September 2012 Canadian Economic Fundamentals

[Ally]

Retail sales drop unexpectedly in June while cross-border trips soar




Canadian Press is writing today about how retail sales have dropped unexpectedly in June, raising questions about growth and the economy. Meanwhile, yesterday I wrote about how cross-border overnight visits in June were at their highest level since record keeping began in 1972. Could these two pieces of information be related? It would seem obvious to me that they are, but I don`t have any definitive proof.




In June, the duty-free limit increased to $200 from $50 on stays longer than 24 hours and to $800 from $400 for stays longer than 48 hours. Previously, a person who was away for seven days or more could bring back goods worth $750, duty-free. The limits for visits shorter than 24 hours and for alcohol and tobacco are unchanged.





Read the full article here.

 

[Ally]

Canada's trade deficit hits record high





OTTAWA ` Statistics Canada says Canada`s trade deficit with the rest of the world grew in July to $2.3-billion, up from $1.9-billion in June.







StatsCan says Canada`s merchandise exports fell 3.4% and imports decreased 2.2% in July.







The agency says exports fell to $37.7-billion, mainly because of lower shipments of energy products.







Imports fell to $40.1-billion, with lower imports of energy products as well as machinery and equipment.






Read the full article here.

 

[Ally]

Housing starts up in August: CMHC report




Canada Mortgage and Housing Corp. said Tuesday there were 19,860 actual housing unit started in August to set a seasonally adjusted annual pace of 224,900 units for the month, up from 208,000 in July.




The consensus estimate by economists had been for a seasonally adjusted annual pace of 201,000.




"This increase is primarily a reflection of the high level of pre-sales in some of these large multi-unit projects in late 2010 and early 2011, which is in line with job gains at that time," said Mathieu Laberge, deputy chief economist at CMHC's Market Analysis Centre.





Read the full article here.

 

[Ally]

Canadian housing: There's an obvious oversupply problem in Vancouver, Toronto, and Montreal




August resale and housing starts figures are now out for all three of Canada`s biggest cities, and it`s not a pretty picture.






Vancouver




When the August resale data for Vancouver came out last week, the headline news was that sales had fallen to their second lowest level for the month since 1998. Sales were 30 per cent below what they were in August of last year and 40 per cent lower than the August average of the past 10 years.





Read the full article here.

 

[Ally]

Canadian dollar at 13-month high ahead of expected fed word on stimulus





TORONTO - The Canadian dollar was at a 13-month high Tuesday morning amid expectations that the U.S. Federal Reserve will launch another round of stimulus to help the American economy.




The loonie rose 0.53 of a cent to 102.83 cents US as traders also took in a strong housing report.




Canada Mortgage and Housing Corp. said housing starts came in at an annual rate of 224,900 during August. The showing was a pleasant surprise as economists had expected a decline to 200,000.




"Clearly low interest rates continue to support home construction activity, although signs of deceleration in the secondary market could dampen that momentum," said CIBC World Markets economist Emanuella Enenajor.






Read the full article here.

 

[Ally]

Lumber rising amid a strengthening U.S. housing market and tight supply



MONTREAL - North American lumber prices are set to surge in the next couple of years amid a tightened supply from Canada as the U.S. housing market continues to strengthen after years of weakness, a new CIBC report predicts.




Spot prices for Western softwood lumber made from spruce, pine and fir trees have steadily increased this year, rising 24 per cent since January to US$310 per thousand board feet in August.





Read the full article here.

 

[Ally]

This is about as bad as it gets for Canadian exporters





A strong currency and global slowdown are choking Canada`s trade-dependent economy.




The merchandise trade deficit swelled in July to $2.3-billion, the largest since Statistics Canada began tracking the data in 1971, driven wider by sharp declines in virtually all of the country`s major exports.




`This is about as bad as it gets for Canadian exporters,` Bank of Nova Scotia economist Derek Holt warned.






Read the full article here.

 

[Ally]

Is Canada sitting on a household debt landmine




There`s a saying that perhaps illustrates my concerns with current debt levels in Canada and the pace of debt accumulation over the past decade:




`It`s not the fall that kills you. It`s the sudden stop at the end.`




While Mr. Lascelles and I agree that household debt poses a risk to the economy, and the pace of borrowing over the past decade is unsustainable, we seem to disagree in two key areas: The likelihood of a hard stop in borrowing and the economic implications of such a hard landing.





Read the full article here.

 

[Ally]

What Canada's current slowdown says about our vulnerability to a global slowdown




Budget deficits, whether provincial or federal, tend to get all the press. The other big Canadian deficit`the current account deficit`usually flies well under the radar. Until this week, that is, when Statistics Canada released numbers indicating that our trade deficit with the world expanded from $1.9 billion to $2.3 billion in July.




The current account surplus or deficit is a measure of a country`s trading relationship with the world. You`ve probably heard of a key part of the current account, the trade balance, or exports minus imports. In addition, the current account also measures net investment income, i.e. interest earned from foreign holdings minus interest paid to foreigners, and net financial transfers over a given period.




Canada`s current account balance is significantly in the red. To be precise, as of the second quarter of 2012, our deficit has reached 3.6 per cent of GDP on an annualized basis. As BMO`s Nesbitt Burns noted, this represents a marked deterioration from the 2.8 per cent deficit recorded in 2011. Canada, they wrote, has only seen two years`1975 and 1981`when the current account deficit exceeded 4 per cent of GDP. We`re close what have typically been extreme readings.





Read the full article here.

 

[Ally]

Volatile gas prices on the way down





Pump-panicked motorists in Canada might be breathing a little easier after this week's sudden spike in gasoline prices - but experts fear price shocks will continue in coming days as commodity traders speculate about economic stimulus south of the border.




The cost of a litre of gas was expected to drop significantly in the wake of Wednesday's jarring increase, according to tomorrowsgaspricestoday.com, a consumer-oriented website that monitors changes in fuel prices.




Pump prices were expected to fall by anywhere from five to seven cents per litre early Friday, depending on the region, said Dan McTeague, a former Liberal MP and longtime gas-price watchdog who operates the website.






Read the full article here.

 

[Ally]

Jim Flaherty ready to act, if needed





Exactly four years after the collapse of Lehman Brothers Holdings Inc. set the global economy on a downward spiral that is still reverberating around the globe, federal Finance Minister Jim Flaherty is grappling with a domestic economy stuck in low gear.




With Canada`s growth hovering below the 2-per-cent mark, unemployment at 7.3 per cent, and an unresolved European crisis looming over the globe, Ottawa is walking a fine line between staying on course to reduce its deficit and spending enough to keep the economy bubbling.






Read the full article here.

 

[Ally]

Exporters hit by loonie's rapid rise





The loonie`s sudden spike is the latest threat to the halting Canadian recovery.




Forget Dutch disease. This looks more like Bernanke disease, a direct consequence of U.S. Federal Reserve chief Ben Bernanke`s pledge Thursday to keep U.S. interest rates ultra-low and easy money flowing until at least 2015.






Read the full article here.

 

[Ally]

Flaherty says loonie's volatility a worry, sees logic of rise





Volatility in the Canadian dollar is worrying, Finance Minister Jim Flaherty said on Friday after the currency shot up to a 13-month high, adding however that the currency`s strength partly reflects faith in the country`s economic fundamentals.




Canada`s dollar hit its highest level in over a year versus the U.S. dollar on Friday, a day after the Federal Reserve finally pulled the trigger on a bold new plan to stimulate the U.S. economy.






Read the full article here.

 

[Ally]

Canada's roller-coaster gasoline prices heading down, but still volatile




OTTAWA - Pump-panicked motorists in Canada might be breathing a little easier after this week's sudden spike in gasoline prices ` but experts fear price shocks will continue in coming days as commodity traders speculate about economic stimulus south of the border.




The cost of a litre of gas was expected to drop significantly after Wednesday's jarring increase, according to tomorrowsgaspricestoday.com, a consumer-oriented website that monitors changes in fuel prices.




Pump prices were expected to fall by anywhere from five to seven cents per litre early Friday, depending on the region, said Dan McTeague, a former Liberal MP and longtime gas-price watchdog who operates the website.





Read the full article here.

 

[Ally]

Canadian housing activity shifts to slower growth







CALGARY ` Canadian housing activity remains relatively buoyant, but has shifted to a slower growth trajectory, says the latest Global Real Estate Trends report by Scotiabank`s senior economist Adrienne Warren.




`Adjusted for inflation, national average prices fell two per cent (year-over-year in the second quarter), matching the first quarter decline,` said Warren in her report released Friday. `Housing demand has been tempered by a slower pace of job growth and the cumulative effects of tighter mortgage insurance rules over the past several years, while more balanced supply conditions in most parts of the country have restrained price increases.






Read the full article here.

 

[Ally]

Housing market weakens, more softening seen




While the Canadian residential real estate market remains relatively buoyant, it has shifted to a slower growth trajectory, says Adrienne Warren, senior economist at Bank of Nova Scotia.




The bank released its second-quarter survey of global housing trends Friday, and found that the number of countries reporting that house prices declined from last year outnumbered those reporting increases by more than two to one. Globally, weak consumer confidence, high unemployment and tight credit conditions continue to weigh heavily on housing demand and pricing, the report said.




Activity in Canada's housing market remains higher than in many, but growth is slowing. Adjusted for inflation, national average prices in the second quarter were two percent lower than the same period a year ago, matching the first quarter's decline, the report noted.





Read the full article here.

 

[Ally]

CIBC: Expect North American oil production to accelerate





Technological breakthroughs are freeing up oceans of black gold from plays in the United States and Canada. Couple that with rising production from Alberta`s oil sands and North American markets are flush in domestic oil, which is leading many giddy Americans to think they are on the cusp of achieving a treasured goal: energy independence.

CIBC World Markets Inc. agrees with that view and says that North American oil production can grow by 800,000 to 900,000 barrels per day (bpd) annually through 2016. And the production growth will come from the onshore, offshore and the oil sands.





Read the full article here.

 

[Ally]

Canadian home sales down in August
OTTAWA, Sept. 17, 2012 /CNW/ ` According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity dropped sharply from July to August 2012.





Highlights:

• Hom

• e sales down 5.8% from July to August.

• Actual (not seasonally adjusted) activity stood 8.9% below levels in August 2011.

• Number of newly listed homes down 1.7% from July to August.

• 
  Housing market remains firmly in balanced territory at the national level.

• 
  National average home price up 0.3% on a year-over-year basis in August.

• 
  The Composite Aggregate Benchmark home price was up 4% in August, its smallest gain in over a year.

The number of home sales processed through the MLSÂ Systems of real estate Boards and Associations in Canada fell 5.8 per cent between July and August 2012, marking the largest month-over-month decline since June 2010.





Read the full article here.

 

[Ally]

CREA updates resale housing forecast






OTTAWA, Sept. 17, 2012 /CNW/ ` The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS&#194 Systems of Canadian real estate Boards and Associations in 2012 and 2013.




Since CREA`s last resale housing forecast, mortgage regulations were tightened further, activity in Ontario softened, and the slowdown of sales activity in British Columbia deepened. As a result of these developments, CREA has lowered its forecast for Canadian home sales this year and next. The national average price forecast has also been reduced, reflecting an expected decrease in Ontario`s and British Columbia`s provincial sales as a proportion of national activity.





Read the full article here.

 

[Ally]

New mortgage rules cited for drop in home sales




Home sales declined 5.8 per cent across Canada from July to August, the largest month-over-month decline since June 2010, according to the Canadian Real Estate Association.




Actual sales activity was down almost 9 per cent in August over a year earlier, `providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended,` said CREA chief economist Gregory Klump Monday.





Read the full article here.