingdom and Japan are both 3.7 percentage points smaller than they were at the start of the recession. And although Germany has had a robust recovery powered primarily by its export sector, its economy is still 0.6 percentage points smaller than it was in 2007 (see table below).
Although Canada has moved from recovery to expansion, its foray into the expansionary phase of the cycle looks like it could be short-lived. Incoming data shows that the economy contracted by 0.4 per cent in the second quarter and two key risks -- the withering of growth in the U.S. and the strong Canadian dollar -- will weigh on the country`s economy in the future.
Read the full article here.
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Slow recovery for sure, but Canada not in recession
The reported decline in GDP in the second quarter of 2011 was an unwelcome development, but I don`t see how it can be interpreted as a sign that the Canadian economy is about to fall into recession.
A closer look at the numbers suggests that the most recent report is far more typical of an expansion than of a recession.
Read the full article here.
The reported decline in GDP in the second quarter of 2011 was an unwelcome development, but I don`t see how it can be interpreted as a sign that the Canadian economy is about to fall into recession.
A closer look at the numbers suggests that the most recent report is far more typical of an expansion than of a recession.
Read the full article here.
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Hold your shovel: So far, no case for stimulus in Canada
One of the things complicating analyses of Canadian business cycle policy is that too many Canadians pay too close attention to what is going on in the United States, and not enough to what is happening here. The question of whether or not governments should embark on a new round of fiscal stimulus by means of increased spending on infrastructure projects is a case in point.
Read the full article here.
One of the things complicating analyses of Canadian business cycle policy is that too many Canadians pay too close attention to what is going on in the United States, and not enough to what is happening here. The question of whether or not governments should embark on a new round of fiscal stimulus by means of increased spending on infrastructure projects is a case in point.
Read the full article here.
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New U.S. property tax rules may hit Canadians at home
A strong loonie and depressed U.S. realestate prices have led to a buying binge by Canadians south of the border. We're now the largest non-American buyers of U.S. real estate. Many purchasers, however, only have a vague idea of what they've committed to from a tax and legal standpoint.
"There's a presumption among people that the laws must be the same in the U.S. and Canada. A lot find out otherwise only after they buy," said David Altro, a Montreal lawyer who also practises in the United States.
Altro, who specializes in cross-border tax, property and estate-planning issues, is the author of a 2009 guidebook titled Owning U.S. Property the Canadian Way
Read the full article here.
A strong loonie and depressed U.S. realestate prices have led to a buying binge by Canadians south of the border. We're now the largest non-American buyers of U.S. real estate. Many purchasers, however, only have a vague idea of what they've committed to from a tax and legal standpoint.
"There's a presumption among people that the laws must be the same in the U.S. and Canada. A lot find out otherwise only after they buy," said David Altro, a Montreal lawyer who also practises in the United States.
Altro, who specializes in cross-border tax, property and estate-planning issues, is the author of a 2009 guidebook titled Owning U.S. Property the Canadian Way
Read the full article here.
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Canada's economy shrinks for first time since recession
OTTAWA -- The Canadian economy shrank in the second quarter, its first quarterly fall since the 2008-09 recession, with temporary factors such as Japan's earthquake and tsunami playing a big role, Statistics Canada said Wednesday.
Real gross domestic product fell at an annualized rate of 0.4% from the first quarter, worse than the median forecast of a 0.1% increase in a Reuters survey of economists. The economy grew by 3.6% in the first quarter.
Several economists said they expect a rebound in the third quarter as the impact of the second-quarter disruptions fades. If this is the case, Canada would escape the technical definition of recession -- two consecutive quarters of a drop in GDP.
Read the full article here.
OTTAWA -- The Canadian economy shrank in the second quarter, its first quarterly fall since the 2008-09 recession, with temporary factors such as Japan's earthquake and tsunami playing a big role, Statistics Canada said Wednesday.
Real gross domestic product fell at an annualized rate of 0.4% from the first quarter, worse than the median forecast of a 0.1% increase in a Reuters survey of economists. The economy grew by 3.6% in the first quarter.
Several economists said they expect a rebound in the third quarter as the impact of the second-quarter disruptions fades. If this is the case, Canada would escape the technical definition of recession -- two consecutive quarters of a drop in GDP.
Read the full article here.
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Rate hikes unlikely in 2011
Expect a "cautious" tone from Bank of Canada governor Mark Carney next Wednesday when he makes the central bank's scheduled interest rate announcement.
While a September rate hike seemed inevitable just months ago, market forces have made any increase a thing of the distant future, say analysts.
Carney will likely not move far from the statement on the economy that he made before a special parliamentary committee last month, says Benjamin Reitzes, senior economist with BMO Capital Markets.
Read the full article here.
Expect a "cautious" tone from Bank of Canada governor Mark Carney next Wednesday when he makes the central bank's scheduled interest rate announcement.
While a September rate hike seemed inevitable just months ago, market forces have made any increase a thing of the distant future, say analysts.
Carney will likely not move far from the statement on the economy that he made before a special parliamentary committee last month, says Benjamin Reitzes, senior economist with BMO Capital Markets.
Read the full article here.
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Rate increase unlikely until 2012, economists say
OTTAWA ` Expect a `cautious` tone from Bank of Canada governor Mark Carney next Wednesday when he makes the central bank`s scheduled interest rate announcement.
While a September rate hike seemed inevitable just months ago, market forces have made any increase a thing of the distant future, say analysts.
Carney will probably not move far from the statement on the economy that he made before a special parliamentary committee last month, says Benjamin Reitzes, a senior economist with BMO Capital Markets.
Read the full article here.
OTTAWA ` Expect a `cautious` tone from Bank of Canada governor Mark Carney next Wednesday when he makes the central bank`s scheduled interest rate announcement.
While a September rate hike seemed inevitable just months ago, market forces have made any increase a thing of the distant future, say analysts.
Carney will probably not move far from the statement on the economy that he made before a special parliamentary committee last month, says Benjamin Reitzes, a senior economist with BMO Capital Markets.
Read the full article here.
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Investors to face trio of major events
TORONTO September trading activity starts in earnest on Tuesday as traders return from a long weekend to deal with a trio of major events that will unspool throughout the week.
The Bank of Canada was expected to announce no changes in interest rates when the central bank makes its next scheduled rate announcement on Wednesday, while economists expect modest job growth when Statistics Canada releases its August employment report on Friday.
But the event that will have a greater impact on stock markets hapens Thursday night when U.S. president Barrack Obama unveils his jobs program before a joint session of congress.
Read the full article here.
TORONTO September trading activity starts in earnest on Tuesday as traders return from a long weekend to deal with a trio of major events that will unspool throughout the week.
The Bank of Canada was expected to announce no changes in interest rates when the central bank makes its next scheduled rate announcement on Wednesday, while economists expect modest job growth when Statistics Canada releases its August employment report on Friday.
But the event that will have a greater impact on stock markets hapens Thursday night when U.S. president Barrack Obama unveils his jobs program before a joint session of congress.
Read the full article here.
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Economic conditions will help Canada's real estate sector stay healthy: CMHC
Canada's national housing agency says it expects home sales and construction activity will cool but remain healthy in the second half of the year, due to favourable economic conditions that push up demand for homes.
Canada Mortgage and Housing Corp. said Monday that lower unemployment, a steady level of immigration, and low interest rates are working together to prop up Canada's real estate industry.
"I think the Canadian housing market is healthy at the moment despite the uncertainty we observed in the financial market," Mathieu Laberge, deputy Chief Economist at CMHC said in an interview.
He was referring to the stock market ups and downs earlier this month as investors worried about the European debt crisis and feared the U.S. could slip back into recession.
"Employment is expected to grow at a moderate pace in the next few years," he said.
Read the full article here.
Canada's national housing agency says it expects home sales and construction activity will cool but remain healthy in the second half of the year, due to favourable economic conditions that push up demand for homes.
Canada Mortgage and Housing Corp. said Monday that lower unemployment, a steady level of immigration, and low interest rates are working together to prop up Canada's real estate industry.
"I think the Canadian housing market is healthy at the moment despite the uncertainty we observed in the financial market," Mathieu Laberge, deputy Chief Economist at CMHC said in an interview.
He was referring to the stock market ups and downs earlier this month as investors worried about the European debt crisis and feared the U.S. could slip back into recession.
"Employment is expected to grow at a moderate pace in the next few years," he said.
Read the full article here.
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Carney holds interest rate at 1%
Bank of Canada Governor Mark Carney held Canada's benchmark interest rate steady at one per cent on Wednesday.
It was the eighth consecutive time the central bank has opted to stand pat. The target for the overnight rate was raised to one per cent in September 2010.
"The global economic outlook has deteriorated in recent weeks," the bank said in a release Wednesday morning. "Canadian economic growth stalled in the second quarter."
Read the full article here.
Bank of Canada Governor Mark Carney held Canada's benchmark interest rate steady at one per cent on Wednesday.
It was the eighth consecutive time the central bank has opted to stand pat. The target for the overnight rate was raised to one per cent in September 2010.
"The global economic outlook has deteriorated in recent weeks," the bank said in a release Wednesday morning. "Canadian economic growth stalled in the second quarter."
Read the full article here.
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Bank of Canada backs away from rate hike option
OTTAWA (Reuters) - In a dramatic policy shift, the Bank of Canada said on Wednesday it saw less need to raise interest rates, becoming the latest major central bank to take a more cautious stance about the worsening global economy.
The bank held its overnight rate unchanged at 1 percent, where it has been for the past year, and took its previous talk of a rate hike off the table.
"In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished," the central bank said in a statement.
Read the full article here.
OTTAWA (Reuters) - In a dramatic policy shift, the Bank of Canada said on Wednesday it saw less need to raise interest rates, becoming the latest major central bank to take a more cautious stance about the worsening global economy.
The bank held its overnight rate unchanged at 1 percent, where it has been for the past year, and took its previous talk of a rate hike off the table.
"In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished," the central bank said in a statement.
Read the full article here.
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Flaherty asks for probe into Canada-U.S. consumer price gap
It`s an issue that's been bothering Canadian consumers since the loonie has been above parity -- Canucks paying more than Americans for the same products. Now Finance Minister Jim Flaherty is asking for an investigation into the price gap.
He has sent a letter to the Senate finance committee expressing his frustration. There is no official cross-border comparison of consumer prices or the impact of currency fluctuations.
"When they [consumers] spend their hard-earned money, they deserve to pay a price that reflects the strength of the Canadian economy," Flaherty said in the letter that was released Wednesday.
Read the full article here.
It`s an issue that's been bothering Canadian consumers since the loonie has been above parity -- Canucks paying more than Americans for the same products. Now Finance Minister Jim Flaherty is asking for an investigation into the price gap.
He has sent a letter to the Senate finance committee expressing his frustration. There is no official cross-border comparison of consumer prices or the impact of currency fluctuations.
"When they [consumers] spend their hard-earned money, they deserve to pay a price that reflects the strength of the Canadian economy," Flaherty said in the letter that was released Wednesday.
Read the full article here.
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Canadian employment declines in August, jobless rate rises
OTTAWA ` There were 5,500 fewer people employed in Canada last month, Statistics Canada said Friday.
The unemployment rate rose to 7.3 per cent from 7.2 per cent.
Economists polled by Bloomberg had expected job gains of 21,500 and an unchanged unemployment rate. This marked another month of what has been a stagnant summer job market in Canada, following July's meagre gain of 7,100 to the ranks of the employed.
Read the full article here.
OTTAWA ` There were 5,500 fewer people employed in Canada last month, Statistics Canada said Friday.
The unemployment rate rose to 7.3 per cent from 7.2 per cent.
Economists polled by Bloomberg had expected job gains of 21,500 and an unchanged unemployment rate. This marked another month of what has been a stagnant summer job market in Canada, following July's meagre gain of 7,100 to the ranks of the employed.
Read the full article here.
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Oil patch steams ahead
As the rest of the world cuts back, Canada`s oil industry is moving full steam ahead amid different types of fears ` labour shortages and escalating costs.
With oil prices strong and balance sheets in good shape, companies operating in Canada seem to be shrugging off the global market mayhem that is pummeling stock prices and taking the long-term view, at least for now.
`For much of the global petroleum industry, the sky is not falling at current prices,` Judith Dwarkin, chief energy economist at ITG Investment Research, said in a report. `In Canada`s oil sands, in-situ projects generally remain profitable at mid-US$70 a barrel West Texas Intermediate, and any slowdown in upstream activity would help relieve cost pressures. For these producers, the surge in crude prices during the first half of 2011 was gravy.`
Read the full article here.
As the rest of the world cuts back, Canada`s oil industry is moving full steam ahead amid different types of fears ` labour shortages and escalating costs.
With oil prices strong and balance sheets in good shape, companies operating in Canada seem to be shrugging off the global market mayhem that is pummeling stock prices and taking the long-term view, at least for now.
`For much of the global petroleum industry, the sky is not falling at current prices,` Judith Dwarkin, chief energy economist at ITG Investment Research, said in a report. `In Canada`s oil sands, in-situ projects generally remain profitable at mid-US$70 a barrel West Texas Intermediate, and any slowdown in upstream activity would help relieve cost pressures. For these producers, the surge in crude prices during the first half of 2011 was gravy.`
Read the full article here.
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Foreign investors help keep Canadian mortgage rates low
Enjoying low mortgage rates? You can give a big thanks to foreign investors.
Foreign investors snatched up $8.5-billion worth of Canadian bonds in the second quarter, bringing the total of bonds bought by foreigners in the past year to $25-billion, data from Statistics Canada Monday showed. Foreign investors now hold a record $137-billion worth of Canadian bonds.
But it is not just the Government of Canada benefiting from the stream of investors willing to lend it money. All those bond purchases are driving down yields, and consequently, lending rates in Canada.
Read the full article here.
Enjoying low mortgage rates? You can give a big thanks to foreign investors.
Foreign investors snatched up $8.5-billion worth of Canadian bonds in the second quarter, bringing the total of bonds bought by foreigners in the past year to $25-billion, data from Statistics Canada Monday showed. Foreign investors now hold a record $137-billion worth of Canadian bonds.
But it is not just the Government of Canada benefiting from the stream of investors willing to lend it money. All those bond purchases are driving down yields, and consequently, lending rates in Canada.
Read the full article here.
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The chart that frightens
FORGET for a moment all the headlines generated by the latest statements from Angela Merkel, Jean-Claude Trichet et al about the best way to stabilize government bond markets. Focus instead on this chart of European bank shares. Things are almost as bad as they were back in late 2008.
Now European politicians and bankers may say that these declines are unwarranted. But banking, like a fiat money system, is a matter of confidence. At one level, it is all about borrowing short and lending long, and the assumption that banks can handle the maturity mismatch. At the moment, the problem is one of capital. Many believe that the banks need to raise more capital, as their British and American counterparts did in 2008 and 2009. If you are a existing shareholder, then you assume that any new equity will come at the expense of diluting your own stake; the more the share price falls, the bigger that dilution is likely to be.
Read the full article here.
FORGET for a moment all the headlines generated by the latest statements from Angela Merkel, Jean-Claude Trichet et al about the best way to stabilize government bond markets. Focus instead on this chart of European bank shares. Things are almost as bad as they were back in late 2008.
Now European politicians and bankers may say that these declines are unwarranted. But banking, like a fiat money system, is a matter of confidence. At one level, it is all about borrowing short and lending long, and the assumption that banks can handle the maturity mismatch. At the moment, the problem is one of capital. Many believe that the banks need to raise more capital, as their British and American counterparts did in 2008 and 2009. If you are a existing shareholder, then you assume that any new equity will come at the expense of diluting your own stake; the more the share price falls, the bigger that dilution is likely to be.
Read the full article here.
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Canadian dollar slides near parity with greenback
The Canadian dollar (CAD/USD-I1.010.0030.33%) fell closer to parity with its U.S. counterpart Thursday after data showed the Canadian economy lost jobs in August.
The Canadian dollar fell 0.81 of a cent to $1.0040 (U.S.) following a report from Statistics Canada showing the economy lost jobs last month for the first time in five months.
Read the full article here.
The Canadian dollar (CAD/USD-I1.010.0030.33%) fell closer to parity with its U.S. counterpart Thursday after data showed the Canadian economy lost jobs in August.
The Canadian dollar fell 0.81 of a cent to $1.0040 (U.S.) following a report from Statistics Canada showing the economy lost jobs last month for the first time in five months.
Read the full article here.
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Canada data dashes hopes of quick economic rebound
Canada's job market had outperformed that of the United States since the recession but it is now looking startlingly similar, stalling for two months in a row.
The Canadian dollar weakened to a one-month low after Statistics Canada said on Friday net job losses in the month totaled 5,500, nearly erasing the meek 7,100 gain in July. The unemployment rate rose to 7.3 percent from 7.2 percent.
"While it seems surprising considering our very strong record in recent months, it's not surprising given the problems that we saw accumulate in the first half of the year which basically peaked in the summer months," said Aron Gampel, deputy chief economist at Scotiabank.
Read the full article here.
Canada's job market had outperformed that of the United States since the recession but it is now looking startlingly similar, stalling for two months in a row.
The Canadian dollar weakened to a one-month low after Statistics Canada said on Friday net job losses in the month totaled 5,500, nearly erasing the meek 7,100 gain in July. The unemployment rate rose to 7.3 percent from 7.2 percent.
"While it seems surprising considering our very strong record in recent months, it's not surprising given the problems that we saw accumulate in the first half of the year which basically peaked in the summer months," said Aron Gampel, deputy chief economist at Scotiabank.
Read the full article here.
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Canada building permits match all-time record in July
OTTAWA - The value of building permits rose 6.3 per cent to $7.0 billion in July, matching the record high set in May 2007.
Statistics Canada attributes the increase mainly to a rise in multi-family dwelling permits in Ontario.
It was the third straight monthly increase in permits, which rose in six provinces, led by Ontario.
Read the full article here.
OTTAWA - The value of building permits rose 6.3 per cent to $7.0 billion in July, matching the record high set in May 2007.
Statistics Canada attributes the increase mainly to a rise in multi-family dwelling permits in Ontario.
It was the third straight monthly increase in permits, which rose in six provinces, led by Ontario.
Read the full article here.