Friday October 05 2018
Canada Posts First Trade Surplus in 20 Months
Statistics Canada | Agna Gabriel | agna.gabriel@tradingeconomics.com

Canada posted a trade surplus of CAD 0.526 billion in August of 2018 from a CAD 0.189 billion deficit in the previous month. Figures compare with market expectations of a CAD 0.5 billion deficit. Both imports and exports declined in August. Imports fell 2.5 percent, mainly on lower imports from non-US countries, while exports were down 1.1 percent, mostly on decreased exports of passenger cars and light trucks.

Exports decreased 1.1 percent month-over-month to CAD 50.5 billion in August after reaching a record high value of CAD 51.11 billion in July. Sales fell for motor vehicles and parts (down 6.2 percent to CAD 7.4 billion), mainly due to passenger cars and light trucks (-8.9 percent); metal and non-metallic mineral products (down 6.2 percent to CAD 5.4 billion), namely unwrought precious metals and precious metal alloys (-14.3 percent) and unwrought gold (-3.8 percent), mainly due to lower sales to the United Kingdom. On the other hand, exports rose 20.1 percent for metal ores and non-metallic minerals, due to copper ores and concentrates (+CAD 187 million), mostly on higher shipments to Japan, South Korea and India.

Exports to the United States went down 1.2 percent to CAD 37.7 billion and exports to other than the US declined 0.9 percent to CAD 12.8 billion, particularly to the United Kingdom. These decreases were partly offset by higher exports to India and South Korea.

Imports declined 2.5 percent from the previous month to CAD 50.0 billion in August. Purchases of aircraft and other transportation equipment and parts fell 27.8 percent to CAD 1.3 billion, as there were no imports of commercial airliners and aircraft engines and parts decreased 16.9 percent. Also, imports of consumer goods decreased 3.7% to CAD 10.5 billion, namely pharmaceutical and medicinal products (-5.0 percent), miscellaneous goods and supplies (-3.5 percent) and furniture and fixtures (-9.5 percent); and motor vehicles and parts (down 3.8 percent to CAD 9.0 billion), particularly motor vehicle engines and parts (-9.6 percent), as atypical planned shutdowns in the automotive manufacturing sector in August contributed to lower imports of auto parts.

Imports from the United States decreased 1.3 percent to CAD 32.4 billion and to other countries than the US fell 4.5 percent to CAD 17.6 billion, namely China, Brazil, Belgium, Algeria and the Netherlands.




Friday October 05 2018
Canada Jobless Rate Falls to 5.9% in September
Statistics Canada | Agna Gabriel | agna.gabriel@tradingeconomics.com

The unemployment rate in Canada decreased to 5.9 percent in September of 2018 from 6.0 percent in the previous month and in line with market expectations. The economy added 63,300 jobs after losing 51,600 in August and well above market consensus of a 25,000 gain. Part-time employment advanced (+80,200) while full-time employment dropped (-16,900).

Employment increased mainly in Ontario (+36,000) and in British Columbia (+33,000). In Quebec and other provinces employment was almost unchanged.

There were employment increases in construction (+28,000); finance, insurance, real estate, rental and leasing (+13,000); public administration (+12,000); agriculture (+9,000). Meantime, employment dropped in information, culture and recreation (-17,000) and business, building and other support services (-10,000). 

The number of private sector employees went up 96,000, the first increase since November of 2017. At the same time, the number of public sector employees was little changed compared with August 2018. 

In September, employment rose for core-aged group (25 to 54) by 54,000, driven by increases in part-time work (+46,000). Employment gains were recorded among both core-aged men (+34,000) and women (+20,000). Meanwhile, employment for workers aged 55 and over and youth ages 15 to 24 was almost unchanged.

The labour force participation rate increased slightly to 65.4 percent from 65.3 percent in August and above market forecasts of 65.3 percent.




Friday September 21 2018
Canada Inflation Rate Down to 2.8%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The inflation rate in Canada fell to 2.8 percent in August of 2018 from 3 percent in July, which was the highest inflation rate since September of 2011. Figures came in line with market expectations amid a slowdown in cost of gasoline, utilities and shelter.

Year-on-year, all eight major components rose, with transportation (7.2 percent compared to 8.1 percent in July) making the largest contribution.

Prices for non-durable goods (3.8 percent) increased at a more moderate pace in August than in July (4.4 percent). Prices slowed for gasoline (19.9 percent compared to 25.4 percent in July) and water, fuel and electricity (2.2 percent compared to 3 percent).

Cost also rose less for shelter (2.3 percent compared to 2.4 percent) and services (3.1 percent compared to 3.2 percent). Month-over-month decreases in the cost of travel tours and air transportation, which reflect the winding down of the summer travel season, were larger in August 2018 than in August 2017. This was attributable to smaller seasonal increases in July 2017 during celebrations related to Canada's 150th birthday.

On the other hand, prices rose faster for durable goods (1.1 percent compared to 0.8 percent), namely the purchase of passenger vehicles (2.3 percent compared to 2 percent). The gain was largely attributable to the greater availability of 2019 model-year vehicles compared with the same month last year. Additional upward pressure came from cost of household operations, furnishings and equipment (0.8 percent compared to 0.7 percent); recreation, education and reading (1.9 percent compared to 1.8 percent); food (1.6 percent compared to 1.4 percent); health and personal care (1.4 percent compared to 1.1 percent); and alcoholic beverages and tobacco products (4.6 percent compared to 4.5 percent). Inflation for clothing and footwear was flat at 0.5 percent.

On a seasonally adjusted monthly basis, the CPI rose 0.1 percent in August, following a 0.5 percent increase in July. Seven of eight major components increased, while the clothing and footwear index was unchanged.

The BoC's annual core inflation, which excludes volatile items, went up to 1.7 percent from 1.6 percent in July and higher than market expectations of 1.3 percent.




Friday September 07 2018
Canada Jobless Rate Rises to 6% in August
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Canada rose to 6.0 percent in August of 2018 from 5.8 percent in the previous month and above market expectations of 5.9 percent. Following two months of increases, employment decreased by 51,600, after creating 54,100 in July and well below market consensus of a 5,000 gain, as part-time employment dropped (-92,000) while full time advanced (+40,400).

Employment fell mainly in Ontario (-80,000) while went up in Alberta (+16,000) and Manitoba (+2,600). In Quebec and other provinces employment was almost unchanged.

There were employment decreases in professional, scientific and technical services (-22,100); wholesale and retail trade (-19,600); construction (-16,400); information, culture and recreation (-7,000); finance, insurance, real estate, rental and leasing (-5,700); agriculture (-4,800); public administration (-3,500) and natural resources (-2,500). Meantime, employment recorded gains in business, building and other support services (+10,000).

The number of public sector employees dropped by 38,000, while the number of employees in the private sector and self-employed workers were almost unchanged.

In August, employment went down for both women and men aged 55 and over. For women in this age group employment decreased by 28,000 and for men by 22,000. Employment for core-aged population (25 to 54) and for youth aged 15 to 24 was almost unchanged.

The labour force participation rate fell slightly to 65.3 percent from 65.4 percent in July and down from market forecasts of 65.4 percent.


Wednesday September 05 2018
Canada Leaves Monetary Policy Unchanged
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada left its benchmark interest rate steady at 1.5 percent on September 5th 2018, in line with market expectations, following a 25bps hike in the previous meeting. Policymakers reinforced their vision that higher interest rates will be needed to achieve the inflation target of 2 percent. The Bank Rate is correspondingly 1.75 percent and the deposit rate is 1.25 percent.

Statement by the Bank of Canada:

CPI inflation moved up to 3 per cent in July. This was higher than expected, in large part because of a jump in the airfare component of the consumer price index. The Bank expects CPI inflation to move back towards 2 per cent in early 2019, as the effects of past increases in gasoline prices dissipate. The Bank’s core measures of inflation remain firmly around 2 per cent, consistent with an economy that has been operating near capacity for some time. Wage growth remains moderate.     

Recent data on the global economy have been consistent with the Bank’s July Monetary Policy Report (MPR) projections. The US economy is particularly robust, with strong consumer spending and business investment. Elevated trade tensions remain a key risk to the global outlook and are pulling some commodity prices lower. Meanwhile, financial stresses have intensified in certain emerging market economies, but with limited spillovers to other countries.

The Canadian economy is evolving closely in line with the Bank’s July projection for growth to average near potential. Following growth of 1.4 per cent in the first quarter, GDP rebounded by 2.9 per cent in the second quarter, as the Bank had forecast. GDP growth is expected to slow temporarily in the third quarter, mainly because of further fluctuations in energy production and exports.

While uncertainty about trade policies continues to weigh on businesses, the rotation of demand towards business investment and exports is proceeding. Despite choppiness in the data, both business investment and exports have been growing solidly for several quarters. Meanwhile, activity in the housing market is beginning to stabilize as households adjust to higher interest rates and changes in housing policies. Continuing gains in employment and labour income are helping to support consumption. As past interest rate increases work their way through the economy, credit growth has moderated and the household debt-to-income ratio is beginning to edge down.

Recent data reinforce Governing Council’s assessment that higher interest rates will be warranted to achieve the inflation target. We will continue to take a gradual approach, guided by incoming data. In particular, the Bank continues to gauge the economy’s reaction to higher interest rates. The Bank is also monitoring closely the course of NAFTA negotiations and other trade policy developments, and their impact on the inflation outlook.




Wednesday September 05 2018
Canada Posts Smallest Trade Deficit in 19 Months
Statistics Canada | Agna Gabriel | agna.gabriel@tradingeconomics.com

The Canadian trade deficit narrowed to CAD 0.11 billion in July of 2018 from an upwardly revised CAD 0.74 billion in the previous month and well below market expectations of a CAD 1.13 billion gap. It was the smallest trade deficit since the most recent surplus in December of 2016, as exports rose 0.8 percent to an all-time high, mainly on higher crude oil prices and imports went down 0.4 percent, due to fewer aircraft imports.

Exports from Canada rose 0.8 percent month-over-month to an all-time high of CAD 51.3 billion in July of 2018 despite declines in 6 of 11 product sections. Sales of energy products increased 5 percent, the highest since September of 2014, boosted by crude oil exports (+7 percent). In addition, there was a 3.4 percent gain in exports of motor vehicles and parts, namely passenger cars and light trucks (+3.8 percent). On the other hand, sales of aircraft and other transportation equipment and parts declined. Exports excluding energy products edged down 0.2 percent in July. 

Exports to the United States went up 3.3 percent to CAD 38.4 billion and exports to other than the US declined 6 percent to CAD 12.8 billion, particularly to Japan, Germany, Mexico, India and Saudi Arabia. These decreases were partially offset by higher exports to the United Kingdom. 

Imports went down 0.4 percent from the previous month to CAD 51.4 billion. Purchases of aircraft and other transportation equipment and parts fell 15.6 percent to CAD 1.8 billion in July, following a 14.1 percent decrease in June, as aircraft decreased 44.8 percent, mainly due to lower imports of airliners from the United States. Also, imports of metal ores and non-metallic minerals declined 13.9 percent, dragged down by other metal ores and concentrates (-16.7 percent). On the other hand, imports advanced for energy products (+8.8 percent), mainly due to refined petroleum products (+11.3 percent) and crude oil (+7.4 percent). 

Imports from the United States edged down 0.1 percent to CAD 33.1 billion and to other countries than the US fell 1 percent, namely from Belgium, Japan and Saudi Arabia.


Thursday August 30 2018
Canada GDP Expands 0.7% in Q2
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The Canadian economy advanced 0.7 percent on quarter in the second quarter of 2018, following an upwardly revised 0.4 percent growth in the previous period. It is the strongest growth rate in a year amid higher household spending and exports of energy, pharmaceutical products and business jets. Expressed at an annualized rate, the GDP grew 2.9 percent, well above 1.4 percent in the first quarter but slightly below market expectations of 3 percent.

Exports rose 2.9 percent, well above 0.6 percent in the previous period and the largest gain since the second quarter of 2014. Notable increases were seen in energy products (+5.6 percent) and consumer goods (+6.3 percent), particularly pharmaceutical products. Exports of aircraft, aircraft engines and aircraft parts (+13.4 percent) increased sharply on higher shipments of business jets to both the United States and non-US countries. Exports of services edged down 0.2 percent.

Imports rose 1.6 percent, also higher than a 1 percent growth in the first quarter. Imports of goods increased 1.7 percent. Imports of refined petroleum energy products rose 45.1 percent to offset the complete shutdown of four Canadian refineries in April and May. These shutdowns typically occur once every five years. Additionally, aircraft and other transportation equipment and parts grew 9.1 percent. Imports of services (+1.1 percent) rebounded following a 0.8 percent decrease in the previous quarter.

Household expenditure increased 0.6 percent, twice the pace of the first quarter and reversing the downward trend over the previous three quarters. Growth was largely attributable to outlays on services (+0.8 percent), which outpaced outlays on goods. Housing-related expenses (housing, water, electricity, gas and other fuels), up 0.6 percent, contributed the most to the widespread growth. Spending on goods grew 0.5 percent following a flat first quarter, with rebounds in semi-durable (+1.2 percent) and non-durable (+0.2 percent) goods. Purchases of vehicles declined 0.5 percent.

Investment in housing increased 0.3 percent in the second quarter, following a 2.7 percent drop in the first quarter. Declines in ownership transfer costs (-3.4 percent) continued, while new constructions (-0.3 percent) contracted for the first time since the third quarter of 2016. However, these declines were more than offset by a sharp 2.9 percent increase in outlays on renovations.

Business gross fixed capital formation increased 0.4 percent (0.6 percent in the first quarter), the slowest pace since the first quarter of 2017, as investment growth in non-residential structures, machinery and equipment, and intellectual property products all decelerated in the second quarter.

Machinery and equipment investment rose 0.3 percent following a 3.9 percent increase in the first quarter, with aircraft and other transportation equipment (+5.8 percent), industrial machinery and equipment (+0.7 percent) and computers and computer peripheral equipment (+1.8 percent) accounting for the majority of the growth.

Businesses added CAD 13.4 billion to inventories in the second quarter, less than the CAD 16.0 billion accumulated in the previous quarter. Most of the accumulation came from wholesalers (+CAD 9.0 billion), with manufacturers (+CAD 2.8 billion) also adding to their stock.

Investment in retail inventories declined to CAD 0.5 billion, while farm inventories increased CAD 0.9 billion.

Government spending rose 0.4 percent, , below 0.6 percent in the previous period. Public investment shrank 0.5 percent, following a 1 percent jump.




Wednesday August 29 2018
Canada Current Account Gap Narrows in Q2
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada's current account deficit decreased by CAD 1.6 billion in the second quarter to CAD 15.9 billion from a downwardly revised CAD 17.5 billion in the previous period and compared with market consensus of a CAD 15.2 billion shortfall. A lower deficit on trade in goods more than offset higher deficits on trade in services and investment income in the quarter.

The goods deficit fell by CAD 3.3 billion to CAD 5.3 billion in the second quarter, as the surplus with the United States rose by CAD 3.4 billion, mostly on stronger exports. Meanwhile, the deficit with non-US countries widened by CAD 0.1 billion to CAD 16.3 billion. On a country basis, the largest improvements to trade balances were with China, Hong Kong and Switzerland, while the most important declines were with United Kingdom and South Korea.

Total exports of goods rose by CAD 8.1 billion to CAD 148.0 billion in the second quarter. Exports of energy products were up by CAD 1.6 billion on higher crude petroleum volumes. Forestry products (+CAD 1.4 billion), metal and non-metallic minerals (+CAD 1.3 billion) and consumer goods (+CAD 1.3 billion) also contributed to the increase in exports in the quarter. The second quarter of 2018 was the first quarter that Canadian exports of steel and aluminum products to the United States were subject to tariffs, as they took effect on June 1. At the same time, total imports of goods were up CAD 4.8 billion to CAD 153.3 billion with basic and industrial chemical, plastic and rubber products being the main contributors, increasing by CAD 1.1 billion on higher volumes.

Meanwhile, the deficit on trade in services expanded by CAD 1.1 billion to CAD 7.0 billion in the second quarter. The surplus on commercial services decreased by CAD 0.7 billion, mostly on higher imports of financial services. This was in line with a higher volume of cross-border trading in foreign securities as well as increased new issue activity abroad by Canadian corporations in the quarter. The travel deficit expanded by CAD 0.2 billion to CAD 3.9 billion as Canadians spent more abroad in the quarter. The transport deficit also went up by CAD 0.2 billion due to higher imports of marine transport.

The deficit on primary income, which covers investment income on international assets and liabilities and compensation of employees, widened by CAD 0.3 billion to CAD 2.8 billion in the second quarter.

Investment income payments on Canada's international liabilities increased by CAD 2.2 billion to CAD 34.9 billion in the quarter. Larger profits earned by foreign direct investors in Canada, combined with higher interest paid on Canadian private corporate bonds and from banking activities, were the main contributors to the increase. Investment income receipts on Canada's international assets rose CAD 1.9 billion to CAD 32.6 billion. Receipts on holdings of portfolio and direct investment assets were both up while interest receipts from banking activities also increased.




Friday August 17 2018
Canada Inflation Rate Highest since 2011
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The inflation rate in Canada increased to 3 percent in July of 2018 from 2.5 percent in June, above market expectations of 2.5 percent. It is the highest inflation rate since September of 2011, boosted by rising prices for gasoline, fuel, air transportation and travel tours.

Year-on-year, all eight major components rose, with transportation (+8.1 percent compared to 6.6 percent in June) making the largest contribution. 

Energy costs were 14.2 percent higher compared with July 2017, after increasing 12.4 percent in June. Consumer prices for gasoline (+25.4 percent) and fuel oil and other fuels (+28.1 percent) continued to rise, amid higher global prices for crude oil following recent supply disruptions.

In addition to gasoline, the purchase of passenger vehicles index rose more in July (+2 percent) than it did in June (+1.8 percent). Prices for passenger vehicle insurance premiums were 3.5 percent higher, following rate increases in several provinces.

Year-over-year gains in the price of services were higher in July (+3.2 percent) than in June (+2.2 percent). Recent interest rate increases continued to impact the mortgage interest cost index, which rose 5.2 percent in the 12 months to July.

Additional upward pressure came from cost of shelter (2.4 percent compared to 2 percent); household operations, furnishings and equipment (0.7 percent compared to -0.1 percent); recreation, education and reading (1.8 percent compared to 0.6 percent); while food inflation was flat at 1.4 percent and prices slowed for clothing and footwear (0.5 percent compared to 1.8 percent); health and personal care (1.1 percent compared to 1.5 percent); and alcoholic beverages and tobacco products (4.5 percent compared to 4.8 percent).

On a seasonally adjusted monthly basis, the CPI rose 0.5 percent in July, higher than 0.1 percent in June and above forecasts of 0.1 percent. Month-over-month increases in the air transportation index (+16.4 percent) and the travel tours index (+13.9 percent) reflected higher prices during peak travel season. Prices for telephone services increased 2.2 percent on a month-over-month basis following declines in May and June, when a series of industry-wide price promotions took place. 

The BoC's annual core inflation, which excludes volatile items, went up to 1.6 percent from 1.3 percent in June and higher than market expectations of 1.3 percent.


Friday August 10 2018
Canada Jobless Rate Falls to 5.8% in July
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Canada decreased to 5.8 percent in July of 2018 from 6.0 percent in the prior month and below market expectations of 5.9 percent. The jobless rate fell back to its lowest on record, as employment increased by 54,000, after creating 31,800 in June and beating market consensus of 17,000, mainly due to gains in part-time work (+82,000) while full-time fell by 28,000.

Employment rose in mainly in Ontario (+61,000), British Columbia (+11,000) and Newfoundland and Labrador (+2,400). In Quebec and other provinces employment was almost unchanged.

There were employment increases in a number of services-producing industries, namely educational services (+37,000); health care and social assistance (+31,000); information, culture and recreation (+12,000) and "other services" (+11,000). On the other hand, employment declined in most goods-producing industries, mainly  manufacturing (-18,000); construction (-12,000) and natural resources (-5,300). 

The number of public sector employees went up by 50,000, while the number of employees in the private sector and self-employed workers were almost unchanged.

In July, employment advanced for the core-aged population (25 to 54) by 35,000, driven by women (+30,000). Also, for women aged 55 and older employment edged up by 12,000, while for men was held steady and also for all youth aged 15 to 24.

The labour force participation rate declined to 65.4 percent from 65.5 percent in June, in line with market consensus.