Friday April 20 2018
Canada Inflation Rate Rises to 2.3%, Highest Since October 2014
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada increased 2.3 percent year-on-year in March of 2018, above 2.2 percent in February and compared to market expectations of 2.4 percent. It is the highest inflation rate since October of 2014, as prices in seven of the eight major components rose, mainly gasoline. Excluding gasoline, inflation was 1.8 percent, the same as in February.

Seven of eight major components increased on a year-over-year basis in March. The clothing and footwear index (-0.1 percent) was the lone major component to decline year over year.

For the second consecutive month, energy prices rose more on a year-over-year basis. Gasoline prices were 17.1 percent higher compared with March 2017, and were the largest contributor to the gain in energy prices.

The price of services was up 2.7 percent year over year in March. Passenger vehicle insurance premiums rose 1.4 percent in the 12 months to March. Recent interest rate increases continue to impact the mortgage interest cost index (+2.8 percent), which posted its eighth consecutive year-over-year rise.

Consumers paid less on a year-over-year basis for food in March (+1.7 percent) than they did in February (+2.1 percent). Prices for fresh vegetables (-2.1 percent) and meat (-0.4 percent) fell month over month.

Prices for durable goods increased 0.3 percent in the 12 months to March, following a larger gain in February (+0.6 percent). The purchase of passenger vehicles index declined 1.5 percent on a month-over-month basis in March, reflecting higher rebates reported for various 2018 model-year vehicles.

On a monthly basis, prices rose 0.3 percent, below 0.6 percent in February.

The BoC's annual core inflation, which excludes volatile items, edged down to 1.4 percent from 1.5 percent.





Wednesday April 18 2018
Canada Leaves Key Rate Steady at 1.25%
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its overnight rate at 1.25 percent on April 18th 2018, in line with market expectations. Policymakers said the transitory impact of higher gasoline prices and recent minimum wage increases will likely cause inflation in 2018 to be modestly higher than expected and the economy is projected to operate slightly above its potential over the next three years. As a result, the central bank sees higher interest rates over time, although some monetary policy accommodation will still be needed to keep inflation on target. The Bank Rate is correspondingly 1.5 percent and the deposit rate is 1 percent.

Excerpts from the Statement by the Bank of Canada:

Inflation in Canada is close to 2 per cent as temporary factors that have been weighing on inflation have largely dissipated, as expected. Consistent with an economy operating with little slack, core measures of inflation have continued to edge up and are all now close to 2 per cent. The transitory impact of higher gasoline prices and recent minimum wage increases will likely cause inflation in 2018 to be modestly higher than the Bank expected in its January Monetary Policy Report (MPR), returning to the 2 per cent target for the rest of the projection horizon.

In Canada, GDP growth in the first quarter was weaker than the Bank had expected, but should rebound in the second quarter, resulting in 2 per cent average growth in the first half of 2018. The economy is projected to operate slightly above its potential over the next three years, with real GDP growth of about 2 per cent in both 2018 and 2019, and 1.8 per cent in 2020. This stronger profile for GDP incorporates new provincial and federal fiscal measures announced since January. It also reflects upward revisions to estimates of potential output growth, which suggest the Canadian economy has made some progress in building capacity.

Slower economic growth in the first quarter primarily reflects weakness in two areas. Housing markets responded to new mortgage guidelines and other policy measures by pulling forward transactions to late 2017. Exports also faltered, partly owing to transportation bottlenecks. Some of the weakness in housing and exports is expected to be unwound as 2018 progresses.

The Bank anticipates that Canadian exports will strengthen as foreign demand increases, but not sufficiently to recover the ground lost during recent quarters. Export growth is being increasingly limited by capacity constraints in some sectors. Continued gains in business investment should build additional capacity in those sectors and in the economy more generally. However, both exports and investment are being held back by ongoing competitiveness challenges and uncertainty about trade policies.

Growth in consumption remains robust, supported by strong labour income growth. Wages have continued to pick up as expected, even after factoring out recent minimum wage increases in Ontario and Alberta. The Bank will continue to assess labour market data for signs of remaining slack.

Some progress has been made on the key issues being watched closely by Governing Council, particularly the dynamics of inflation and wage growth. This progress reinforces Governing Council’s view that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed to keep inflation on target. The Bank will also continue to monitor the economy’s sensitivity to interest rate movements and the evolution of economic capacity. In this context, Governing Council will remain cautious with respect to future policy adjustments, guided by incoming data.




Friday April 06 2018
Canada Jobless Rate Steady at 5.8% in March
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Canada was unchanged at 5.8 percent in March of 2018 from the previous month, in line with market consensus. The jobless rate remained at its lowest level since 1976 for the second straight month. Employment rose by 32,300, more than an expected 20,000 gain, driven by job adds in construction and public administration as well as a recovery in full-time work (+68,300). In contrast, part-time employment was down (-35,900).

In March, among the core-aged population (25 to 54 years old), employment increased for women (+26,000) and decreased for men (-22,000). At the same time, employment was up for youth aged 15 to 24 (+18,000), and was little changed for people 55 years and older.

Employment rose in Quebec (+16,000) and Saskatchewan (+4,200), while there was little change in the other provinces, such as Alberta, British Columbia and Ontario.

There were more people working in construction (+18,300), public administration (+11,900) and agriculture (+8,100).

The number of public sector employees edged up (+19,600), while the number of private sector employees and self-employed held steady.

On a year-over-year basis, total employment rose by 296,000 (+1.6 percent), with the number of full-time workers increasing by 335,000 (+2.3 percent). Over the same period, total hours worked grew by 2.2 percent.




Thursday April 05 2018
Canada Trade Deficit Widens in February
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's merchandise trade deficit widened to CAD 2.69 billion in February of 2018 from an upwardly revised CAD 1.94 billion in January and above market expectations of a CAD 2.1 billion deficit. Imports advanced 1.9 percent month-over-month, mostly due to higher purchases of energy products. Exports rose 0.4 percent, mainly due to higher sales of passenger cars and light trucks.

Total imports increased 1.9 percent month-over-month in February to CAD 48.6 billion, after dropping 4.3 percent in the previous month. Purchases of energy products advanced 15.4 percent to CAD 3.4 billion, the highest rise since November of 2014. Additionally imports of crude oil and crude bitumen rose 15.4 percent and purchases of refined petroleum energy products went up 24.1 percent, partially due to higher imports of motor gasoline in British Columbia. Also, imports of motor vehicles and parts rebounded (+1.7 percent to CAD 9.4 billion). On the other hand, purchases fell for metal ores and non-metallic minerals (-11.9 percent), namely gold and in the metal and non-metallic mineral (-3.0 percent). Lower imports of both gold bullion and unwrought gold were manily due to disruptions in gold mining activity, particularly in Argentina and the Dominican Republic. Year over year, total imports increased 3.5 percent.

Imports from the United States rose 3.3 percent to CAD 32.1 billion, led by higher imports of aircraft. Purchases from countries other than the United States fell 0.6 percent to CAD 16.6 billion, as imports of gold from the Dominican Republic and Argentina dropped.

Exports rose 0.4 percent month-over-month to CAD 45.9 billion in February. Sales of motor vehicles and parts, and aircraft and other transportation equipment and parts went up 5.0 percent to CAD 7.5 billion, mainly passenger cars and light trucks (+6.7 percent) and after plant closures in January. In addition, exports of aircraft, other transportation equipment and parts increased 19.6 percent to CAD 1.7 billion, rebounding from a 21.9 percent fall in the prior month. In contrast, sales of farm, fishing and intermediate food products declined 17.2 percent to CAD 2.4 billion, the largest drop on record, namely wheat (-41.6 percent) and canola (-40.1 percent). Also, sales of metal and non-metallic minerals decreased in February, down 7.2 percent to CAD 5.2 billion, mainly unwrought precious metals and precious metal alloys (-34.3 percent), as shipments of unwrought gold to the United Kingdom dropped. Exports excluding energy products went up 0.7 percent. Year over year, total exports rose 1.5 percent. 

Exports to the United States increased 1.9 percent to CAD 34.6 billion, mostly due to higher sales of passenger cars and light trucks. Sales to countries other than the United States went down 4.2 percent to CAD 11.3 billion, due to lower exports of unwrought gold to the United Kingdom.





Friday March 23 2018
Canada Inflation Rate Highest Since 2014
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The consumer price inflation in Canada increased to 2.2 percent year-on-year in February of 2018, up from 1.7 percent in the prior month and well above market consensus of 2 percent. It was the highest inflation rate since October of 2014, as prices rose mostly for transportation, especially gasoline and vehicles. Meanwhile, food inflation slowed.

The main upward contributors to the 12-month change in February included gasoline (+12.6 percent from +7.8 percent in January) and purchase of passenger vehicles (+2.5 percent from +1.4 percent), mainly due to lower rebates on 2018 model-year vehicles. 

Higher prices for services also contributed to the increase in the CPI. In February, consumers paid more on a year-over-year basis for travel tours (+2.2 percent) and Internet access services (+5.2 percent). The mortgage interest cost index rose 2.3 percent, reflecting, in part, recent interest rate increases. These gains in service prices were moderated by lower traveller accommodation (-4.8 percent) costs.

Meanwhile, food prices rose 2.1 percent in February compared to a 2.3 percent gain in the previous month.

On a monthly basis, consumer prices were up 0.6 percent, compared to a 0.7 percent increase in January and slightly above forecasts of a 0.5 percent gain.

The BoC's annual core inflation, which excludes volatile items, rose to 1.5 percent from 1.2 percent in January, reaching the highest in a year.


Friday March 09 2018
Canada Jobless Rate Drops to 5.8% in February
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Canada decreased to 5.8 percent in February of 2018 from 5.9 percent in January and below market expectations of 5.9 percent. Employment was up by 15,400, as an increase in part-time employment (+54,700) largely offset a decrease in full-time employment (-39,300).

In February, employment increased for both men and women in the core working age group (25 to 54), while there was little change for youth aged 15 to 24 and for people aged 55 and older.

For youth aged 15 to 24, both the level of employment and the unemployment rate were little changed in February. 

Employment increased the most in New Brunswick (+5,100) and Nova Scotia (+2,800), while it decreased in Saskatchewan (-2,900). There was little change in the other provinces.

Jobs were added in several industries, including health care and social assistance (+25,000); other services as repair and maintenance (+17,000); transportation and warehousing (+13,000); educational services (+12,000); public administration (+9,000). Conversely, employment declined in wholesale and retail trade (-22,000); manufacturing (-17,000); professional, scientific and technical services (-12,000) and finance, insurance, rental and leasing (-12,000).

The number of employees increased in the public sector (+50,000), while it held steady in the private sector. The number of self-employed workers decreased (-43,000).

On a year-over-year basis, employment grew by 283,000 or 1.5 percent, driven by full-time work (+283,000 or +1.9 percent), while part-time employment was unchanged. Over the same period, hours worked rose by 3.2 percent.


Wednesday March 07 2018
BoC Holds Key Interest Rate at 1.25%
Bank of Canada | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Canada held its overnight rate at 1.25 percent on March 7th 2018, following a 25bps hike in the previous meeting, saying that while the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to support growth and inflation.

Statement by the Bank of Canada:

The Bank of Canada today maintained its target for the overnight rate at 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent.

Global growth remains solid and broad-based. In the United States, new government spending and previously-announced tax cuts are anticipated to boost growth in 2018 and 2019. However, trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks.

In Canada, the national accounts data show that the economy grew by 3 per cent in 2017, bringing the level of real GDP in line with the projection in the Bank’s January Monetary Policy Report (MPR). In the fourth quarter, GDP growth was slower than expected, largely due to higher imports, while exports made only a partial recovery from their third-quarter decline. The gain in imports mainly reflected stronger business investment, which adds to the economy’s capacity.

Strong housing data in late 2017, and softer data at the beginning of this year, indicate some pulling forward of demand ahead of new mortgage guidelines and other policy measures. It will take some time to fully assess the impact of these, as well as recently announced provincial measures, on housing demand and prices. More broadly, the Bank continues to monitor the economy’s sensitivity to higher interest rates. Notably, household credit growth has decelerated for three consecutive months. The implications of the recent federal budget for the outlook for growth and inflation will be incorporated in the Bank’s April projection.

Inflation is running close to the 2 per cent target and the Bank’s core measures of inflation have edged up, consistent with an economy operating near capacity. Wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack. Inflation is fluctuating because of temporary factors related to gasoline, electricity, and minimum wages.

In this context, Governing Council maintained the target for the overnight rate at 1 1/4 per cent. While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.


Wednesday March 07 2018
Canada Trade Deficit Narrows in January
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's merchandise trade deficit narrowed to CAD 1.9 billion in January of 2018 from a CAD 3.1 billion in December. Imports decreased 4.3 percent month-over-month on lower purchases of industrial machinery, equipment and parts. Exports fell 2.1 percent, mostly due to lower sales of passenger cars and light trucks.

Total imports declined 4.3 percent month-over-month in January of 2018 to CAD 47.7 billion, after reaching a record high in the previous month. Imports of industrial machinery, equipment and parts dropped 11.3 percent to CAD 4.5 billion. Purchases of logging, mining and construction machinery, which reached a record high in December, fell 40 percent as new regulations on off-road diesel engine and machine emissions came into effect on January 1, 2018. Additionally, imports of consumer goods decreased 4.6 percent to CAD 10 billion and clothing, footwear and accessories declined 18.0 percent. Also, lower purchases were seen for: electronic and electrical equipment and parts (-6.3 percent); communications and audio and video equipment (-10.3 percent), mainly due to lower imports of cell phones from China and following high import levels of cell phones in November and December. Year over year, imports increased 2.0 percent. 


Imports from the United States went down 1.8 percent to CAD 30.9 billion, mainly due to lower purchases of logging, mining and construction machinery and equipment. Following a record high in December, imports from countries other than the United States dropped 8.5 percent to CAD 16.8 billion, mostly attributable to lower imports of cell phones from China and refined petroleum products from the Netherlands. 

After three consecutive monthly increases, exports fell 2.1 percent to CAD 45.8 billion. Sales of motor vehicles and parts declined 5.7 percent to CAD 7.2 billion on lower exports of passenger cars and light trucks (-13.1 percent). Atypical plant closures for this time of year were responsible for the decrease in January, which also led to a drop in sales of motor vehicle engines and parts (-7.6 percent). In addition, exports of forestry products and building and packaging materials went down 6.6 percent to CAD 3.4 billion, mostly due to lumber and other sawmill and millwork products (-14.5 percent), as the US Department of Commerce resumed collecting import duties on Canadian lumber in late December 2017. Exports excluding energy products dropped 3.2 percent. On the other hand, sales of energy products increased 2.9 percent for the sixth consecutive month and entirely due to higher prices. Year over year, exports decreased 1.5 percent. 

Shipments to the United States fell 2.9 percent to CAD 34.1 billion, due to lower exports of passenger cars and light trucks and aircraft. Exports to countries other than the United States rose 0.4 percent to CAD 11.8 billion. Sales advanced to the United Kingdom, namely unwrought gold while exports decreased to Spain, China and Turkey.


Friday March 02 2018
Canada GDP Growth Rate Steady at 0.4%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The Canadian economy advanced 0.4 percent on quarter in the last three months of 2017, the same as in the previous period, boosted by higher business investment and residential structures. Expressed at an annualized rate, the GDP expanded 1.7 percent, higher than 1.5 percent in Q3 but below expectations of a 2 percent growth.

Final domestic demand rose 1 percent.

Business gross fixed capital formation grew 2.3 percent, compared with 0.8 percent in the previous quarter. Higher investment in residential structures was the main contributor, increasing 3.2 percent following a flat third quarter. New housing construction (+3 percent) also rose, while renovations edged down 0.1 percent. Outlays on non-residential structures increased 1.3 percent) on higher investment in engineering structures (+2.1 percent)), while investment in non-residential buildings declined 0.8 percent). Business investment in machinery and equipment rose 3 percent), primarily because of increased outlays on aircraft and other transportation equipment. Investment in intellectual property products was unchanged overall. Increased outlays on research and development (+2.1 percent)) and software (+1.1 percent)) were offset by declines in mineral exploration and evaluation (-11 percent)).

Businesses accumulated CAD 14.2 billion of inventories in the fourth quarter, as manufacturers, retailers and wholesalers all added to their stocks.

Real household final consumption expenditure slowed to 0.5 percent growth, following a 0.9 percent increase in the previous quarter. Spending was up on durable (+0.4 percent), semi-durable (+0.3 percent) and non-durable (+0.4 percent) goods, as well as on services (+0.6 percent).

Exports rose 0.7 percent, following a 2.7 percent decline in the third quarter. Exports of goods went up 0.6 percent, following a 3.4 percent drop in the previous quarter. The gain was led by basic and industrial chemical, plastic and rubber products (+7.9 percent). Forestry products and building and packing materials (+3.5 percent) also contributed to the gain, as did motor vehicles and parts (+1.3 percent). Exports of services (+1.3 percent) increased for the eighth consecutive quarter, mainly travel services (+4.4 percent).

Imports were 1.5 percent higher after edging up 0.1 percent in the previous quarter. Imports of goods increased 1.8 percent, with notable gains in aircraft and other transportation equipment and parts (+24.6 percent) and electronic and electrical equipment and parts (+6.2 percent). Imports of services increased 0.4 percent following 1.3 percent growth in the third quarter. Most of the gain was in commercial services (+1.6 percent), while imports of travel services declined 1.6 percent following 4.3 percent growth in the third quarter.

Considerinng full 2017, the economy advanced 3 percent, following a 1.4 percent growth in 2016. Much of this growth was attributable to the first two quarters of 2017, with deceleration observed toward the end of the year.





Thursday March 01 2018
Canada Current Account Deficit Narrows in Q4
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's current account deficit decreased by CAD 2.2 billion to CAD 16.3 billion in the fourth quarter of 2017, mainly due to a lower goods deficit. For the year 2017, the current account deficit reached CAD 63.9 billion, which was CAD 1.4 billion less than the deficit in 2016.

The goods deficit narrowed by CAD 1.9 billion to CAD 7.2 billion in the fourth quarter of 2017, after three consecutive increases. Considering full 2017, the goods deficit recorded CAD 23.9 billion, easing from a record deficit of CAD 25.9 billion in 2016.

On a geographical basis, the goods deficit with non-US countries increased by CAD 0.7 billion to a record CAD 17.6 billion in the fourth quarter, as trade balances deteriorated with the European Union countries and China, moderated by lower deficits with Japan and Mexico. Meantime, the surplus with the United States rose by CAD 2.6 billion to CAD 10.5 billion.

Total exports of goods advanced by CAD 6.4 billion to CAD 137.7 billion in the last quarter of 2017, following a drop of CAD 10.7 billion in the previous quarter. Exports of energy products increased by CAD 2.8 billion, mainly on higher crude petroleum prices. Total exports of goods were up CAD 28.0 billion in 2017, mainly due to stronger exports of energy products.

Total imports of goods widened by CAD 4.5 billion to CAD 144.9 billion. Imports of energy products rose CAD 1.2 billion as prices of crude petroleum increase. Aircraft and other transportation equipment and parts advanced CAD 1.2 billion, mostly on higher imports of aircraft. For 2017, imports grew by CAD 26.1 billion.

The non-goods deficit narrowed by CAD 0.4 billion to CAD 9.2 billion in the fourth quarter. Higher profits on Canadian direct investment abroad contributed the most to this decline. The deficit on investment income fell by CAD 0.8 billion to CAD 1.5 billion. Profits earned by Canadian direct investors went up CAD 1.7 billion. This was partially offset by higher income earned by foreign investors, both direct and portfolio, on their financial assets in Canada. The overall deficit on international trade in services rose by CAD 0.3 billion to reach CAD 6.5 billion. For the year 2017, the services deficit increased by CAD 1.8 billion to CAD 25.1 billion, mostly due to higher payments of financial services, namely with the United Kingdom, and transport services with non-US countries. Despite a record number of foreign tourists during the year, the travel deficit advanced in 2017 as spending by Canadians travelling abroad was higher than receipts from non-residents travelling to Canada.