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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
This page has been updated with additional analysis since first publication. Rebound in hiring should ease recession concerns The rebound in employment and larger increase in hours worked in August suggest the economy bounced back following some of the …
8th September 2023
Bank maintains hawkish bias, but next move likely to be a cut The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and …
6th September 2023
BC port workers’ strike weighs heavily on imports As the BC port workers’ strike weighed far more heavily on imports than exports, the trade data suggest that there are modest upside risks to the preliminary estimate that GDP was unchanged in July. That …
Retail sales still struggling as higher interest rates feed through Retail sales volumes broadly stagnated over June and July and would have performed much worse were it not for the improving supply of motor vehicles. While the ongoing wildfires across …
23rd August 2023
Encouraging signs under the surface This page has been updated with additional analysis since first publication. While the continued above-target gains in the CPI-trim and CPI-median core measures may cause some concern for the Bank of Canada, there were …
15th August 2023
Net trade weighed on second-quarter GDP growth Weaker global demand and the fading boost from easing supply shortages took a toll on exports in June, confirming that net trade weighed on second-quarter GDP growth. While the surveys point to further …
8th August 2023
This page has been updated with additional analysis since first publication. Labour market continues to loosen The small fall in employment and rise in the unemployment rate in July show that the labour market continues to loosen, suggesting that the …
4th August 2023
This page has been updated with additional analysis since first publication. Sharp slowdown in second quarter growth Despite the rebound in GDP in May, growth in the second quarter looks set to be weaker than expected. With some of the factors supporting …
28th July 2023
Demand not looking so excessive after all Retail sales volumes were little changed in May and the preliminary estimate implies that they dropped back in June. That calls into question the Bank of Canada’s recent claim about “persistent excess demand” and …
21st July 2023
Not as good as it looks This page has been updated with additional analysis since first publication. On the face of it, the sharper-than-expected fall in headline inflation to 2.8% in June and the only modest 0.1% m/m seasonally adjusted rise in the CPI …
18th July 2023
Easing supply shortages still supporting activity The 2.2% m/m jump in manufacturing sales volumes in May was better than we expected given the weakness of the survey evidence and shows that easing supply shortages are still supporting the sector. While …
14th July 2023
Hike to 5.0% likely to be the last The Bank of Canada’s 25bp hike today, taking the policy rate to 5.0%, is likely to be the last in this cycle. With the labour market loosening, core inflation declining and the survey indicators implying that inflation …
12th July 2023
This page has been updated with additional analysis since first publication. Easing wage growth despite jump in employment The surge in employment in June was not quite as strong as it looks, with hours worked essentially unchanged last month, but still …
7th July 2023
Slump in exports a downside risk to GDP growth The slump in export volumes presents downside risks to the preliminary estimate that GDP rose strongly in May, and suggests that the earlier boost from easing supply shortages is now largely behind us. With …
6th July 2023
This page has been updated with additional analysis since first publication. Weak April offset by strong May The stagnation in GDP in April was weaker than expected but, with the preliminary estimate pointing to a sharp rise in GDP in May, quarterly …
30th June 2023
Some improvement, but core inflation pressures still a bit too strong for comfort This page has been updated with additional analysis since first publication . While the steep declines in both headline and core inflation in May were partly due to …
27th June 2023
This page has been updated with additional analysis since first publication. Broad-based resilience in spending The stronger-than-expected rise in retail sales in April suggests that household spending was resilient going into the second quarter. Both the …
21st June 2023
Labour market starting to loosen The increase in the unemployment rate to 5.2% in May will probably not prevent the Bank of Canada from raising interest rates again at its July meeting, as the weakness was partly a statistical effect related to reduced …
9th June 2023
Bank resumes rate hikes and probably another to come in July The Bank of Canada’s 25bp interest rate hike today is unlikely to be the last, with the rapid turnaround in the housing market and concerning underlying inflation dynamics raising the case for …
7th June 2023
Exports still benefitting from easing supply shortages Easing supply shortages continued to support export growth in April but, with export orders still very weak, that resilience is likely to fade soon. Canada’s goods trade surplus widened from a …
Upside surprise further boosts the case for another rate hike The larger-than-expected 3.1% annualised rise in first-quarter GDP and the strong preliminary estimate in April boost the case for another interest rate hike from the Bank of Canada, which …
31st May 2023
A step backward The renewed acceleration in the monthly changes in CPI-trim and CPI-median in April, combined with the recent rapid turnaround in the housing market, leaves us doubting our view that the Bank of Canada will be ready to cut interest rates …
16th May 2023
Labour market resilient, but small cracks emerging The decline in full-time positions in April means that the large rise in total employment was weaker than it looks. Hours worked only crept up during the LFS reference week and, given the public sector …
5th May 2023
Downside risks to Q1 GDP growth The small rise in export volumes and slump in import volumes in March confirms that net trade boosted GDP growth last quarter. However, as lower imports are likely to be reflected in slower inventory building – which the …
4th May 2023
Decent first quarter likely to be followed by contraction The small rise in GDP in February points to a healthy first-quarter growth rate but, with the preliminary estimate pointing to a contraction in March and activity set to suffer in April due to the …
28th April 2023
Core inflation pressures continue to ease While base effects helped to pull headline inflation sharply lower in March, there were also some encouraging signs in core inflation, as the average three-month annualised gain in CPI-trim and CPI-median fell to …
18th April 2023
The Bank of Canada delivered mixed messages today, noting that it is more confident that inflation will decline in the next few months but less confident that inflation will return to 2% as quickly as it previously anticipated. Nonetheless, with the …
12th April 2023
Labour market conditions easing despite low unemployment rate The unemployment rate remained very low at 5.0% in March but, with wage growth slowing and the survey indicators pointing to a sharper decline ahead, the Bank of Canada is unlikely to be too …
6th April 2023
Net trade on track to boost quarterly GDP growth Exports are still on track to rise this quarter, despite declining in February specifically, but the renewed deterioration in the survey-based export indicators points to further weakness in the second …
5th April 2023
A strong start to the year GDP rose strongly in January and the preliminary estimate points to another healthy gain in February. That strength suggests the Bank of Canada will use its April meeting to reiterate that, despite the recent issues in the US …
31st March 2023
Bank likely to be feeling more confident about inflation outlook The latest Summary of Deliberations reveals that the Bank of Canada is not overly concerned by signs of sticky core inflation elsewhere, but the Bank still needs to see more evidence of …
22nd March 2023
Another reason for the Bank to maintain its pause In case the turmoil in the global banking sector left any doubt, the sharper-than-expected decline in headline CPI inflation in February suggests there is little chance that the Bank of Canada will be …
21st March 2023
Hours worked rise strongly despite employment slowdown Employment growth slowed sharply in February but the rise in hours worked suggests that the economy performed well last month. With the low unemployment rate putting upward pressure on wage growth, …
10th March 2023
Policy unchanged, but Bank leaves the door open to future hikes There were no surprises from the Bank of Canada today as it kept the policy rate unchanged at 4.5%, as it previously hinted it would, and reiterated that it is still prepared to resume …
8th March 2023
Surge in exports supported GDP growth at start of 2023 The broad-based jump in exports at the start of the year suggests that net trade should boost GDP growth this quarter. Nonetheless, with the surveys of export orders still very weak, that boost seems …
Economy stagnates, supporting the Bank’s move to the sidelines The stagnation in fourth-quarter GDP, together with the downward revision to third-quarter GDP growth, leaves the economy in worse shape than the Bank of Canada expected. That is another …
28th February 2023
Core prices rise at slowest pace since early 2021 Core prices only inched up in January, which contributed to a larger-than-expected fall in headline inflation. That reinforces our view that the Bank of Canada is unlikely to follow the Federal Reserve in …
21st February 2023
Labour market strength eases recession fears The surge in employment and strong rise in hours worked in January suggest that GDP growth will be stronger than we anticipated this quarter. However, the decline in wage growth means that unexpected strength …
10th February 2023
Bank balancing risks of sticky services inflation and housing market The Summary of Deliberations reveals that the Bank of Canada is still concerned about the risk that inflation will not decline all the way back to the 2% target, but that it ultimately …
8th February 2023
Rebound in autos exports offsets decline in commodity export prices A surge in motor vehicle exports drove overall export volumes higher at the end of 2022, even as lower commodity prices weighed on export values. As the export order surveys are still …
7th February 2023
Monthly data point to healthy fourth-quarter GDP growth The monthly data suggest that GDP expanded by 1.6% annualised in the fourth quarter. That would mark a sharp slowdown from the gain of 2.9% in the third quarter, but would still be much better than …
31st January 2023
Bank hints that smaller 25 bp hike likely to be the last The Bank of Canada accompanied its smaller 25 bp hike with new guidance that it intends to hold the policy rate at the current 4.5% while it assesses the impact of the cumulative interest rate …
25th January 2023
Some encouraging signs despite elevated core inflation Unfavourable base effects mean that the small falls in CPI-trim and CPI-median inflation in December are better than they look. And with prices falling on the month for the first time since July 2020, …
17th January 2023
Surge in employment locks in another interest rate hike The surge in employment in December and renewed fall in the unemployment rate suggests that the Bank of Canada will raise interest rates again later this month, although the fall in wage growth means …
6th January 2023
Goods trade balance moves back into deficit Lower commodity prices have now wiped out the goods trade surplus, while the falls in export and import volumes present downside risks to the preliminary estimate that GDP edged up in November. The merchandise …
5th January 2023
Economy beginning to lose momentum The modest gain in GDP in October and upward revision to activity in September suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that GDP was …
23rd December 2022
Jump in rents drives upside surprise in inflation Overall inflation pressures were stronger than anticipated in November and support our view that the Bank of Canada will err on the side of hawkish caution with a final interest rate hike in the new year. …
21st December 2022
The end of the tightening cycle? The Bank of Canada delivered a somewhat dovish 50 bp policy rate hike today by softening its explicit forward guidance that interest rates will need to rise further. We would not rule out a final 25 bp interest rate hike …
7th December 2022