Wednesday May 15 2019
Canada Inflation Rate at 4-Month High of 2%
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Canada edged up to 2 percent in April 2019 from 1.9 percent in the prior month, matching market expectations. It is the highest inflation rate since December, driven by prices of shelter and transportation.

Year-on-year, main upward pressure came from prices of shelter (2.7 percent, the same rate as in March) and transportation (2.5 percent vs 1.9 percent), as downward pressure from gasoline lessened (-1.6 percent vs -4.4 percent). Also, cost was higher for recreation, education and reading (1.8 percent vs 0.2 percent) and health and personal care (0.7 percent vs 0.2 percent) 

On the other hand, inflation slowed for food (2.9 percent vs 3.6 percent), primarily driven by a decline in the fresh or frozen beef index (-0.8 percent); clothing & footwear (1 percent vs 1.5 percent) and alcoholic beverages, tobacco products and recreational cannabis (2 percent vs 3 percent). In addition, prices fell for household operations, furnishings and equipment (-0.1 percent vs 0.5 percent).

Regarding special aggregates of the CPI, prices of durable goods rose 1.3 percent, up from a 1.2 percent increase in the prior month; and cost of services accelerated to 2.4 percent following a 2.2 percent gain in March, with the travel tours index rising 8.4 percent compared with April 2018. The increase was partly attributable to the fact that the first two days of the Easter long weekend, a popular time for travel, took place in April this year. Air transportation prices (+6.6 percent) continued to rise, amid jet groundings and increased April holiday travel. Also, the price of energy products rebounded (0.7 percent vs -1.2 percent).

On a monthly basis, consumer prices went up 0.4 percent, after a 0.7 percent gain in March and in line with market expectations. Monthly inflation was led by a 10 percent rise in gasoline prices largely due to a new carbon tax being implemented in New Brunswick, Ontario, Manitoba, PEI and Saskatchewan, while British Columbia hiked its existing carbon tax.

The BoC's annual core inflation, which excludes volatile items, dropped to 1.5 percent in April from 1.6 percent in the previous month and below market expectations of 1.8 percent.




Friday May 10 2019
Canada Jobless Rate Falls to 5.7%
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Canada fell to 5.7 percent in April 2019 from 5.8 percent in the previous month and slightly below market expectations of 5.8 percent. The economy added 106.5 thousand jobs, the largest rise in employment on record, driven by both full-time positions (+73 thousand) and part-time employment (+33.6 thousand).

Employment rose in Ontario (+47,000), Quebec (+38,000), Alberta (+21,000), and Prince Edward Island (+2,600), while it fell in New Brunswick (-3,900), and was little changed in the other provinces.

More people were employed in wholesale and retail trade (+32,000); construction (+29,000); information, culture and recreation (14,000); other services (+14,000); public administration (+9,000); agriculture (+7,000). On the other hand, employment declined in professional, scientific and technical services (-15,000), its first monthly decline since August 2018.

The number of employees in both the private and public sectors increased, while self-employment held steady.

In April, more people aged 15 to 24 were employed (+47,000), boosted by a strong increase in part-time work (+66,000). The youth unemployment rate was 10.3%, the lowest rate since comparable data became available in 1976. Also, employment went up  among those aged 55 and older (+34,000), due to gains for men (+26,000). Additionally, in the core working ages (25 to 54) employment increased by 24,000 in April for women, while it was little changed for male.

The labour force participation rate rose to 65.9 percent from 65.7 percent in the prior month, above market forecasts of 65.7 percent.




Thursday May 09 2019
Canada Trade Deficit Narrows in March
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada’s merchandise trade deficit narrowed to CAD 3.21 billion in March 2019 from an upwardly revised CAD 3.42 billion in the previous month and compared with market expectations of a CAD 2.45 billion gap. Exports rose 3.2 percent month-over-month, mainly due to higher sales of energy products and imports advanced at a softer 2.5 percent mostly driven by purchases of consumer goods.

Exports rose 3.2 percent month-over-month to CAD 49 billion in March from a downwardly revised CAD 47.54 billion in February and below market consensus of CAD 48 billion. Sales of energy products increased 7.7 percent to CAD 9.6 billion, driven by crude oil (5.0 percent), coal (29.5 percent), natural gas (9.9 percent) and refined petroleum products (13.6 percent). Also, sales of motor vehicles and parts went up 5.6 percent, namely passenger cars and light trucks (8.4 percent) and motor vehicle engines and motor vehicle parts (4.6 percent).

Exports to the US advanced 1.3 percent to CAD 36.4 billion, mostly on higher sales of motor vehicles and crude oil. Exports to countries other than the US rose 8.8 percent to CAD 12.7 billion, as higher exports to the UK (gold), the Netherlands (aluminium and crude oil), Germany (aircraft and crude oil) and Saudi Arabia (other transportation equipment) were partially offset by lower exports to Hong Kong (gold).

Imports increased 2.5 percent to CAD 52.26 billion in March 2019, from an upwardly revised CAD 50.96 billion in February and against market expectations of CAD 51.5 billion. Purchases of consumer goods went up 6.7 percent to a record CAD 10.9 billion, boosted by clothing, footwear and accessories (22.9 percent) mainly on higher purchases of clothing from Bangladesh and Cambodia. Also, imports of motor vehicles and parts advanced 4.9 percent to CAD 9.9 billion, mostly due to commercial trucks. On the other hand, purchases of aircraft fell 50.7 percent due to a slowdown in deliveries of airliners from the US.

Imports from the US dropped 0.4 percent, primarily on lower imports of aircrafs while those from countries other than the US rose 8.0 percent to CAD 19.5 million, led by higher purchases from China (computers and peripherals) and Mexico (cars and trucks).

Considering the first quarter of the year, the country's trade gap widened to CAD 10.4 billion from CAD 7.8 billion in the same period of 2018, the largest trade gap since the second quarter of 2016. Imports in the first quarter of 2019 went up 2.2 percent to CAD 155.1 billion, driven by higher purchases of aircraft and other transportation equipment and parts (35.0 percent) and motor vehicles and parts (4.9 percent). Exports advanced 0.5 percent to CAD 144.7 billion, boosted by sales of energy products.




Wednesday April 24 2019
Canada Holds Interest Rate at 1.75%
BoC | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Bank of Canada held its benchmark interest rate at 1.75 percent on April 24th 2019, as widely expected. It remained the highest rate since December 2008. Policymakers said that an accommodative policy interest rate continues to be warranted. The Committee added that they will be evaluating the appropriate degree of monetary policy accommodation depending on developments, which include household spending, oil markets, and global trade policy. The Bank Rate and deposit rate were also left unchanged at 2.0 percent and 1.50 percent, respectively.

Statement by the Bank of Canada:

Global economic growth has slowed by more than the Bank forecast in its January Monetary Policy Report (MPR). Ongoing uncertainty related to trade conflicts has undermined business sentiment and activity, contributing to a synchronous slowdown across many countries. In response, many central banks have signalled a slower pace of monetary policy normalization. Financial conditions and market sentiment have improved as a result, pushing up prices for oil and other commodities. 

Global economic activity is expected to pick up during 2019 and average 3 ¼ per cent over the projection period, supported by accommodative financial conditions and as a number of temporary factors weighing on growth fade. This is roughly in line with the global economy’s potential and a modest downgrade to the Bank’s January projection.

In Canada, growth during the first half of 2019 is now expected to be slower than was anticipated in January. Last year’s oil price decline and ongoing transportation constraints have curbed investment and exports in the energy sector. Investment and exports outside the energy sector, meanwhile, have been negatively affected by trade policy uncertainty and the global slowdown. Weaker-than-anticipated housing and consumption also contributed to slower growth.

The Bank expects growth to pick up, starting in the second quarter of this year. Housing activity is expected to stabilize given continued population gains, the fading effects of past housing policy changes, and improved global financial conditions. Consumption will be underpinned by strong growth in employment income. Outside of the oil and gas sector, investment will be supported by high rates of capacity utilization and exports will expand with strengthening global demand.  Meanwhile, the contribution to growth from government spending has been revised down in light of Ontario’s new budget.

Overall, the Bank projects real GDP growth of 1.2 per cent in 2019 and around 2 per cent in 2020 and 2021. This forecast implies a modest widening of the output gap, which will be absorbed over the projection period.

CPI and measures of core inflation are all close to 2 per cent. CPI inflation will likely dip in the third quarter, largely because of the dynamics of gasoline prices, before returning to about 2 per cent by year end. Taking into account the effects of the new carbon pollution charge, as well as modest excess capacity, the Bank expects inflation to remain around 2 per cent through 2020 and 2021.

Given all of these developments, Governing Council judges that an accommodative policy interest rate continues to be warranted. We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive. In particular, we are monitoring developments in household spending, oil markets, and global trade policy to gauge the extent to which the factors weighing on growth and the inflation outlook are dissipating.




Wednesday April 17 2019
Canada Trade Gap Narrows in February
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada’s merchandise trade deficit narrowed to CAD 2.90 billion in February 2019 from a downwardly revised CAD 3.09 billion in the previous month and compared with market expectations of a CAD 3.5 billion shortfall. Imports declined 1.6 percent month-over-month, led by lower purchases of gold and exports dropped 1.3 percent on lower sales of non-energy products.

Imports fell 1.6 percent to CAD 50.9 billion in February. Purchases of metal and non-metallic mineral products dropped 7.7 percent, driven by gold. Also, purchased decreased for electronic and electrical equipment and parts (3.8 percent to CAD 5.8 billion); computers and computer peripherals (-9.5 percent), namely laptops from the US and China; industrial machinery, equipment and parts (-3.5 percent); consumer goods (-1.9 percent) and motor vehicles and parts (-1.9 percent). On the other hand, imports of aircraft and other transportation equipment and parts rose 6.3 percent to CAD 2.8 billion, boosted by aircraft, which posted a record high.

Imports from the US advanced 1.2 percent to CAD 32.8 billion, in part due to higher purchases of aircraft. Imports from countries other than the US went down 6.3 percent to CAD 18.1 billion, including China (various products), Mexico (autos), Germany (autos) and the UK (aircraft and parts, energy products).

Exports decreased 1.3 percent to CAD 48.0 billion. Sales fell for all non-energy product sections, mostly metal and non-metallic mineral products (-6.6 percent to CAD 5.2 billion), due to lower exports of refined gold to the UK and gold transfers within the banking sector. Additionally, exports of metal ores and non-metallic minerals dropped 11.0 percent to CAD 1.7 billion. Also, sales declined for motor vehicles and parts (-2.8 percent), mainly passenger cars and light trucks. Meanwhile, sales of energy products increased 11.7 percent to CAD 9.3 billion, mostly driven by crude oil (+8.5 percent) and  natural gas (+46.2 percent). Excluding energy products, exports fell 4.0 percent.

Exports to the US went up 3.5 percent to CAD 36.3 billion, primarily on higher sales of crude oil. Exports to countries other than the US fell 14.0 percent to CAD 11.7 billion, the lowest level since February last year. Widespread decreases were led by lower exports to the UK (gold), Saudi Arabia (other transportation equipment), Japan (canola and other crop products) and the Netherlands (iron ores, crude oil and coal).


Wednesday April 17 2019
Canada Inflation Rate Hits 3-Month High of 1.9%
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Canada rose to 1.9 percent in March 2019 from 1.5 percent in the previous month and matching market expectations. It is the highest inflation rate since December. The transportation index drove headline inflation up, as gasoline prices declined less in March than in February.

Year-on-year, prices rose faster mainly for transport (1.9 percent vs 0.1 percent in February), as downward pressure from gasoline eased (-4.4 percent vs -11.9 percent); shelter (2.7 percent vs 2.4 percent); food (3.6 percent vs 3.2 percent) and household operations, furnishings and equipment (0.5 percent vs 0.2 percent). On the other hand, inflation slowed for recreation, education and reading (0.2 percent vs 1.0 percent); clothing & footwear (1.5 percent vs 1.6 percent); health and personal care (0.2 percent vs 0.6 percent) and alcoholic beverages, tobacco products and recreational cannabis (3.0 percent vs 4.1 percent).

Regarding special aggregates of the CPI, prices for durable goods rose 1.2 percent, after a 0.4 percent increase in the prior month, led by a 3.0 percent increase in the purchase of passenger vehicles index. Also, the price of energy products decreased much less (-1.2 percent vs -5.7 percent). Meanwhile, cost of services slowed to 2.2 percent following a 2.3 percent increase in February.

On a monthly basis, consumer prices increased 0.7 percent, the same pace as in February and in line with market consensus.

The BoC's annual core inflation, which excludes volatile items, rose to 1.6 percent in March from 1.5 percent in the previous month, hitting its highest level since December.


Friday April 05 2019
Canada Jobless Rate Steady at 5.8%
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Canada was at 5.8 percent in March 2019, unchanged from the previous month and in line with market expectations. It remained the highest jobless rate since October last year for the third consecutive month. Employment declined unexpectedly by 7.2 thousand, against market expectations of a 1 thousand gain. In the first quarter of 2019, employment rose by 116 thousand.

Employment advanced mainly in Saskatchewan (+3,900), New Brunswick (+3,100) and Prince Edward Island (+2,000), while it was almost unchanged in the rest of provinces, including Ontario, Alberta and Quebec. 

More people were employed in finance, insurance, real estate, rental and leasing (+13,000); public administration (+9,600); wholesale and retail trade (+8,400); other services (+6,500); manufacturing (4,500); professional, scientific and technical services (3,900); and transportation and warehousing (+1,900). Meanwhile, employment dropped in health care and social assistance (-20,000); business, building and other support services (-14,000); accommodation and food services (-13,000); information, culture and recreation (-3,200); construction (-2,400); and educational services (-1,400).

The number of employees in the public and private sectors was little changed in March. Also, self-employment held steady.

In March, more people aged 55 and older were employed (+29,000), with the gains evenly split between men and women. For women in the core working ages (25 to 54), employment decreased by 48,000 while for core-aged men was almost unchanged. Additionally, youth employment held steady after two consecutive montly increases.

The labour force participation rate dropped to 65.7 percent from 65.8 percent in the prior month, matching market consensus.


Wednesday March 27 2019
Canada Trade Deficit Narrows Less than Expected in January
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada’s merchandise trade deficit narrowed to CAD 4.25 billion in January 2019 from an upwardly revised all-time high CAD 4.82 billion in the previous month and compared with market expectations of a CAD 3.5 billion shortfall. It was the second largest trade gap on record. Exports rose 2.9 percent, the first increase since July, mainly on the strength of higher crude oil export prices and imports increased at a softer 1.5 percent, led by aircraft purchases.

Exports went up 2.9 percent to CAD 47.6 billion in January, the first rise since July last year. Sales of energy products increased for the first time after five consecutive monthly decreases (14 percent to CAD 7.1 billion), name crude oil (36.5 percent) on the strength of a 36.0 percent rise in prices. The price of crude oil exports dropped sharply in the second half of 2018, falling by more than 50 percent from July to December. Also, sales of metal and non-metallic mineral products advanced 11.9 percent to CAD 5.6 billion in January, the strongest monthly gain since March 2014, mainly due to higher exports of refined gold to the UK, as well as an increase in gold transfers to Hong Kong within the banking sector.  Higher exports of energy products and metal and non-metallic mineral products were partially offset by lower exports of farm, fishing and intermediate food products. Excluding energy products, exports rose 1.2% in January. On the other hand, sales of farm, fishing and intermediate food products fell 8.1 percent to CAD 3.1 billion, mostly other crop products (-25.4 percent), mainly due to lower exports of soybeans to China. This comes on the heels of record exports of Canadian soybeans to China in 2018, a peak that coincided with strong decreases in US exports of soybeans to China.

Exports to the US increased 1.1 percent to CAD 34.0 billion, primarily on the strength of higher sales of crude oil. Exports to countries other than the US went up 7.9 percent to CAD 13.6 billion, namely to the UK (gold). Other countries, such as Hong Kong (gold) and Saudi Arabia (other transportation equipment) also contributed to the increase, while China (soybeans) recorded the largest decrease.

Imports rose 1.5 percent to a record CAD 51.8 billion, mainly boosted by higher purchases of aircraft and other transportation equipment and parts (52.6 percent to a record CAD 2.7 billion) were moderated by lower imports of energy products. Meanwhile, purchases of energy products decreased 12.1 percent to CAD 2.8 billion, mostly refined petroleum products (-16.0 percent).

Imports from the US increased 1.8 percent to CAD 32.5 billion, namely aircraft. Imports from countries other than the US advanced 1.1 percent to CAD 19.4 billion, surpassing the record set in December. A number of countries contributed to the increase, including Belgium (pharmaceutical products), the UK (aircraft and aircraft parts), Saudi Arabia (crude oil), China (various products) and Mexico (various products). These gains were partially offset by lower imports from Brazil (bauxite) and South Korea (iron and steel products).


Friday March 22 2019
Canada Annual Inflation Rate Rises to 1.5% in February
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Canada rose to 1.5 percent in February 2019 from 1.4 percent in the previous month and above market expectations of 1.4 percent. Prices increased further mainly driven by food and shelter.

Year-on-year, prices advanced further for food (3.2 percent from 2.8 percent in January), namely fresh vegetables (14.3 percent) and fruit (3.8 percent); and clothing and footwear (1.6 percent from 0.5 percent). Also, cost of transportation rebounded (0.1 percent from -0.4 percent) and inflation was steady for shelter (2.4 percent, the same as in January) and health and personal care (0.6 percent). On the other hand, prices eased for household operations, furnishings and equipment (0.2 percent from 0.7 percent); recreation, education and reading (1.0 percent from 1.3 percent); and alcoholic beverages and tobacco products (4.1 percent from 4.5 percent). 

Regarding special aggregates of the CPI, prices for durable goods increased 0.3 percent, rebounding from a 0.1 percent decline in the prior month. In addition, the price of energy products went down 5.7 percent, less than a 6.9 percent fall in January, of which gasoline (-11.9 percent). Meanwhile, cost of services slowed to 2.3 percent from 2.7 percent in the previous month.

On a monthly basis, consumer prices went up 0.7 percent, after a 0.1 percent in January and higher than market consensus of 0.6 percent.

The BoC's annual core inflation, which excludes volatile items, was at 1.5 percent, unchanged from the prior month.


Friday March 08 2019
Canada Jobless Rate Steady at 4-Month High of 5.8%
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Canada stood at 5.8 percent in February 2019, the highest level since October, as more people searched for work (+55.1 thousand). The economy added 55.9 thousand jobs, entirely driven by full-time positions (+67.4 thousand) while part-time employment fell (-11.6 thousand).

The number of unemployed dropped to 1161.3 thousand in February 2019 from 1162 thousand in January while employment rose to 18929.8 thousand from 18873.9 thousand in the prior month. The labour force participation rate rose to 65.8 percent in February from 65.6 percent January, beating market forecasts of 65.4 percent. It is the highest rate since December 2017.

Ontario was the sole province with a notable employment gain in February (+37,000). Employment declined in Manitoba (-3,300), and was little changed in the remaining provinces.

More people were employed in professional, scientific and technical services (+18,000); public administration (+14,000); natural resources (+8,000); and agriculture (+6,000). At the same time, there were fewer workers in accommodation and food services (-14,000), as well as transportation and warehousing (-11,000).

In both the public and private sectors, there was little change in the number of employees in February. When combined, the total number of employees in the two sectors increased by 41,000. Also, self-employment was little changed.

Employment rose for both women and men aged 15 to 24 (+29,000), while it was little changed for the other demographic groups.