September 2012 Canadian Economic Fundamentals

[Ally]

Harper calms investor fears over new Quebec premier






VANCOUVER - Prime Minister Stephen Harper tried to calm foreign investors spooked by the election Tuesday of a separatist government in Quebec by saying that Quebecers voted for a change of government, not a change of countries.




After Quebecers narrowly chose Parti Quebecois Leader Pauline Marois to be the province's next premier, stock market analysts slapped the National Bank of Canada, based in Montreal, with a downgrade, citing the uncertain political environment in the province where that bank does much of its business.




Here in Vancouver on Thursday afternoon, Harper was asked if the minority win by the Parti Quebecois might threaten Canada's reputation internationally as a safe haven for investments amidst global economic turmoil.





Read the full article here.

 

[Ally]

The end of the Canadian consumer as we know it?






The days of the Canadian consumer as the main driver of the economy may be coming to an end, a growing chorus of economists and analysts are warning.




Strong consumer spending -- which has pushed the average household debt-to-income ratio north of 152 percent, near levels hit in the U.S. and the UK before their economies went into tailspins -- has been one of main reasons Canada`s economy has seen a stronger recovery than its peers.




But recent data shows that momentum is beginning to fade.




This week ratings agency Moody's Investors Service warned Canadian households are leveraged to a "dangerous point," and the rising level of debt-to-income ratios is unsustainable. As consumers pullback on their spending, the Canadian economy will be pushed to the brink of a second recession, Moody`s predicts.





Read the full article here.

 

[Ally]

TD says real estate slowdown ahead




The chief economist for TD Bank is now predicting those new, tighter mortgage rules, which came into force in July, will slow sales by as much as 5% in the waning months of 2012.




In addition, prices will be slashed by 3% on average in the second half of 2012, says Craig Alexander, right through to the beginning of 2013.




The assessment also comes with projections of a rate hike, which will result in a price correction of 10% on the national average.




That`s not the rosiest picture for homeowners, especially looking to pull equity out of their homes, but it may benefit investors across the country. The combination of lower prices and increased interest rates will likely bolster demand for rental units, and possibly lead to a bump-up in rental prices.





Read the full article here.

 

[Ally]

No changes in Canadian unemployment rate in August




OTTAWA ` Canada's economy hammered out 34,300 new jobs last month, a figure that topped expectations but one that was coolly received by economists surveying the cross-currents beneath the headline number.




All the gains in the August jobs report from Statistics Canada were part-time jobs. As well, there were heavy losses in the goods producing sector, which generally pays higher wages.




And the unemployment rate remained unchanged at 7.3 per cent as the labour force grew in step with the employment gains.






Read the full article here.

 

[Ally]

Canada adds 34,000 jobs in August, outpacing July loss




The gains topped the expectations of analysts surveyed by Reuters. They predicted, on average, a gain of 10,000 jobs, and the highest prediction was for 25,000.




All the job gains were part time, mirroring part-time losses in July. The unemployment rate remained at 7.3 percent, as forecast, because more Canadians looked for work in August.




"It's likely to support the already hawkish stance of the Bank of Canada. We've had a slew of some disappointing domestic data recently, so this is a positive development for the Canadian dollar," Scotiabank chief currency strategist Camilla Sutton said.





Read the full article here.

 

[Ally]

Canada's job growth blows past expectations







OTTAWA ` Canada`s economy added a surprising 34,300 jobs in August, after a similar decline the previous month, although most of those gains were in part-time positions.







The unemployment rate held steady at 7.3%, as more Canadians joined the workforce in search of employment.







Most economists had expected an increase of as little as 10,000 jobs in August, after a drop of more than 30,000 positions in July.







Statistics Canada said Friday that part-time positions rose by 46,700, while there were 12,500 fewer full-time jobs in August.






Read the full article here.

 

[Ally]

Talk of PQ chill on property values: scare tactic or scary reality




MONTREAL - Some observers of the Montreal real estate market say potential home buyers are holding off until they know who wins the Sept. 4 provincial election.




The market traditionally slows in summer and new regulations concerning mortgages have been imposed but some brokers say buyers are also taking a wait-and-see attitude to protect their investment or maybe get a better price after Sept. 4.




It's the type of news that would rankle the Parti Quebecois, which has had warnings of a flight of economic capital and an exodus of anglophones used against it since the 1970s.




Monique Assouline, a real-estate broker who works in Montreal's west end, says she's had both anglophone and francophone clients tell her they're not buying anything until after the election is decided.




"Their main fear is that the PQ government will win and that the separation issue will come back up and that the prices are going to fall down," she said.




Assouline said buyers fear property values will plummet amid an exodus of residents from the mainly English-speaking areas such as after the 1976 election, the first time the PQ took power.





Read the full article here.

 

[Ally]

RBC predicts better economic growth this year





TORONTO -- The Royal Bank of Canada predicts the Canadian economy will grow by 2.1 per cent this year, and that the central bank will gradually raise interest rates next year.




RBC's (TSX:RY) latest Economic and Financial Market Outlook says accommodative monetary policy, continued business spending, supportive labour market conditions and an improving trade balance will lay the foundation for the growth.




The forecast, released early Monday, says lingering downside risks will diminish in the months ahead and clear the way for the Bank of Canada to gradually begin raising interest rates next year.






Read the full article here.

 

[Ally]

Canada among 7 best housing markets in the world




While much of the world is seeing home prices depreciate, there are a few countries where home prices are on the rise.Canada ranked among Germany, Switzerland and Hong Kong in the top 7 housing markets.




Global Property Guide`s latest report shows, however, that even the strongest housing markets are losing momentum as the economy falters.





Read the full article here.

 

[Ally]

Is household debt threatening the Canadian economy?




Over the past 10 years, household debt in Canada has risen by 135 per cent, while disposable income and nominal GDP have risen by 54 per cent. Household debt growth over the past decade has risen nearly three times as fast as income growth, a trend that is clearly unsustainable. The average Canadian now has a record-high debt load equal to 154 per cent of their disposable income. This rise in household debt has led to our central bank warning that household debt levels are the most significant risk to the economy.




Yet despite this rapid growth in credit, it appears at first blush that it poses little risk to the economy. Interest rates and hence the interest portion of debt-servicing costs remain low (although total debt-servicing costs remain very elevated), arrears rates are minimal, unemployment is relatively stable, and the percentage of at-risk households as measured by debt-servicing ratio, while rising, still remains reasonably low.





Read the full article here.

 

[Ally]

Canadian closes in on 3 cents above parity





Expect another rush in cross-border shopping as the Canadian dollar climbs, and is expected to go further still.



The loonie is at its highest level in a year, closing in on 3 cents above parity with the U.S. currency, buoyed by speculation over U.S. monetary policy and a Canadian central bank that still plans a rate hike at some point.




That means, of course, that the currency buys more in the U.S. Not only that, but there are also new rules that boosted the level of duty-free exemptions for Canadians coming back across the border.




Canadian shopping in the United States was already on the upswing.





Read the full article here.

 

[Ally]

Canadian hiring sees modest rebound, overall trend still soft





The Canadian economy created 34,300 jobs last month as a rebound in part-time positions offset a steep drop in the construction sector.




The country`s unemployment rate stayed at 7.3 per cent in August , Statistics Canada said Friday. Last month`s job growth follows a surprise drop of 30,400 jobs in July.






Read the full article here.

 

[Ally]

Credit and debit cards give economy a boost, Visa report says



OTTAWA ` Being able to pay for goods and services electronically with credit and debit cards has helped boost the economy by making it easier to spend money, a new report by Visa Canada suggests.





Electronic payment technology has helped make international tourism easier, as well as fuelled online shopping, which would be far more difficult without easy ways to pay, the report found.





Tom Hester, senior economist at Visa, said as we move to more efficient payment mechanisms it allows consumers to walk around with much more powerful wallets.





Read the full article here.

 

[Ally]

When it comes to debt, unemployment is the big risk





Warning people about the dangers of rising interest rates has done precisely nothing to curb borrowing.




I know because I`ve tried. So have various people in the financial sector and in government, and we`ve all been largely ignored, if you judge by borrowing trends.




So let`s take a different approach. In the view of some experts, indebted people have a lot more to fear from rising unemployment than they do from rising rates.






Read the full article here.

 

[Ally]

Demographics will boost Canadian housing demand




After booming for more than a decade, the housing market in Canada is expected to level off during the next two or three years. While some analysts predict home prices will drop, the consensus is the real estate market is more likely to flatten as the global economic crisis sorts itself out.




Recently CIBC's deputy chief economist, Benjamin Tal, issued a report that says demographic shifts in the housing market will help mitigate damage from a market downturn.





Read the full article here.

 

[Ally]

Unprecedented demand and record prices continue to characterize the market for Canadian farmland in 2012




MISSISSAUGA, ON, Sept. 10, 2012 /CNW/ ` Soaring commodity values and limited supply continue to push Canadian farmland values to new heights, with price per acre now commanding top dollar in most markets across the country, says RE/MAX.




The RE/MAX Market Trends Report, Farm Edition 2012, highlighting trends and developments in 16 markets throughout Canada, found that prices have increased almost across the board this year with only the Annapolis Valley, parts of Windsor/Essex, and the Fraser Valley reporting levels on par with 2011. Tight inventory has been an issue in all markets, restricting year-over-year sales activity to a large extent. While low interest rates, high commodity prices, and nutrient/supply management requirements have been the primary factors fueling the trend toward expansion, increased advancement in farm equipment has also been behind the push for additional acreage.





Read the full article here.

 

[Ally]

Economy to grow at modest pace in 2013: RBC






Canada yielded a disappointing economic performance in the second quarter of 2012 and is expected to grow at a moderate pace through 2013, according to an Economic and Financial Market Outlook by RBC Economics Research.






Accommodative monetary policy, continued business spending, supportive labour market conditions and an improving trade balance will lay the foundation for real GDP growth of 2.1 per cent in 2012.






"The tone of global economic data was somewhat disappointing in the second quarter and Canada was no exception, with only marginal increases in exports, a decline in manufacturing sales and weak consumer spending," said Craig Wright, senior vice-president and chief economist at RBC. "Canada should, however, continue to take global headwinds in stride. The economy continues rumbling along and will likely pick up as temporary factors ebb and global growth prospects improve."





Read the full article here.

 

[Ally]

Hiring outlook weakens, lead by Ontario




The fourth-quarter hiring outlook among Canadian employers has softened, with managers in Ontario the most cautious.




Hiring plans for the October-to-December period are weaker than for the prior quarter and more tepid than in the same period last year, Manpower's employment outlook survey, to be released Tuesday, shows.




The intentions come as job creation has sputtered over the past four months, held back by a shaky global economy. Canada's jobless rate, at 7.3 percent, is unchanged from last year.





Read the full article here.

 

[Ally]

Tips on skirting the new mortgage rules




Earlier this summer there was a lot of talk around the changes Ottawa was making to the mortgage rules. The rule change that received the biggest buzz and headlines was when Finance Minister Jim Flaherty announced that government insured mortgages (read CMHC) will no longer allow amortization periods of over 25 years. In other words, we no longer have the option of taking 30 years to pay off our mortgages if they were insured. This announcement received a lot of airplay in cities like Vancouver because it speaks to the heart of a very real concern ` affordability. Simply put, a house in the Vancouver market is more affordable if you can spread your mortgage payments over 30 years instead of being limited to only 25.










Since affordability is a huge topic on the west coast, it garners a lot of attention. But what I find a little surprising is the fact that there is another set of rule changes scheduled to take effect by the end of 2012 that have not received as much media attention but could impact local homebuyers more so than those announced in June.





Read the full article here.

 

[Ally]

Canadian housing starts surge unexpectedly in August: CMHC





TORONTO - Canadian housing starts surged unexpectedly in August as a few large multi-unit projects in Toronto, presold in late 2010 and early 2011, broke ground, data from the Canada Mortgage and Housing Corp showed on Tuesday.




The seasonally adjusted annualized rate of housing starts was 224,900 units in August, compared with 208,000 units in July. The July figure was revised down slightly from 208,500 units reported previously.






Read the full article here.