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Canada Economics Update

Canada Economics Update

Housing Watch (Aug.)

Home sales fell further below the pre-pandemic norm in July and pre-construction sales seem to have fallen through the floor, but there is no evidence yet that this is weighing on construction.

16 August 2022

Canada Economics Update

We doubt the Canadian dollar’s resilience will last much longer

The Canadian dollar has held up relatively well against the US dollar so far in 2022, but we think the factors underpinning the loonie’s resilience will fade and push it lower against the greenback over the next couple of years. In view of the wider interest, we are also sending this FX Markets Update to clients of our Canada Service. 

11 August 2022

Canada Economics Update

Will Canadians retire themselves into a recession?

The sharp increase in retirements this year presents downside risks to our forecasts for employment and, with GDP growth already faltering, further raises the probability that economic activity will contract.

9 August 2022
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Canada Economics Update

Inventory building will not transform the outlook

There is scope for inventory building to boost GDP growth in the near term but, as the US experience has recently demonstrated, this could raise the risk of GDP falling in the following quarters.

4 August 2022

Canada Economics Update

Loonie unlikely to have big bearing on policy outlook

Governor Tiff Macklem has voiced concern about the inflationary impact of the loonie, but we doubt that a modest fall would prevent the Bank of Canada from pausing its tightening before the Federal Reserve.

Canada Economics Update

Housing Watch (Jul.)

The further decline in home sales in June and the record monthly fall in house prices did little to affect construction activity, with housing starts once again outperforming expectations last month. As there are signs that pre-construction sales are tumbling, however, new construction is likely to weaken over the second half of the year. This is first edition of our new Canada Housing Watch, designed to help clients stay on top of developments in the housing market and residential construction sector, and assess what it all means for the broader economic outlook and monetary policy.

Canada Economics Update

Bank pulls out all the stops with 100 bp hike

The Bank of Canada’s 100 bp hike today and its accompanying communications have led us to upgrade our forecast for the policy rate to 3.5% by the October policy meeting, from 3.0%. As the commodity price and global supply chain assumptions underpinning the Bank’s new forecasts are already looking out of date, however, we would be surprised if it went any further than that.

Canada Economics Update

House prices to slump by 20%

The Bank of Canada’s hawkishness, a widening of mortgage spreads, and news that at least one lender is restricting new loan applications suggest the outlook for house prices is worse than we previously feared.

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