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Sales benefitting from easing supply shortages The resilience of manufacturing sales suggests easing supply shortages are still supporting activity, with the transport sector reaping much of the benefits. Nevertheless, the surveys point to a weaker …
15th June 2023
Labour market starting to loosen The fall in employment and 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, but the moves reinforce our view that the …
9th June 2023
Exports still benefitting from easing support shortages Easing supply shortages supported strong export growth in April but, with the surveys of export orders still very weak, that strength is likely to fade soon. Canada’s goods trade surplus widened from …
7th June 2023
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
Weakness mainly due to lower vehicle sales The fall in retail sales in March was driven mainly by lower vehicle sales. Overall sales volumes still rose by 4.9% annualised last quarter, suggesting that a pick-up in consumption supported GDP growth, but the …
19th May 2023
The renewed acceleration in the monthly changes in CPI-trim and CPI-median in April leaves us doubting our view that the Bank of Canada will be ready to cut interest rates as soon as October. While the rise in headline CPI inflation to 4.4%, from 4.3%, …
16th May 2023
Labour market conditions easing despite unchanged unemployment rate 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 …
5th May 2023
Downside risks to first-quarter GDP growth despite export outperformance The small rise in export volumes and slump in imports in March confirms that net trade improved last quarter. However, the weakness of imports means there is a risk that the …
4th May 2023
Decent first quarter likely to be followed by contraction The small rise in GDP in February points to healthy first-quarter growth but, with the preliminary estimate pointing to a contraction in March and activity set to suffer in April due to the federal …
28th April 2023
Momentum fading After a strong start to the year, retail sales volumes dropped back in February and the preliminary estimate implies they fell again in March. While consumption probably still rose at a healthy pace in the first quarter, that weakness is a …
21st April 2023
Base effects helped to pull headline inflation lower in March, but there were also encouraging signs in core inflation, as the average three-month annualised gain in CPI-trim and CPI-median fell to a 16-month low. We continue to expect headline and core …
18th April 2023
Manufacturing outlook remains challenging After a bright start to the year, manufacturing activity weakened in February. While that was partly due to temporary factors that are likely to be quickly reversed, the surveys point to a challenging outlook. The …
14th 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 weakness in the second quarter. The …
5th April 2023
There was plenty to be encouraged by in the Bank of Canada’s business and consumer surveys, with firms’ sales expectations holding up even as labour and other capacity pressures eased considerably. Wage expectations remain elevated, but the easing of …
3rd April 2023
The strength of GDP growth in January, and probably February too, suggests the Bank of Canada will use its April meeting to reiterate that, despite the recent banking turmoil, it is still prepared to raise interest rates again if needed. The 0.5% m/m rise …
31st March 2023
Consumer spending made a strong start to the year The large rise in retail sales volumes in January and the even bigger increase in sales at food service & drinking places imply that household consumption rose strongly at the start of the year. Spending …
24th 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 fall in headline CPI inflation in February suggests there is little chance that the Bank of Canada will be forced …
21st March 2023
Strong start to the year but risks on the horizon The manufacturing sector made a stellar start to 2023, but the surveys suggest growth will soon slow and the banking sector problems in the US could weigh on manufacturing demand over the rest of the year. …
14th 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
Surge in exports supported GDP growth at start of 2023 The strong gains in exports and imports in January suggest that easing supply shortages are offsetting the negative impact of higher interest rates on both external and domestic demand. That presents …
8th March 2023
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 in two years The much smaller rise in core prices in January suggests that headline inflation will fall faster than the Bank of Canada expects, reinforcing our view that the Bank is unlikely to resume raising interest …
21st February 2023
Sales volumes fall again despite resurgent motor vehicle sector Another rise in motor vehicle manufacturing sales failed to offset weakness elsewhere in December, with overall sales volumes edging down. The rebound in the S&P Manufacturing PMI and …
15th February 2023
Surge in employment eases recession fears The surge in employment and 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 is unlikely …
10th February 2023
Rebound in auto exports offsets decline in commodity export prices A surge in motor vehicle exports drove export volumes higher at the end of 2022, even as lower commodity prices weighed on export values. While there is scope for motor vehicle exports …
7th February 2023
Monthly data point to healthy fourth-quarter growth The monthly data suggest GDP growth slowed to 1.6% annualised in the fourth quarter, which would be better than initially expected considering the surge in interest rates. Nonetheless, with some of the …
31st January 2023
Retail sales appear to have ended 2022 with a bang Retail sales edged down in November but the preliminary estimate of a 0.5% m/m rise in December, despite the double-digit fall in gasoline prices, implies that sales volumes rose sharply at the end of …
20th January 2023
Encouraging signs despite elevated core inflation Although the annual rates of core inflation remain elevated, the three-month annualised rates of CPI-trim and CPI-median dropped back to 2.5% in December. Elevated inflation expectations mean that the …
17th January 2023
Wage and price inflation expectations still too strong for comfort The Bank of Canada’s latest quarterly surveys leave no doubt that higher interest rates are weighing on demand, but still don’t show a convincing moderation in wage and inflation …
16th January 2023
Surge in motor vehicle sales fails to offset weakness elsewhere The easing of supply shortages provided a big boost to motor vehicle shipments in November, but this failed to offset falls elsewhere. While there is scope for transportation equipment …
Surge in employment locks in another interest rate hike The surge in employment in December and renewed fall in the unemployment rate suggest that the Bank of Canada will raise interest rates again later this month, although the fall in wage growth …
6th January 2023
Lower commodity prices push goods trade 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 …
5th January 2023
Economy starting to lose momentum The modest gain in GDP in October and upward revision to activity in previous months suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that …
23rd December 2022
Upside surprise keeps the pressure on the Bank Overall inflation pressures were stronger than anticipated in November and the 3-month annualised measures of CPI-trim and CPI-median both increased. This supports our view that the Bank of Canada will err on …
21st December 2022
Sales volumes struggling for momentum Retail sales volumes are struggling for momentum and, with the services spending indicators also showing some weakness, household consumption may be heading for a second consecutive quarterly contraction. The 1.4% …
20th December 2022
Sales volumes continue to struggle The strong rise in manufacturing sales in October was largely due to a jump in refined petroleum prices. Manufacturing sales volumes were unchanged and the business surveys point to outright falls ahead. The 2.8% m/m …
14th December 2022
Export volumes struggling despite boost from agricultural sector The essentially unchanged level of export volumes in October, despite big gains in agricultural and pharmaceutical exports, suggests the sector is struggling amid weaker global demand. …
6th December 2022
Unemployment rate declines despite slowdown in hiring The slowdown in hiring in November did not prevent a decline in the unemployment rate, as the labour force contracted. The Bank of Canada will be more encouraged by the fall in the 3-month annualised …
2nd December 2022
Domestic demand contracts for first time since Q2 2021 The stronger-than-expected gain in third-quarter GDP tips the odds slightly toward another 50 bp interest rate hike from the Bank of Canada next week. But, with domestic demand contracting for the …
29th November 2022
Retail sales struggling for momentum The small fall in retail sales volumes in September appears to have been reversed in October but, more generally, sales volumes have been little changed for the past six months and the low leve of consumer confidence …
22nd November 2022
Core inflation pressures better than they look Although the annual rates of CPI-median and CPI-trim edged up in October, the 3-month annualised rates that the Bank of Canada is now focussed on declined. As that for CPI-median is now in the 1% to 3% …
16th November 2022
Manufacturing sales volumes set to fall further Manufacturing sales volumes edged down in September and, with the business surveys continuing to weaken and inventory levels now looking unusually high, they are likely to fall further. We expect weaker …
15th November 2022
Jump in employment and wage growth pressures the Bank to do more The 108,300 surge in employment in October makes a mockery of claims that the economy is on the cusp of recession and, with wage growth accelerating sharply despite favourable base effects, …
4th November 2022
Export strength overshadowed by record fall in building permits The improvement in crop yields boosted export volumes in September, but the strength of exports was overshadowed by the also-reported record slump in building permits, which suggests that …
3rd November 2022
Economy performed better than feared last quarter GDP performed better than expected last quarter but, with the business surveys weakening significantly, growth is likely to slow to a crawl this quarter and we expect a mild recession in 2023. The 0.1% m/m …
28th October 2022
Consumers shrug off higher interest rates The stronger-than-expected gain in retail sales in August and preliminary estimate of only a small decline in September show that higher interest rates are yet to weigh on consumption, which is another reason to …
21st October 2022
Strength of core inflation points to another 75 bp hike The Bank’s core CPI inflation measures were unchanged in September but, as we expected a decline due to more favourable base effects, that increases the odds of another 75bp interest rate hike next …
19th October 2022
Mixed messages on inflation expectations The Bank of Canada’s quarterly surveys offer some evidence that aggressive policy tightening is having the intended effects, with widespread fears of recession leading to a moderation in wage expectations and an …
17th October 2022
Sales slump, leaving more excess inventory The 1.7% m/m decline in real manufacturing sales in August more than reversed the gains over the preceding couple of months, leaving volumes at a seven-month low. Admittedly, sales are being held back by …
14th October 2022