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The economy made a strong start to the year, but that was largely due to temporary factors that will soon fade. With spare capacity emerging, particularly in the labour market, downward progress on inflation is becoming clearer. Changes to immigration …
2nd April 2024
Canada Chart Pack (Feb. 2024) …
29th February 2024
High interest rates are still feeding through and we expect both GDP and employment to be flat over the next two quarters. As excess supply builds, a fall in inflation to the 2% target will leave scope for the Bank of Canada to cut interest rates sharply, …
31st January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
Canada Chart Pack (Dec. 2023) …
28th December 2023
GDP contracted in the third quarter and there are downside risks to the outlook. As house prices are falling again, household debt is elevated and high interest rates are still feeding through, the key risk is that the mild recession we forecast could …
30th November 2023
Strong immigration is unlikely to be enough to prevent a mild recession, with GDP contracting recently and the business surveys consistent with further declines. As house prices are falling again, household debt is elevated and high interest rates are …
25th October 2023
Strong immigration and the resilience of the housing market raise the chance that the economy will avoid recession but, with the Bank of Canada keeping further rate hikes on the table, we still judge that GDP will contract later this year. Even if …
27th September 2023
Strong immigration and the turnaround in the housing market raise the chance that the economy will avoid recession but, with the Bank of Canada keeping further rate hikes on the table, we still judge that GDP will contract later this year. Even if …
25th August 2023
Strong immigration and the turnaround in the housing market raise the chance that the economy will avoid recession but, with the Bank of Canada back in hiking mode, we still judge that GDP will contract later this year. Even if recession is avoided, a …
24th July 2023
The turnaround in the housing market, with sales and prices rebounding in April, has raised hopes that construction will hold up despite elevated borrowing costs. Media reports suggest that buyer enquiries for pre-construction projects have rebounded, …
24th May 2023
House prices edged up in March and the sharp rise in the sales-to-new listing ratio suggests there are further gains to come. (See Chart 1.) As the improvement has been driven mainly by a collapse in new listings, while buying power is still constrained …
26th April 2023
Canada’s banks do not face the same immediate risks as those elsewhere. The bank sector is far more concentrated than in the US, limiting the chance that problems at small lenders will trigger a broader crisis of confidence. But the latest area of …
30th March 2023
The January CPI data provided mixed signals about developments in underlying inflation. The CPI excluding food and energy and the CPI excluding the eight most volatile components each rose by just 0.1% m/m, which were the lowest gains since early 2021. …
22nd February 2023
The sharp fall in hiring intentions in the Bank of Canada’s Business Outlook Survey suggests that the 104,000 surge in employment in December is not a sign of things to come. The survey points to a slowdown in average monthly employment growth to just …
23rd January 2023
The renewed rise in the three-month annualised rates of CPI-trim and CPI-median inflation in November call into question the idea that the Bank of Canada has already finished its tightening cycle. Those rates are not published by either Stats Can or the …
21st December 2022
The big surprise so far this year has been the resilience of housing starts which, despite falling from their 10-month high of 300,000 annualised in September, remained at a relatively strong 267,000 in October. While developers have largely shrugged …
24th November 2022
The rebound in global oil prices over the past month has not been matched by those in Canada, with Western Canadian Select (WCS) instead trading closer to $60 per barrel, as the discount between WCS and the US WTI benchmark has widened to a …
25th October 2022
The fall in headline inflation to 7.0% in August, from 7.6%, was largely due to energy price effects, but there were also some encouraging signs that underlying inflationary pressures are easing. The number of individual CPI components that rose by more …
28th September 2022
The surge in interest rates so far this year has contributed to a sharp decline in home sales but, so far at least, that has not weighed on construction activity. Housing starts averaged 279,000 annualised between May and July, 10% higher than the prior …
24th August 2022
The extent of the downturn in the housing market and broader residential investment will determine whether the economy enters a recession in the next 12 months (see our Canada Economics Outlook ), and in that respect there has been some good news in the …
26th July 2022
The tight labour market is putting upward pressure on wages, with the Labour Force Survey showing a strong 1.0% m/m rise in average hourly earnings in May. While the annual rate of wage growth, at 3.9% y/y, remained lower than before the pandemic, base …
29th June 2022
With core CPI inflation still rising, the Bank of Canada has no choice but to continue hiking its policy rate “forcefully’ back toward neutral. All three of the core measures tracked by the Bank are now above the 3% ceiling of the target range. (See Chart …
26th May 2022
The further fall in the unemployment rate in March, to a multi-decade low of 5.3%, raises the risk that a sharp acceleration in wage growth will exacerbate inflationary pressures, at a time when consumer price inflation is already approaching 7%. Business …
27th April 2022
The surge in interest rate expectations is a key risk to housing. We recently set out how, due to the much larger share of variable rate mortgages than before the pandemic, the Bank of Canada would need to raise its policy rate to 2.5% to achieve the same …
23rd March 2022
The evidence of broadening inflationary pressures and the further rise in oil prices suggest that the balance of risks to our inflation forecast lies to the upside. The January consumer price data showed a surprisingly large rise in headline inflation, to …
23rd February 2022
The Bank of Canada’s fourth-quarter Business Outlook Survey showed firms’ wage expectations at a record high, which suggests that wage growth could accelerate to far above the pre-pandemic norm this year. (See Chart 1.) With little sign yet of a rebound …
25th January 2022
The economy gained momentum at the start of the fourth quarter and we have revised up our forecast for fourth-quarter GDP growth to 5.5% annualised, from 4.0%. Given the rapidly deteriorating coronavirus situation, however, we have revised down our …
23rd December 2021
The sharp slowdown in the pace of hiring in the October Labour Force Survey caught the headlines, but the more important development was the sharp rise in fixed-weight average hourly earnings. Based on our seasonal adjustment, the fixed-weight index, …
23rd November 2021
Wage growth remained moderate over the summer but, with labour shortages intensifying, it seems likely to accelerate sharply soon. The Bank of Canada’s third-quarter Business Outlook Survey (BOS) added to the evidence of widespread labour shortages, which …
26th October 2021
Labour shortages have intensified in recent months, which could both act as a brake on the recovery and lead to a stronger acceleration in wage growth. According to the CFIB Business Barometer, the share of small firms suffering from labour shortages …
27th September 2021
GDP is on track to return to its pre-pandemic level this month but, with the number of coronavirus infections now picking up, there is a growing risk that the recoveries in some sectors go into reverse. Admittedly, the progress on vaccinations means that …
24th August 2021
The wildfires in British Columbia appear to have been more disruptive than we first thought, but GDP should still rise this month thanks to the easing of the coronavirus restrictions. The volume of rail freight carloads carried across the country …
29th July 2021
The latest CFIB Business Barometer shows that, as the re-opening process got underway, firms’ selling price expectations surged in June. Firms now expect to raise their prices by an average of 4.7% over the next 12 months, which is by far a record high. …
25th June 2021
The jump in inflation to 3.4% in April was stronger than most forecasters expected and, with firms’ selling price expectations rising again in May, there seem to be further upside risks to inflation over the rest of the year. We expect inflation to …
27th May 2021
The ratio of homes under construction to population growth is at a record high, reflecting both the strength of housing starts and the weakness of immigration. (See Chart 1.) While the boom in construction might seem like a much-needed response to the …
29th April 2021
The housing market has gathered more momentum in the past month and, if this continues, could prompt the Bank to tighten policy sooner than we anticipate. The Teranet measure of house price growth rose to almost 10% y/y in February and the MLS measure …
24th March 2021
The pandemic has thrown up many surprises for the Canadian economy, the latest of which is the speed at which oil production has rebounded. Even though global fuel demand remains weak amid ongoing global travel restrictions, the Canada Energy Regulator’s …
23rd February 2021
Canada will receive only enough doses of the Pfizer and Moderna vaccines to provide the equivalent of one dose to 16% of the population by the end of the first quarter. By contrast, even in the unlikely event that there is no further improvement in the …
26th January 2021
The province-wide shutdowns recently announced in Ontario and Quebec raise the downside risks to our near-term forecasts, although the start of the coronavirus vaccination program last week provides a reason to be hopefully about prospects in 2021. The …
22nd December 2020
The decline in restaurant visits in the past month suggests that over 100,000 jobs in the accommodation and food services sector were at risk even before most of the Greater Toronto Area moved into lockdown this week. The accommodation and food services …
24th November 2020
The restrictions reimposed in Ontario and Quebec this month have weighed heavily on restaurant visits, but we think overall GDP will continue to recover so long as more draconian lockdowns are avoided. The OpenTable data show that visits to restaurants …
26th October 2020
We expect an average of the Bank’s core inflation measures to remain close to 2% this year, before declining in 2020, as GDP growth falls below potential. An average of the Bank of Canada’s three core inflation measures reached a seven-year high of 2.1% …
25th June 2019
