Wednesday May 24 2017
Canada Maintains Key Rate At 0.5%
Bank of Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its overnight rate steady at 0.5 percent on May 23rd, 2017, saying inflation is broadly in line with projections and recent economic data have been encouraging. The decision came in line with market expectations. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent.

Statement by the Bank of Canada:

Inflation is broadly in line with the Bank’s projection in its April Monetary Policy Report (MPR). Food prices continue to decline, mainly because of intense retail competition, pushing inflation temporarily lower. The Bank’s three measures of core inflation remain below two per cent and wage growth is still subdued, consistent with ongoing excess capacity in the economy.

The global economy continues to gain traction and recent developments reinforce the Bank’s view that growth will gradually strengthen and broaden over the projection horizon. As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors. Recent data point to a rebound in the second quarter.  The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.

The Canadian economy’s adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment. Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions. Macroprudential and other policy measures, while contributing to more sustainable debt profiles, have yet to have a substantial cooling effect on housing markets. Meanwhile, export growth remains subdued, as anticipated in the April MPR, in the face of ongoing competitiveness challenges. The Bank’s monitoring of the economic data suggests that very strong growth in the first quarter will be followed by some moderation in the second quarter.

All things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present, and maintains the target for the overnight rate at 1/2 per cent.




Friday May 19 2017
Canada Inflation Rate Steady At 1.6% In April
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada increased 1.6 percent year-on-year in April of 2017, the same as in the previous month and below expectations of 1.7 percent. Prices of energy, transportation and shelter showed the highest upward pressure while food cost continued to decline although at a slower pace.

Year-on-year, transportation cost rose 4.2 percent, after increasing 4.6 percent in March. This deceleration was led by the purchase of passenger vehicles index. Gasoline prices posted a 15.9 percent  increase, slightly larger than the 15.2 percent rise registered in March. 

Shelter costs went up 2.2 percent, matching the increases in February and March. The homeowners' replacement cost index (+3.9 percent) was the main upward contributor, despite slowing growth since November 2016. Prices for natural gas (+15.2 percent,) rose for the fourth consecutive month. Conversely, electricity prices posted their fourth consecutive decline, down 1.3 percent.

The recreation, education and reading index grew 3.3 percent, following a 3.6 percent, increase in March. The travel tours index added 9.4 percent,, contributing the most to the rise. Traveller accommodation costs were up 5.7 percent after rising 1.4 percent. At the same time, the video equipment index fell 8.8 percent. Prices for video and audio subscription services rose less in the year to April than in the 12-months to March.

The household operations, furnishings and equipment index rose 0.5 percent following no change in March. This acceleration was mainly attributable to a 3.8 percent, month-over-month rise in the prices of telephone services, as new product introductions affected the price of service plans.

The food index declined 1.1 percent, following a 1.9 percent drop in March and marking the seventh month of falling food cost.

On a monthly basis, consumer prices went up 0.4 percent, above 0.2 percent in March. Gasoline prices jumped 9.5 percent, partly due to supply disruptions at oil refineries, as they changed over to summer fuel blends.

The core index rose was unchanged on the month and rose 1.1 percent on the year, below 1.3 percent in March. It is the lowest annual core inflation since November of 2013.





Friday May 05 2017
Canada Jobless Rate At 8-1/2-Year Low Of 6.5% In April
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Canada decreased to 6.5 percent in April of 2017 from 6.7 percent in the previous month and below market expectations of 6.7 percent. It was the lowest jobless rate since October of 2008, as the number of unemployed persons fell by 48.7 thousand while employed rose by 3.2 thousand, below market consensus of a 10 thousand increase.

Unemployment decreased by 48,700 to 1,265,000, and employment went up by 3.2 thousand to 18,311,200. Full-time employment decreased by 31.2 thousand, following a 18.4 thousand rise in March. Part-time employment rose by 34.3 thousand after a 1 thousand gain in the previous month.

There were more people working in educational services (19.9 thousand); health care and social assistance (12 thousand); transportation and warehousing (8.8 thousand); and information, culture and recreation (10.7 thousand). On the other hand, declines were recorded in business, building and other support services (-19 thousand); accommodation and food services (-12 thousand); "other services" (-9.5 thousand); and public administration (-7.8 thousand).

Public sector employment increased by 35,000 in April, largely in health care and social assistance and educational services. At the same time, the number of private sector employees fell by 51,000.

Employment rose in British Columbia and Prince Edward Island, while it was virtually unchanged in the other provinces.

In April, employment increased among people 55 and older, while it declined among men aged 25 to 54.

The participation rate decreased to 65.6 percent from 65.9 percent in the previous month.




Thursday May 04 2017
Canada Trade Gap Narrows Sharply In March
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada's trade deficit narrowed to CAD 0.14 billion in March of 2017, following an upwardly revised CAD 1.08 billion gap in the previous month and better than market expectations of a CAD 0.9 billion deficit. Exports were up 3.8 percent, due to stronger sales of energy products and consumer goods. Imports rose 1.7 percent, driven by metal and non-metallic mineral products, industrial machinery, equipment and parts and motor vehicles and parts.

Total exports rose 3.8 percent to a record high CAD 47 billion. There were higher exports of energy products (7 percent), consumer goods (6.8 percent) and metal and non-metallic mineral products (7.1 percent). Sales excluding energy products were also up 3.1 percent.

Exports to the United States edged up 0.1 percent to CAD 34.4 billion. However, exports to countries other than the United States jumped 15.3 percent to a record high CAD 12.6 billion. Higher exports to China (gold and coal), India (vegetables) and South Korea (coal and copper) were responsible for the increase.

Total imports went up 1.7 percent to CAD 47.1 billion. Higher imports of metal and non-metallic mineral products (10.4 percent), industrial machinery, equipment and parts (4.1 percent) and motor vehicles and parts (1.5 percent) contributed the most to the increase.

Imports from the United States advanced 2 percent to CAD 30.4 billion. Also, imports from countries other than United States increased 1.2 percent to CAD 16.7 percent, mainly on higher imports from Saudi Arabia (crude oil) and the United Kingdom.

Year-on-year, exports rose 12.9 percent and imports advanced 5.6 percent.

On a quarterly basis, exports increased 1.7% and also reaching a record high of CAD 138.6 billion due to higher exports of energy products.

Total Imports went up 2.6 percent reaching a record high CAD 139.7 billion. Increases were observed in imports of motor vehicles and parts, energy products, and aircraft and other transportation equipment and parts.






Friday April 21 2017
Canada Inflation Rate Down To 3-Month Low Of 1.6%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada rose 1.6 percent year-on-year in March of 2017, easing from a 2 percent increase in February and below market expectations of 1.8 percent. Gasoline prices slowed and food and clothing cost declined.

Year-on-year, transportation cost rose 4.6 percent after increasing 6.6 percent in February, led by the gasoline index. Gasoline prices rose 15.2 percent, following a 23.1 percent increase in February. The purchase of passenger vehicles index was up 2.1 percent in the 12 months to March, following a gain of 3.6 percent in February.

The clothing and footwear index fell 0.9 percent, following a 0.9 percent increase the previous month. This turnaround was led by a decrease in the women's clothing index, down 1.0 percent, following a 3.5 percent increase. A larger year-over-year decline in the children's clothing index (-4.4 percent) more than offset a 0.3 percent increase in the footwear index.

Food cost went down for the sixth consecutive month, dropping 1.9 percent. Prices for food purchased from stores declined 3.6 percent while prices for food purchased from restaurants posted a 2.4 percent increase.

Shelter cost increases in March matched those of February, up 2.2 percent. The homeowners' replacement cost index was the main upward contributor to the 12-month change in the shelter index, up 4.0 percent, despite slowing growth since November 2016. At the same time, rent increased 0.6 percent, after posting a 0.5 percent increase for six consecutive months.

The recreation, education and reading index rose 3.6 percent, following a 3.3 percent gain in February. This acceleration was led by the travel tours index, up 6.8 percent, following a 0.5 percent decline the previous month. In contrast, traveller accommodation prices rose less in March than in February.

On a monthly basis, consumer prices went up 0.2 percent, the same as in February.

The core index rose 0.3 percent on the month and 1.3 percent on the year.



Wednesday April 12 2017
Canada Leaves Monetary Policy Unchanged
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its overnight rate steady at 0.5 percent on April 12th, 2017, matching market expectations. Policymakers said growth was stronger than anticipated and inflation is in line with the target although significant uncertainties weigh on the outlook. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent. Policymakers also revised GDP and inflation forecasts.

The economy is expected to expand 2.6 percent in 2017 (2.1 percent in the January estimate) and 1.9 percent in 2018 (2.1 percent in the January estimate). Forecasts for inflation were revised higher to 1.9 percent this year (1.8 percent) and 2 percent in 2019 (1.9 percent).

Statement by the Bank of Canada:

Global economic growth is strengthening and becoming more broadly-based than the Bank had expected in its January Monetary Policy Report (MPR), although there is still considerable uncertainty about the outlook. In the United States, some temporary factors weighed on economic activity in the first quarter but the drivers of growth remain solid. The US is close to full employment, unlike many other advanced economies, including Canada, where material slack remains. Global financial conditions remain accommodative. The Bank expects global GDP growth to increase from 3 1/4 per cent this year to about 3 1/2 per cent in 2018 and 2019.

In Canada, recent data indicate that economic growth has been faster than was expected in the January MPR. Growth was temporarily boosted by a resumption of spending in the oil and gas sector and the effects of the Canada Child Benefit on consumer spending. Residential investment has also been stronger than expected. Employment data have been robust, although gains in hours worked are still soft. Meanwhile, export growth has been uneven in the face of ongoing competitiveness challenges. Further, despite a recent uptick in sentiment, business investment remains well below what could be expected at this stage in the recovery. Accordingly, while the recent rebound in GDP is encouraging, it is too early to conclude that the economy is on a sustainable growth path.

During the rest of this year and into 2018 and 2019, growth in Canada is expected to moderate but remain above potential. At the same time, its composition is expected to broaden as the pace of household spending, especially residential investment, slows while the contributions from exports and business investment increase. The Bank now projects real GDP growth of 2 1/2 per cent in 2017 and just below 2 per cent in 2018 and 2019. Meanwhile, the Bank has revised down its projection of potential growth, reflecting persistently weak investment. With this combination of a higher profile for economic activity and a lower profile for potential, the output gap is projected to close in the first half of 2018, a bit sooner than the Bank anticipated in January.  

CPI inflation is now at the 2 per cent target, largely because of the transitory effects of higher oil prices and carbon pricing measures in two provinces, as well as other temporary factors. The Bank’s three measures of core inflation, on the other hand, have been drifting down in recent quarters and wage growth remains subdued, consistent with material excess capacity in the economy. CPI inflation is expected to dip in the months ahead, as the temporary factors unwind, and then return to 2 per cent later in the projection horizon as the output gap closes.

The Bank’s Governing Council acknowledges the strength of recent data, some of which is temporary, and is mindful of the significant uncertainties weighing on the outlook. In this context, Governing Council judges that the current stance of monetary policy is still appropriate and maintains the target for the overnight rate at 1/2 per cent.


Friday April 07 2017
Canada Jobless Rate Rises To 6.7% In March
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Canada increased to 6.7 percent in March of 2017 from 6.6 percent in the previous month and in line with market expectations. Employment rose by 19.4 thousand, beating market consensus of a 5 thousand increase, while the unemployment went up by 27.6 thousand.

Unemployment increased by 27,600 to 1,313,700, and employment went up by 19.4 thousand to 18,308,00. Full-time employment increased by 18.4 thousand, following a 105.1 thousand rise in February. Part-time employment rose by 1 thousand after a 89.8 thousand drop in the previous month.

There were more people working in manufacturing (24.4 thousand, the largest increase since August 2002); business, building and other support services (18.2 thousand); wholesale and retail trade (16.9 thousand); and information, culture and recreation (10.7 thousand). On the other hand, declines were recorded in educational services (-14.9 thousand); transportation and warehousing (-12.8 thousand); "other services" (-9.5 thousand); and public administration (-7.8 thousand).

Employment rose in Alberta, Nova Scotia and Manitoba. At the same time, employment fell in Saskatchewan, while it was relatively stable in the remaining provinces.

In March, employment increased for men aged 25 to 54, while there was little change among other demographic groups.

The participation rate increased to 65.9 percent from 65.8 percent in the previous month.


Tuesday April 04 2017
Canada Trade Balance Shifts To Deficit In February
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Canada's trade balance posted a deficit of CAD 0.97 billion in February 2017, following a downwardly revised CAD 0.42 billion surplus in the previous month while market expected of a CAD 0.5 billion surplus. Exports were down 2.4 percent to CAD 44.3 billion on lower sales of farm, fishing and intermediate food products, aircraft and other transportation equipment and parts, and consumer goods. Imports increased 0.6 percent to CAD 46.3 billion, mainly due to higher purchases of special transactions trade, motor vehicles, and parts, and farm, fishing and intermediate food products.

After reaching a record high in January, total exports fell 2.4 percent to CAD 45.3 billion. There were lower exports of farm, fishing and intermediate food products (-10.6 percent), mainly canola (-33.7 percent); aircraft and other transportation equipment and parts (-15.2 percent); and consumer goods (-4.3 percent). Sales excluding energy products were also down 2.4 percent.

Exports to the United States were down 1.2 percent to CAD 34.4 billion. Also, exports to countries other than the United States fell 5.9 percent to CAD 11.0 billion. Lower exports to China (mainly canola) and South Korea (mainly coal) were responsible for the decrease.

Total imports edged up 0.6 percent to CAD 46.3 billion. Higher imports of special transactions trade (33.1 percent); motor vehicles and parts (1.8 percent), and farm, fishing and intermediate food products (8.7 percent) contributed the most to the increase.

Imports from the United States decreased 1.6 percent to CAD 29.9 billion, led by lower purchases of aircraft and crude oil.  In contrast, imports from countries other than the United States increased 4.9 percent to CAD 16.4 billion, mainly on higher imports from Japan, Norway, and Brazil.

Year-over-year, exports rose 4.4 percent while imports were up 1.4 percent.



Friday March 24 2017
Canada Inflation Rate Slows To 2% In February
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Canada increased 2 percent year-on-year in February of 2017, easing from a 2.1 percent rise in the preceding month and below market expectations of 2.1 percent. Telephone services declined and food prices posted the biggest drop since 1971. In contrast, transportation and shelter contributed the most to the rise in the CPI.

Year-on-year, transportation cost rose 6.6 percent after a 6.3 percent increase in January, led by gasoline prices. This acceleration occurred despite a 0.8 percent monthly decline in February. The purchase of passenger vehicles index increased less in February (3.6 percent) than in January (3.8 percent).

Prices of recreation, education and reading advanced 3.3 percent, following a 3.2 percent increase in January. A 6.2 percent rise in the traveller accommodation was partly attributable to major sporting events that took place in February. The travel tours index fell 0.5 percent, after increasing 5.5 percent a month earlier.

The household operations, furnishings and equipment index went up 0.6 percent, after rising 1.2 percent in the previous month. This deceleration was led by the telephone services index, which declined 2.2 percent, following a 1.6 percent increase in January. In contrast, the Internet access services cost rose 0.2 percent, following a 1 percent decline in January.

Consumers paid 2.3 percent less for food compared with a year ago, due to lower prices for fresh vegetables (-14.0 percent) and fresh fruit (-13.3 percent) which reflect a spike in their prices last winter. Also, the prices of dairy products fell 2.5 percent, its largest decrease since March 1994, namely lower cheese prices. Prices for food purchased from restaurants rose 2.3 percent, matching the gain in January.

On a monthly basis, consumer prices went up 0.2 percent after a 0.9 percent rise in January.

Excluding food and energy, consumer prices were up 0.4 percent on the year and excluding gasoline only, prices gained 1.3 percent. 


Friday March 10 2017
Canada Jobless Rate At 2-Year Low Of 6.6%
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Canada decreased to 6.6 percent in February of 2017 from 6.8 percent in the previous month and below market expectations of 6.8 percent. It was the lowest jobless rate since January of 2015. Employment rose by 15.3 thousand, beating market consensus of a 2.5 thousand increase.

Full time employment jumped by 105.1 thousand, following a 15.8 thousand increase in January. Part time employment fell by 89.8 thousand after a 32.4 thousand gain in the previous month.

The employment growth was recorded mainly in the service sector, with increases in retail and wholesale trade (by 19100) and public administration (by 11900).

Meanwhile, the labor force participation rate fell to 65.8 percent from 65.9 percent in the previous month.