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Retail sales growth disappointing The surprise fall in retail sales in February and the apparent stagnation in March means they had a disappointing first quarter. That reinforces our view that the Bank of Canada is likely to cut interest rates at the next …
24th April 2024
On track for a June interest rate cut The March CPI data showed the third consecutive month of muted gains in the Bank of Canada’s preferred core inflation measures, suggesting that there is a growing chance of the Bank cutting interest rates at its next …
16th April 2024
Downside risks to flash GDP estimate for February The unchanged level of wholesale sales and signs that manufacturing GDP contracted suggest that there are downside risks to the flash estimate that GDP rose by 0.4% m/m in February. The 0.7% m/m rise in …
15th April 2024
Bank leaves the door open for a June interest rate cut The acknowledgment by the Bank of Canada today that “the data since January have increased our confidence that inflation will continue to come down” leaves the door open to an interest rate cut at the …
10th April 2024
Cracks growing in the labour market The jump in the unemployment rate in March, together with evidence of easing wage pressures, raises the chance of the Bank of Canada surprising markets with a rate cut next week, although our base case remains that the …
5th April 2024
Exports and imports both surged A surge in gold exports and the end of earlier weather-related disruptions flattered the figures in February, but the trade data nonetheless point to a strengthening economy and suggest that net trade made a large …
4th April 2024
Strong growth reduces urgency for interest rate cuts The broad-based strength of GDP growth in January and February means the economy almost certainly outperformed the Bank of Canada’s expectations in the first quarter and reduces the immediate risk of …
28th March 2024
Heading for another decent quarter Despite only modest rises in retail sales volumes in January and February, the earlier strength in December means that growth should remain strong this quarter. The 0.3% m/m fall in retail sales was a little smaller than …
22nd March 2024
Another good month, but more needed to convince Bank to cut rates The surprise fall in headline inflation to 2.8%, from 2.9%, is further reason to expect the Bank of Canada to cut interest rates soon, although we still think it will wait until June rather …
19th March 2024
Temporary rebound in sales volumes Lower prices mean that the muted 0.2% m/m rise in manufacturing sales in January was better than it looked, with sales volumes rising by a much stronger 1.1%. That strength was entirely due to the resumption of …
14th March 2024
Wage growth heading in the right direction The Bank of Canada will be relieved to see renewed labour market slack putting downward pressure on wage growth. While the Bank will need to see wage growth soften further before it pivots to rate cuts, we …
8th March 2024
Improvement in trade balance may not be a good thing Although the economy appears to have received a large boost from net trade at the start of 2024, the plunge in imports does not bode well for domestic demand and raises the risk that an inventory …
7th March 2024
Bank gives little away The Bank of Canada gave little away about the potential timing of interest rate cuts today, although its communications suggest that the Bank is gaining greater confidence that inflation is moving in the right direction. We …
6th March 2024
Economy looking a bit better than the Bank expected The 1.0% annualised rise in fourth-quarter GDP was stronger than the stagnation that the Bank of Canada expected and, together with the downward revision to the third-quarter contraction, is reason to …
29th February 2024
Set for a weaker first quarter The strong rise in December means that retail sales volumes rose by close to 5% annualised last quarter, supporting the preliminary estimate that GDP growth turned positive again. With sales volumes broadly unchanged in …
22nd February 2024
Better news on core inflation While the larger-than-expected drop in headline inflation in January was partly driven by weaker than expected energy inflation, the Bank of Canada will be pleased to see the more marked easing in its measures of core …
20th February 2024
Sales dragged down by vehicle plant shutdowns The 0.7% m/m decline in manufacturing sales values in December was actually a positive outcome, since the more downbeat export data had suggested that the fall would be far bigger than the 0.6% m/m provisional …
15th February 2024
Wage pressures still too strong Although the sharp rise in employment in January may paint a healthier picture of the labour market than what is under the surface, the Bank of Canada will still be concerned about the renewed decline in the unemployment …
9th February 2024
Trade balance back in deficit Net trade appears to have contributed to the likely rebound in GDP last quarter but, with exports falling in December and the survey indicators of external demand still weak, that boost will probably go into reverse this …
7th February 2024
GDP growth set to remain well below potential The monthly GDP data imply that the economy returned to growth in the fourth quarter and the strong handover from December reduces the risk of the economy contracting this quarter, despite the weakness of the …
31st January 2024
Bank drops its hiking bias The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts. We continue to think that the Bank’s forecasts for the economy are too optimistic, and that inflation will slow faster …
24th January 2024
Retail sales volumes rose strongly last quarter Retail sales were weaker than expected in November, but earlier gains and the strong preliminary estimate for December still suggest that sales volumes grew substantially over the fourth quarter. The latest …
19th January 2024
Core inflation pressures still too strong Although the rise in headline inflation in December was mainly due to gasoline price base effects, the more worrying development is that the CPI-trim and CPI-median core measures both rose by a larger 0.4% m/m. …
16th January 2024
Temporary rebound in sales volumes The rebound in manufacturing sales in November was broad-based but, with new orders dropping back and the manufacturing surveys weakening in December, that strength is unlikely to be sustained. The 1.2% m/m rise in …
15th January 2024
Tougher times ahead for exporters Export volumes were little changed in November but the surveys suggest that tougher times lie ahead, with export orders seemingly falling fast in December. The trade surplus halved to $1.6bn in November as exports …
9th January 2024
This page has been updated with additional analysis since first publication. Jump in wage growth a concern for the Bank The unchanged level of employment in December is consistent with the message from the business surveys that labour demand has weakened …
5th January 2024
This page has been updated with additional analysis since first publication. Rate cuts approaching The weaker-than-expected monthly GDP figures raise the risk that the economy contracted again this quarter and are another reason to think that the Bank of …
22nd December 2023
Consumption growth better than feared The strong rise in retail sales volumes in October suggests that consumption growth will accelerate this quarter. That presents an upside risk to our forecast that GDP will edge down again, although we remain …
21st December 2023
This page has been updated with additional analysis since first publication. A temporary step backward The renewed acceleration in core inflation pressures in November was largely due to a jump in travel tour prices, which is likely to be quickly …
19th December 2023
A third consecutive decline in sales volumes The slump in manufacturing sales volumes in October suggests that there are downside risks to the flash estimate that GDP rose by 0.2% m/m at the start of the fourth quarter. The 2.8% m/m decline in …
14th December 2023
Bank maintains tightening bias, but next move likely to be a cut The policy statement from the Bank of Canada was a bit more hawkish than we expected, with the Bank reiterating that it is still concerned about the outlook for inflation and “remains …
6th December 2023
Slump in imports only partly due to UAW strike The slump in import volumes in October was partly due to the knock-on effects of the UAW strike in the US, but it also suggests that firms are now drawing down their inventories as demand weakens. That raises …
Labour market conditions loosening The labour market is weaker than the 24,900 rise in employment might suggest, with the unemployment rate rising again and hours worked slumping by 0.7% m/m last month. The fall in hours worked means that the preliminary …
1st December 2023
This page has been updated with additional analysis since first publication. A bumpy landing so far, but recession risks remain On the face of it, the upward revision to second-quarter GDP growth combined with the preliminary estimate of a strong monthly …
30th November 2023
Retail sales perk up after weak Q3 The renewed rise in retail sales volumes in September was not enough to prevent a large contraction in sales volumes over the third quarter. The balance of risks is probably now skewed to the downside surrounding our …
24th November 2023
This page has been updated with additional analysis since first publication. Core inflation pressures muted There was good news all round in the October CPI report, with the overall CPI falling in month-on-month seasonally adjusted terms for the first …
21st November 2023
Manufacturing and wholesale trade GDP broadly unchanged in September The slightly better-than-expected gains in manufacturing and wholesale sales in September do not change the big picture that GDP in each sector was probably largely unchanged, supporting …
15th November 2023
Surplus boosted by temporary surge in oil prices The September trade data look encouraging at first glance, with the merchandise trade surplus widening to $2.0bn, from $1.0bn, but the 2.7% m/m increase in export values was mostly due to higher oil prices. …
7th November 2023
Looser labour market driving softer wage pressures This page has been updated with additional analysis since first publication. The more modest rise in employment and essentially unchanged hours worked in October suggest that labour demand is easing …
3rd November 2023
This page has been updated with additional analysis since first publication. The surprise stagnation in August and preliminary estimate that GDP was unchanged again in September imply that third-quarter GDP probably edged down by 0.1% annualised, marking …
31st October 2023
Bank maintains tightening bias but next move likely to be a cut Although the Bank of Canada maintained its tightening bias today, the rest of the policy statement suggests that the Bank is growing more confident that its job is done. We continue to expect …
25th October 2023
Weakness in sales volumes adds to recession fears The weakness of retail sales volumes in August and September suggest that consumption is stagnating at best, and that “excess demand” has faded faster than the Bank of Canada initially expected. That is …
20th October 2023
This page has been updated with additional analysis since first publication. Fall in inflation to keep Bank on the sidelines The larger-than-expected falls in headline and core inflation in September should be enough to finally persuade markets that there …
17th October 2023
Manufacturing losing momentum The surprise fall in manufacturing sales volumes in August reduces the chance of GDP rising by any more than the initial preliminary estimate of a 0.1% m/m gain, and means a second consecutive contraction is still on the …
16th October 2023
Wage pressures easing This page has been updated with additional analysis since first publication. The strong headline employment gain in September was entirely due to a rebound in educational services employment, with employment elsewhere edging down. …
6th October 2023
Surge in exports an upside risk to preliminary GDP estimate Exports rose by far more than imports in August, even as the latter benefited more from the fading disruption from the earlier BC port strikes. That suggests there are upside risks to the …
5th October 2023
This page has been updated with additional analysis since first publication. On the cusp of recession The economy failed to make much headway in July and August and the latest business surveys suggest that GDP probably contracted in September, which would …
29th September 2023
Retail sales volumes weakening despite strong population growth Retail sales volumes edged down in July and the preliminary estimate implies they fell even more sharply in August. Given that population growth has accelerated in recent months, retail sales …
22nd September 2023
This page has been updated with additional analysis since first publication. Jump in core inflation puts renewed pressure on the Bank The larger rise in core prices in August is bad news for the Bank of Canada although, with high interest rates now …
19th September 2023
Easing supply shortages continue to support activity The continued strength of manufacturing sales in July suggests that GDP may be stronger than initially expected, as easing supply shortages continue to support the manufacturing sector. While there may …
15th September 2023
