Friday February 09 2018
Canada Jobless Rate Edges Up to 5.9%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in Canada increased to 5.9 percent in January of 2018 from an upwardly revised 5.8 percent in December and market expectations of 5.8 percent. Employment fell by 88,000, the most since January of 2009 as part-time employment declined by 137,000 while full-time employment was up by 49,000.

Employment declined for core-aged women (25 to 54 years old), as well as people 55 and older and youth aged 15 to 24. There was little change for core-aged men.

The employment decreased the most in Ontario (-51,000) and Quebec (-17,000) followed by New Brunswick (-5,800) and Manitoba (-3,600).

Jobs were shed across a number of industries, including educational services (-20,000); finance, insurance, real estate, rental and leasing (-18,000); professional, scientific and technical services (-17,000); construction (-15,000); and health care and social assistance (-11,000). On the other hand, employment increased in business, building, and other support services (+11,000).

In January, the number of employees fell in both the private (-71,000) and public (-41,000) sectors, while the number of self-employed workers held steady.

On a year-over-year basis, employment went up by 289,000 or 1.6 percent driven by full-time work (+414,000 or +2.8 percent), while there were fewer people working part time (-125,000 or -3.5 percent). Over the same period, hours worked rose by 2.8 percent.




Tuesday February 06 2018
Canada December Trade Gap Larger Than Expected
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada's merchandise trade deficit with the world totaled CAD 3.2 billion in December, widening from a CAD 2.7 billion deficit in November while markets were expecting a CAD 2.2 billion shortfall. Imports rose 1.5 percent, underpinned by higher purchases of energy products and industrial machinery, equipment and parts. Meantime, exports were up 0.6 percent, driven by sales of energy products and metal and non-metallic mineral products.

Total imports were up 1.5 percent to a record CAD 49.7 billion in December, with increases in 9 of 11 sections. Imports of energy products were up 16.9 percent  to CAD 3.0 billion in December. Crude oil and crude bitumen imports increased 23.9 percent, while refined petroleum energy products rose 17.8 percent, mainly on higher imports of diesel and fuel oils. Purchases of industrial machinery, equipment and parts also grew 6.3 percent to CAD 5.0 billion. Imports of logging, mining and construction machinery and equipment led the way, rising 24.6 percent to a record CAD 897 million, the third consecutive monthly increase. These gains precede new emissions regulations affecting off-road diesel engines and machines. As of January 1, 2018, imports of equipment not meeting the new standards are no longer permitted

Meanwhile, imports of aircraft and other transportation equipment and parts were down 23.4 percent in December to CAD 1.7 billion, after two strong monthly increases, as fewer airliners were imported from the United States.

Imports from the United States fell 1.3 percent to CAD 31.5 billion in December. Following a 5.6 percent increase in November, imports from countries other than the United States rose 6.8 percent to CAD 18.2 billion in December, notably due to higher imports of passenger cars and light trucks from Germany as well as refined petroleum energy products from the Netherlands.

Total exports rose for the third consecutive month, up 0.6 percent to CAD 46.5 billion in December despite decreases in 6 of 11 sections. Shipments of energy products rose 6.2 percent to CAD 8.5 billion in December, the fifth consecutive monthly increase and the highest level since November 2014. Following pipeline disruptions in November, exports of crude oil and crude bitumen led the increase, up 7.4 percent to CAD 5.6 billion on higher volumes. Exports of natural gas (+26.6 percent) and electricity (+48.8 percent) also contributed to the gain as unusually low temperatures hit the North-eastern United States in December. Also, sales of metal and non-metallic mineral products soared  7.7 percent to CAD 5.6 billion. Unwrought precious metals and precious metal alloys led the increase on higher shipments of unwrought gold to Hong Kong, the United States and the United Kingdom.

Exports to the United States were down 0.8 percent to CAD 34.9 billion while those to countries other than the United States rose 4.9 percent to  CAD 11.6 billion in December, led by Japan (aircraft), India (potash), the United Kingdom (unwrought gold) and Hong Kong (also unwrought gold).

Year-on-year, exports were up only 0.4% while imports jumped 7.8 percent.




Friday January 26 2018
Canada Inflation Rate Moderates to 1.9% in December
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The consumer price index in Canada rose 1.9 percent year-on-year in December of 2017, easing from a 2.1 percent gain in the previous month and matching market consensus. Prices of transport contributed the most to the slowdown in inflation. Meanwhile, cost of shelter and food continued to grow. Also, the BoC's annual core inflation, which excludes volatile items, went down to 1.2 percent compared to 1.3 percent in November.

Consumer prices for transportation rose 4.9 percent on a year-over-year basis in December, following a 5.9 percent increase in November. The movement in transportation prices was led by gasoline, which rose 12.2 percent, after increasing 19.6% the previous month. The purchase of passenger vehicles index increased 3.7 percent, following a 3.6 percent gain in the prior month.

The shelter index grew 1.4 percent, after increasing 1.2 percent in November. The natural gas index contributed to the gain in this major component, up 6.2 percent in December following a 3.1 percent increase in November.

Prices of food advanced 2 percent, after rising 1.6 percent in the prior month. Food purchased from stores was up 1.5 percent in the 12 months to December. Higher prices for fresh vegetables (+6.9 percent) contributed the most to the increase. Prices for food purchased from restaurants rose 2.9 percent.

Household operations, furnishings and equipment costs fell 0.3 percent, after increasing 0.9 percent in November. This decline was largely due to price decreases in telephone services, down 5.0 percent in December.

On a monthly basis, consumer prices inched down 0.4 percent, following a 0.3 percent rise in the prior month and compared with market expectations of a 0.3 percent fall.





Wednesday January 17 2018
Canada Raises Key Rate to 1.25%
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada hiked its overnight rate by 25bps to 1.25 percent on January 17th 2018, in line with market expectations. Policymakers said that recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity but noticed that uncertainty surrounding the future of NAFTA is clouding the economic outlook. The Bank Rate is correspondingly 1.5 percent and the deposit rate is 1 percent.

Statement by the Bank of Canada:

The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Bank’s October Monetary Policy Report (MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices.

In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.

Consumption and residential investment have been stronger than anticipated, reflecting strong employment growth. Business investment has been increasing at a solid pace, and investment intentions remain positive. Exports have been weaker than expected although, apart from cross-border shifts in automotive production, there have been positive signs in most other categories.

Looking forward, consumption and residential investment are expected to contribute less to growth, given higher interest rates and new mortgage guidelines, while business investment and exports are expected to contribute more. The Bank’s outlook takes into account a small benefit to Canada’s economy from stronger US demand arising from recent tax changes. However, as uncertainty about the future of NAFTA is weighing increasingly on the outlook, the Bank has incorporated into its projection additional negative judgement on business investment and trade.

The Bank continues to monitor the extent to which strong demand is boosting potential, creating room for more non-inflationary expansion. In this respect, capital investment, firm creation, labour force participation, and hours worked are all showing promising signs. Recent data show that labour market slack is being absorbed more quickly than anticipated. Wages have picked up but are rising by less than would be typical in the absence of labour market slack.

In this context, inflation is close to 2 per cent and core measures of inflation have edged up, consistent with diminishing slack in the economy. The Bank expects CPI inflation to fluctuate in the months ahead as various temporary factors (including gasoline and electricity prices) unwind. Looking through these temporary factors, inflation is expected to remain close to 2 per cent over the projection horizon.

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.




Friday January 05 2018
Canada Jobless Rate Declines to Lowest in Over 40 Years
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Canada fell to 5.7 percent in December of 2017 from 5.9 percent in November and well below market consensus of 6 percent. It is the lowest jobless rate since comparable data became available in January 1976, as the economy added 79,000 jobs. Employment gains were concentrated in part-time work (54.9 thousand) while 23.7 thousand full-time jobs were added.

In December, employment increased for men and women aged 25 to 54 as well as for people aged 55 and over. There was little overall change for youth aged 15 to 24.

The largest employment gains in December were observed in Quebec and Alberta, while there were smaller increases in Nova Scotia, Saskatchewan, New Brunswick and Prince Edward Island.

There were more people working in the services-producing sector, led by finance, insurance, real estate, rental and leasing (up 25 thousand). Employment also increased in "other services" (up 13 thousand), educational services (up 11 thousand), and transportation and warehousing (up 9.5 thousand). In the goods-producing sector, there were more people employed in natural resources (up 5.8 thousand) and construction (up 6.5 thousand) while manufacturing cut jobs (down 3.6 thousand).

The number of self-employed workers increased by 28 thousand in December. At the same time, public sector employment rose by 22 thousand, while the number of private sector employees was stable.


Friday January 05 2018
Canada Trade Deficit Widens in November
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's trade deficit increased to CAD 2.5 billion in November of 2017, widening from CAD 1.6 billion in the previous month and above market expectations of a CAD 1.2 billion deficit. Imports went up 5.8 percent month-over-month and exports rose 3.7 percent, both due largely to increased activity in the automotive industry. Sales to the United States increased by 5.4 percent, while imports grew by 6.5 percent. As a result, the trade surplus with the United States, which accounted for 76.2 percent of Canadian goods exported in November, declined to CAD 3.34 billion from CAD 3.47 billion in October.

Imports advanced 5.8 percent month-over-month to CAD 48.7 billion in November of 2017 from CAD 46.0 billion in October. It is the strongest increase since July of 2009, as there were increases in 10 of 11 sections. Volumes rose 5.0 percent and prices 0.7 percent. The imports increase was mainly due to purchases of electronic and electrical equipment and parts, motor vehicles and parts, as well as aircraft and other transportation equipment and parts.

Year over year, total imports were up 8.1 percent. Imports of electronic and electrical equipment and parts rose 10.9 percent to CAD 5.8 billion in November, driven by rises in all commodity groups. In addition, communications and audio and video equipment, mainly cell phones, posted a 21.6 percent gain to a record high CAD 2.1 billion. The introduction of new cell phone models, which is atypical for this time of year, was behind the growth observed in November. Also, purchases of motor vehicles and parts rose 5.4 percent to CAD 9.2 billion and motor vehicle engines and motor vehicle parts were up 15.7 percent, after two consecutive monthly drops. Activity in the automotive industry rebounded following the planned shutdowns and work stoppages that occurred in September and October. Imports of aircraft and other transportation equipment and parts also rose in November, up 18.7% to CAD 2.2 billion. Higher imports of ships from South Korea and China were responsible for the increase.

Exports increased 3.7 percent month-over-month to CAD 46.2 billion, the most in a year, due to increases in 8 of 11 sections. Higher sales of motor vehicles and parts and consumer goods contributed the most to the growth. Prices were up 3.2 percent and volumes 0.6 percent. In contrast, excluding exports of motor vehicles and parts, sales volumes were down 1.4 percent. The export value of motor vehicles and parts increased 14.6 percent to CAD 7.7 billion and passenger cars and light trucks rebounded 21.2 percent to CAD 5.3 billion. As with imports of motor vehicle engines and motor vehicle parts, increased activity in the automotive industry led to a rise in exports. For the section as a whole, volumes rose 13.4 percent. Also, sales of consumer goods contributed to the growth in November, rising 7.4 percent to CAD 6.0 billion and pharmaceutical and medicinal products posted the strongest increase (+23.7 percent), due mainly to increased exports to Italy.


Thursday December 21 2017
Canada Inflation Rate Rises to 2.1% in November
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Canada increased 2.1 percent year-on-year in November of 2017, following a 1.4 percent gain in the previous month and above market expectations of 2.0 percent. It is the highest rate since January of 2017, as prices advanced at a faster pace for gasoline and food. Meanwhile, the BoC's annual core inflation, which excludes volatile items, went up to 1.3 percent compared to 0.9 percent in October.

Year-on-year, transportation prices rose 5.9 percent in November, following a 3.0 percent rise in October. The gain was mainly driven by gasoline prices, which went up 19.6 percent, after a 6.5 percent increase in the previous month. The rise was partly attributable to higher crude oil prices, as well as a monthly decline one year earlier. In additon, the purchase of passenger vehicles index jumped 3.6 percent compared to a 1.9 percent gain in October, mostly due to the greater availability of new 2018 model year vehicles.

The food index rose 1.6 percent year over year in November from a 1.3 percent increase in October. On a month-over-month basis, the food index advanced 0.8 percent, the largest monthly gain since January of 2016, namely meat (1.9 percent) and fresh vegetable (3.8 percent).

Consumer prices for household operations, furnishings and equipment went up 0.9 percent on a year-over-year basis in November after increasing 0.2 percent in October, mainly driven by growth in the telephone services index (2.3 percent) which was partly attributable to a decline in prices in November 2016, which no longer influences the 12-month movement. Furniture prices rose 1.9 percent month over month, the largest since February 2015.

On a monthly basis, consumer prices edged up 0.3 percent, following a 0.1 percent rise in the prior month..


Wednesday December 06 2017
Canada Leaves Monetary Policy Steady
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its benchmark overnight rate at 1 percent on December 6th, 2017, in line with market expectations. Policymakers said the current policy stance remains appropriate although higher interest rates will likely be required over time. The Bank Rate is correspondingly 1 1/4 percent and the deposit rate is 3/4 percent.

Statement of the Bank of Canada:

The global economy is evolving largely as expected in the Bank’s October Monetary Policy Report (MPR). In the United States, growth in the third quarter was stronger than forecast but is still expected to moderate in the months ahead. Growth has firmed in other advanced economies. Meanwhile, oil prices have moved higher and financial conditions have eased. The global outlook remains subject to considerable uncertainty, notably about geopolitical developments and trade policies.

Recent Canadian data are in line with October’s outlook, which was for growth to moderate while remaining above potential in the second half of 2017. Employment growth has been very strong and wages have shown some improvement, supporting robust consumer spending in the third quarter. Business investment continued to contribute to growth after a strong first half, and public infrastructure spending is becoming more evident in the data. Following exceptionally strong growth earlier in 2017, exports declined by more than was expected in the third quarter. However,  the latest trade data support the MPR projection that export growth will resume as foreign demand strengthens. Housing has continued to moderate, as expected.

Inflation has been slightly higher than anticipated and will continue to be boosted in the short term by temporary factors, particularly gasoline prices. Measures of core inflation have edged up in recent months, reflecting the continued absorption of economic slack. Revisions to past quarterly national accounts have resulted in a higher level of GDP. However, this is unlikely to have significant implications for the output gap because the revisions also imply a higher level of potential output. Meanwhile, despite rising employment and participation rates, other indicators point to ongoing­ – albeit diminishing – slack in the labour market.

Based on the outlook for inflation and the evolution of the risks and uncertainties identified in October’s MPR, Governing Council judges that the current stance of monetary policy remains appropriate. While higher interest rates will likely be required over time, Governing Council will continue to be cautious, 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.


Tuesday December 05 2017
Canada Trade Gap Narrows in October
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada's trade deficit decreased to CAD 1.47 billion in October of 2017 from an upwardly revised CAD 3.36 billion shortfall in the prior month and better than market expectations of a CAD 2.70 billion deficit. Exports were up 2.7 percent on higher sales to the United States, while imports decreased 1.6 percent due to lower purchases of motor vehicles and parts.

Total exports increased 2.7 percent to CAD 44.5 billion in October, following four consecutive monthly declines. Advances were observed in 9 of 11 sections, led by basic and industrial chemical, plastic and rubber products (12.4 percent). There were also notable gains in metal and non-metallic mineral products (4.5 percent); farm, fishing and intermediate food products (7.7 percent); and energy products (2.7 percent). The increases within the basic and industrial chemical, plastic and rubber products, as well as the energy products sections were driven by similar factors in October. Exports of lubricants and other petroleum refinery products (gasoline blending stock), up 44.5 percent, and refined petroleum energy products (diesel and fuel oils), up 18.4 percent, rose for a second consecutive month, mostly on higher US demand. A recent drawdown in inventories of refined petroleum products in the United States (especially on the East Coast) led to increased exports from Canadian refineries.

Exports to the United States rose 4.1 percent to CAD 33.3 billion in October, led by unwrought gold. Exports to countries other than the United States were down 1.4 percent to CAD 11.1 billion on lower exports to the United Kingdom and China (both unwrought gold). Partially offsetting these declines were higher exports to the Netherlands (metallurgical coal) and Switzerland (aircraft).

Total imports were down 1.6 percent to CAD 45.9 billion in October, mainly due to a decrease in motor vehicles and parts (-8.1 percent). Passenger cars and light trucks were down 8.8 percent in October, returning to June levels after three consecutive monthly increases. Also contributing to the decrease were lower imports of motor vehicle engines and motor vehicle parts, down 11.1 percent. Work stoppages and planned shutdowns in the automotive industry led to a sharp decrease in the demand for automotive components in October. Metal ores and non-metallic minerals were also down 20.1 percent to CAD 983 million, with other metal ores and concentrates (-21.8 percent) contributing the most to the decline. After peaking in September, imports of zinc ores from Alaska decreased in October. 

Imports from the United States were down 0.6 percent to  CAD 29.8 billion, partly on lower imports of zinc ores. As a result, Canada's trade surplus with the United States widened from CAD 2.0 billion in September to CAD 3.5 billion in October. Imports from countries other than the United States fell 3.3 percent to CAD 16.1 billion, on lower imports from Mexico (light trucks), Japan (gold bullion) and Saudi Arabia (crude oil).

Year-on-year, exports were up 0.8 percent and imports rose 0.9 percent.


Friday December 01 2017
Canada Unemployment Rate Falls to 5.9%, Lowest Since 2008
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in Canada declined to 5.9 percent in November of 2017 from 6.3 percent in October and well below market expectations of 6.2 percent. It is the lowest jobless rate since February of 2008 as the economy added 80,000 jobs.

In November, employment increased for women 55 and older, for youth aged 15 to 24, and for core-aged men (25 to 54). There was little change for the other demographic groups.

Employment rose in Ontario, British Columbia, Quebec and Prince Edward Island. At the same time, fewer people were employed in New Brunswick, while there was little change in the other provinces.

A number of goods and services producing industries recorded employment gains: wholesale and retail trade, manufacturing, educational services, and construction. On the other hand, a decrease was observed in agriculture.

The employment increase in November was largely among private sector employees, as both public sector employment and the number of self-employed were little changed.