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Fall in hours worked another downside risk to Q3 GDP growth The first rise in employment in four months was not as strong as it looked, as it was driven entirely by the public sector, while the fall in hours worked points to downside risks to GDP growth. …
7th October 2022
Weak export volumes a risk to third-quarter GDP growth The drop in export volumes in August and the large downward revision to the trade surplus in July present downside risks to our already-weak estimate for third-quarter GDP growth of 0.8% annualised. …
5th October 2022
Growth slowing but economy doing better than feared Strong gains in the natural resource sector will prevent the economy from contracting this quarter but, with the business surveys deteriorating and the global economy facing recession, it looks …
29th September 2022
Retail sales volumes set to fall sharply this quarter The fall in retail sales volumes in July leaves them on track for their weakest quarter since the initial pandemic lockdowns in early 2020. With the Bank of Canada’s policy rate hikes still feeding …
23rd September 2022
Headline and core inflation moving in right direction The larger-than-expected falls in headline and core inflation in August suggest that the Bank of Canada will enact a smaller interest rate hike in October, particularly with the labour market now …
20th September 2022
Manufacturing activity remains muted Although manufacturing sales fell by 0.9% m/m in July, in line with the preliminary estimate, that was a better outcome than we had expected given the more downbeat export data. Furthermore, the decline was mainly due …
14th September 2022
Fall in public sector labour demand pulling down employment The fall in employment in August was concentrated in the public sector and the jump in unemployment reflected an immigration-fuelled rise in the labour force, so they probably overstate the …
9th September 2022
Stronger export volumes unlikely to prevent Q3 GDP slowdown Export volumes rose by more than we expected in July but, with the fall in import volumes painting a weak picture of domestic demand, it still looks like GDP growth will slow sharply this …
7th September 2022
Economy slowing faster than expected The weaker-than-expected second-quarter rise in GDP as well as the preliminary estimate of a small fall in output in July confirm the economy is slowing sooner than the Bank of Canada predicted. Nevertheless, given …
31st August 2022
Retail sales volumes will struggle over the rest of 2022 The small gain in retail sales volumes in June appears to have been more than reversed in July. As the Bank of Canada is set to raise interest rates further and there is little reason to expect an …
19th August 2022
Underlying inflationary pressures still very strong The fall in headline inflation to 7.6% in July left it lower than the Bank of Canada’s recent forecast but, amid continued broad upward pressure on core prices, we still judge that the Bank is more …
16th August 2022
Little relief in sight for manufacturers Manufacturing sales volumes only inched up in June and, with the manufacturing surveys on both sides of the border weakening in recent months, the outlook is growing even more challenging. The 0.8% m/m fall in …
15th August 2022
The Great Retirement? The second consecutive monthly fall in employment will raise a few eyebrows at the Bank of Canada but, as retirements were partly to blame, the unemployment rate remained at a record low and wage growth is strong, we doubt it will …
5th August 2022
Trade surplus likely to narrow soon Export volumes outpaced import volumes in June but, with the survey-based export indices falling back, the outlook is growing more challenging. Together with the declines in commodity prices since June, it seems likely …
4th August 2022
Economy losing momentum Although activity was stronger than initially estimated in May, the economy still failed to grow and the preliminary estimate suggests that GDP only crept up in June. Together with the weakening of the consumer and business surveys …
29th July 2022
Slump in confidence points to sales weakness ahead Retail sales rose by a bit more than we anticipated in May, but the preliminary estimate implies that most of the gain in sales volumes was reversed in June and the slump in consumer confidence suggests …
22nd July 2022
Some encouraging signs despite further rise Despite the further rise in inflation to a multi-decade high, the June data showed some encouraging signs, with the monthly price gains slowing across almost every category. Inflation will begin to fall in the …
20th July 2022
Manufacturing continues to struggle Manufacturing sales volumes plunged in May amid renewed semiconductor shortages, but there is scope for a more sustained rebound over the second half of this year, despite the worsening global backdrop. The 2.0% m/m …
14th July 2022
Surprise fall in employment a seasonal distortion The surprise fall in employment in June appears to reflect seasonal effects and, with wage growth surging to 5.2% y/y, the Bank of Canada will follow through next week on its hint of a larger 75 bp rate …
8th July 2022
Healthy trade surplus to be maintained over second half of 2022 The recent falls in commodity prices mean that, after soaring in May and probably improving again in June, the trade surplus will decline in the coming months. Nonetheless, as we expect …
7th July 2022
Rise in long-run inflation expectations bolsters case for larger 75 bp hike The increase in long-run inflation expectations in the Bank of Canada’s latest business and consumer surveys further raises the probability of the Bank enacting a larger 75 bp …
4th July 2022
Shock contraction in GDP in May partly due to temporary factors The preliminary estimate suggests that the healthy 0.3% m/m rise in GDP in April was followed by a shock 0.2% contraction in May but, as this appears to have been partly due to temporary …
30th June 2022
Peak in inflation yet to come The jump in CPI inflation to 7.7% in May all but guarantees that the Bank of Canada will raise interest rates by a larger 75 bp next month, particularly with inflation on track to accelerate to over 8% in June. The rise in …
22nd June 2022
Strong April, but tougher times ahead The strong rise in retail sales volumes in April reinforces our view that overall consumption growth will accelerate sharply this quarter but, with consumer confidence plunging in June and the housing market rapidly …
21st June 2022
Revisions leave manufacturing sector looking better than expected The 0.9% m/m rise in April, combined with a large upward revision to March, means that manufacturing sales volumes have finally risen above their pre-pandemic peak. While the recovery in …
14th June 2022
Rapidly accelerating wage growth makes 75bp hike more likely The 39,800 rise in employment in May drove down the unemployment rate to a multi-decade low and there are now clear signs of the tight labour market pushing up wages. That raises the chance of …
10th June 2022
Goods trade surplus to widen before long Elevated commodity prices were still doing little to lift the goods trade surplus at the start of the second quarter, but we expect it to widen in the coming months as goods imports from Asia drop back and energy …
7th June 2022
Q1 growth weaker, but strong momentum going into Q2 First-quarter GDP growth slowed to 3.1% annualised, from 6.6%, as the Omicron-related restrictions had more of an impact than previously thought. But the 0.7% m/m increase in monthly GDP in March …
31st May 2022
Sales hit by supply-related slump in autos Retail sales values were unchanged month-to-month in March, as a further supply-related slump in motor vehicle sales offset a largely price-related surge in gasoline station sales and solid increases in other …
26th May 2022
Inflation edges even higher as food prices surge 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 …
18th May 2022
Rise in manufacturing sales entirely due to higher prices The rise in manufacturing sales in March was entirely due to higher commodity prices, but the orders data and the business surveys suggest that sales volumes will do better in the coming months. …
16th May 2022
Sharp slowdown in employment growth partly due to temporary factors The sharp slowdown in employment growth and large decline in hours worked in April present downside risks to GDP growth but, as temporary factors seem to explain much of the weakness, …
6th May 2022
Goods trade surplus to widen this quarter The trade surplus unexpectedly fell in March, despite the surge in commodity prices, but it is likely to rise in the second quarter, as export volumes recover while import volumes drop back. The goods trade …
4th May 2022
Economy surges as Omicron wave fades The jump in GDP in February means that, despite the Omicron wave, the economy was even stronger than expected in the first quarter. But signs of a sharp slowdown in the housing market in April suggest there are …
29th April 2022
Retail sales understate the pick-up in overall spending Retail sales were basically unchanged in February, but this understates the strength of total spending following the lifting of the Omicron wave restrictions on high-contact services. As consumer …
22nd April 2022
Further surge in inflation a big surprise for the Bank The surge in inflation in March was much larger than the Bank of Canada expected and suggests it will follow its 50 bp interest rate hike last week with another similar-sized move at its next meeting …
20th April 2022
Producers ramped up despite protest blockades The 4.2% m/m rebound in manufacturing sales in February was much better than we were expecting, as firms continued to boost production even though the blockade at the key Ambassador Bridge border crossing …
14th April 2022
Unemployment rate falls to lowest since the 1970s Another solid rise in employment drove the unemployment rate down to a 48-year low of just 5.3% in March, but the still-muted pace of wage growth suggests the Bank of Canada may not need to tighten policy …
8th April 2022
Goods trade surplus to widen again soon The goods trade surplus unexpectedly narrowed in February but, with commodity prices rising strongly since then and some of the jump in imports set to be reversed, it will rebound in March. The goods trade surplus …
5th April 2022
Long-run inflation expectations remain well-anchored The Bank of Canada’s latest quarterly surveys suggest that firms’ and consumers’ long-run inflation expectations remain well anchored, which the Bank could use to justify a slower tightening cycle than …
4th April 2022
Solid January followed by strong February Following the moderate gain in GDP in January, the preliminary estimate of a further 0.8% m/m surge in activity in February will fuel speculation that the Bank of Canada will hike its policy rate by a bigger 50bp …
31st March 2022
Strong start to 2022 Retail sales made a strong start to 2022 and, while the hit to household purchasing power from higher gasoline prices is a headwind to further growth in sales volumes, the fact that consumer confidence has held up well supports our …
18th March 2022
Inflation likely to hit 6.0% in March While the price increases in February were not as broad-based as in January, they nevertheless caused all three of the Bank of Canada’s core inflation measures to rise further and suggest that, even if oil prices were …
16th March 2022
Manufacturing sales volumes probably rebounded in February The sharp fall in manufacturing sales volumes in January was at least in part due to the impact of staff absenteeism amid the Omicron outbreak and, with hours worked across the sector increasing …
15th March 2022
Surge in employment pushes unemployment rate below pre-pandemic level The labour market boom resumed in February and the odds of a sharp acceleration in wage growth are rising, which would add to the pressure for the Bank of Canada to continue raising …
11th March 2022
Goods trade headed for even bigger surplus The goods trade balance moved back to a surplus of more than $2bn in January and, based on the recent broad gains in commodity prices, it is likely to hit close to $5bn this month. If that were sustained, it …
8th March 2022
GDP growth continues to surpass expectations GDP rose by more than expected in the fourth quarter and the preliminary estimate suggests that, despite the Omicron outbreak, GDP rose further in January. This continued strength supports our view that the …
1st March 2022
Weak December, but strong start to 2022 Retail sales fell in December as the Omicron wave took hold but, rather oddly, the preliminary estimate suggests that decline was more than revered in January, even as coronavirus restrictions were reimposed. The …
18th February 2022
Peak in inflation yet to come Consumer price inflation rose by more than expected at the start of 2022 and the breakdown suggests that inflationary pressures are broadening, which adds to the pressure for the Bank of Canada to begin tightening policy next …
16th February 2022
Goods trade to move back into surplus in January Goods trade moved into a modest deficit in December but, with oil prices rising sharply since then, it should return to surplus in January. A 3.7% m/m rise in imports and a 0.9% decline in exports resulted …
8th February 2022