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Ivey PMI suggests widespread Omicron disruption

The various reports this week of intense labour shortages and the slump in the Ivey PMI in December suggest that the Omicron variant is causing widespread economic disruption.
Stephen Brown Senior Canada Economist
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Canada Economics Weekly

Core inflation still rising, as housing slumps

The Bank of Canada will have eyed this week’s data releases and market moves with some trepidation. The further acceleration in core CPI inflation in April means the Bank is all but guaranteed to push ahead with another 50bp interest rate hike at its upcoming policy meeting, particularly with gasoline prices spiking even higher this month. But the reported slump in home sales (and prices) and the sell-off in global equity markets, are warnings that overly aggressive monetary tightening by the Bank of Canada (and other central banks) could backfire, plunging the global economy into recession.

20 May 2022

Canada Data Response

Consumer Prices (Apr.)

CPI inflation edged up to a new cyclical high of 6.8% in April, from 6.7%, and, together with the more marked increases in core inflation, that almost guarantees the Bank of Canada will hike its policy rate by another 50bp next month.

18 May 2022

Canada Economics Update

Fall in house prices to contribute to lower CPI inflation

The 10% fall in house prices that we expect over the next 12 months will also help to pull down CPI inflation, via its impact on shelter costs. Admittedly, shelter inflation is unlikely to decline meaningfully until 2023, because of soaring mortgage costs, but this is nevertheless one reason to expect headline inflation to drop back sharply next year.

16 May 2022

More from Stephen Brown

Canada Economics Update

Will the Bank of Canada hike this month?

We expect the Bank of Canada to wait for the coronavirus restrictions to be lifted before starting to raise interest rates, suggesting it is more likely to begin hiking in March or April than at its meeting this month. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.

12 January 2022

Canada Economics Weekly

Omicron a new type of challenge for labour market

The Omicron wave will be characterised more by heightened absenteeism from work than previous waves. This raises the risk that the hit to activity will be larger than current restrictions alone might imply.

7 January 2022

Canada Data Response

Labour Force Survey (Dec.)

The strength of employment in December is mainly because the LFS reference week preceded the onset of the Omicron wave. Nevertheless, the fall in hours worked is probably a taste of what is to come, as more workers were forced to isolate. We expect both employment and hours worked to fall this month.

7 January 2022
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