September 2012 Canadian Economic Fundamentals

[Ally]

Canada's sky-high debt increases recession risk





TORONTO ` There is more than a 20 per cent risk of Canada falling into a second recession ` and though much of that risk comes from outside our borders, Canadians` sky high debt loads could push the economy over the edge, warns a new report from Moody`s Analytics.




With debt-to-income ratios at an all-time high around 150 per cent, Canadians have stretched themselves to the limit since the recession and have left little head room to buffer against another economic downturn, Moody`s suggests in the report released Thursday.




`With the economy now relying heavily on the continued expansion of household spending, any retrenchment in the consumer sector will likely place the economy on the brink of a second recession,` the report`s authors say.






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[Ally]

Flaherty urges businesses to open wallets, forge partnerships with emerging economies



OTTAWA ` Canada`s finance minister is taking his fight to loosen corporate coffers and expand export markets to the belly of the beast.





Jim Flaherty will tell business leaders Tuesday they need to step up efforts to ensure `sustained, long-run` growth by ties to emerging economies at a time when traditional markets ` such as Europe and the United States ` are struggling.





`Our government continues to create the right conditions to enable Canadians and Canadian businesses to feel confident to invest, to create jobs, to participate in the global marketplace and to grow our economy,` according to the text of a speech to be delivered to an Ottawa conference organized by the Canadian Council of Chief Executives.





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[Ally]

Chinese partnerships with Canadian companies 'have not disappointed'





Canadians wary of China`s growing presence in Alberta`s oil patch can rest easier.




As Ottawa mulls approval of the communist country`s largest foreign investment to date ` the $15.1-billion bid from state-controlled CNOOC Ltd. to purchase Calgary-based Nexen Inc., which was approved by shareholders last week ` Canada-based experts on China argue the country infamous for replicating the innovations of others has a newfound respect for intellectual property rights. A Canadian energy executive with years of experience dealing with a Chinese state-owned enterprise, meanwhile, continues to sing the praises of the rising Asian superpower.






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[Ally]

Expect housing starts to moderate through 2013, CMHC says





EMC Business - Housing starts in Canada were trending at 222,900 units in August, according to Canada Mortgage and Housing Corporation (CMHC).







The trend is a moving average of the monthly seasonally adjusted annual rates (SAAR)1 of housing starts. The standalone monthly SAAR was 224,900 units in August, up from 208,000 in July.







"The increase in housing starts in August was the result of a few, large, multi-unit projects in the Greater Toronto area. 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.







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[Ally]

Is Canada's housing crash beginning?




Last spring, Keith Roy noticed his phone wasn`t ringing so often. The Vancouver real estate agent typically booked at least 10 showings a week for the properties he sells in the city. But requests gradually slowed to a trickle. Something was up. His suspicions were confirmed as he watched the market data roll in. On the desirable west side of Vancouver, which Roy considers a bellwether for the region, home sales fell and listings rose. This continued for four straight months. In July, Roy took to his blog to issue an unusual proclamation for a real estate agent: anyone thinking about selling should cash out now. By then, Roy had even sold his own home, convinced it was about to decrease in value. `This is Econ. 101,` he says in an interview. `Supply is up, sales are down. Prices will adjust.`




Roy`s post, which he edited after offending a few realtors, should be viewed with some skepticism. It does, after all, encourage potential sellers to call a real estate agent`and hey, why not call Roy? But he may be right that the Vancouver market has peaked. In August, the number of sales in Greater Vancouver fell 21.4% from the previous month, after dropping 11.2% in July and 17.2% in June. The Real Estate Board of Greater Vancouver chalked it up to a `summer lull,` but the numbers suggest a trend that can`t be dismissed as simply seasonal. Last month, unit sales were the lowest for any August in the past dozen years, and nearly 40% below the 10-year August norm. Even more worrying, the average home price in Vancouver is now down more than 12% from a year ago`a worrying sign for the country`s priciest city.





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[Ally]

TD slashes provincial GDP forecasts




A weakening global economy and stingy consumers are taking their toll on the Canadian economy, leading economists at TD to lower their provincial GDP targets for 2012.




The economists now predict that all provinces will see growth of less than three percent, with eight provinces expected to post GDP growth below 2 percent.




Only Manitoba and Prince Edward Island were spared a forecast cut.





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[Ally]

After 25 years, free trade agreement with U.S. has helped Canada grow




Ed Broadbent, who was leader of the NDP during the free-trade debate, thought it was a rotten deal then, `and I do to this day.`




Free trade brought deregulation, privatization of state-owned companies, weakened protection for labour and the great sloshing of capital from one national market to another ` all of it part of the race to the bottom, he believes.




`This approach became ideologically dominant in the Anglo-American world,` Mr. Broadbent maintains. `The trade deal was part of the kickoff of this kind of thinking, and I think it was a mistake.`





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[Ally]

Brazil's boom is big business for Canada




Brazil is a `perfect storm` of opportunity for Canadian companies. The country is in dire need of infrastructure upgrades and is hosting both the 2014 FIFA World Cup and the 2016 Summer Olympics. As well, an estimated 40 million people joined the ranks of the middle class between 2003 and 2011 and are looking to buy their first car or home.




There was a point during that economic boom when Brazil couldn`t physically get their products out to sea quick enough to satisfy demand from abroad because they didn`t have the infrastructure, said Stuart Bergman, Export Development Canada`s assistant chief economist. The country didn`t have the capacity in terms of roads, railways or port facilities.





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