Friday November 17 2017
Canada Inflation Rate Slows to 1.4% in October, Matches Forecasts
Statistics Canada |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Canada increased 1.4 percent year-on-year in October of 2017, following a 1.6 percent rise in the previous month, and matching market expectations. The decline in annual inflation rate was mainly led by a slowdown in prices of gasoline and shelter. Meanwhile, the BoC's annual core inflation, which excludes volatile items, went up to 0.9 percent compared to 0.8 percent in September.

Transportation prices rose 3 percent on a year-over-year basis in October, following a 3.8 percent increase in September. This deceleration was led by gasoline prices, which advanced 6.5 percent after increasing 14.1 percent the previous month in the aftermath of Hurricane Harvey. At the same time, the purchase of passenger vehicles index rose 1.5 percent month-over-month in October, providing the impetus for the largest year-over-year gain in this index since March 2017.

The shelter index rose 1.2 percent after an increase of 1.4 percent in September.

Consumer prices for food were up 1.3 percent, after rising 1.4 percent in the previous month.

The recreation, education and reading index increased 1.5 percent, following a 2.1 percent gain in September. Prices for travel tours contributed the most to this deceleration, increasing 4.4 percent, after a 7.3 percent gain in September. The recreational services index increased 5.2 percent, following a 14.7 percent gain in September. Meanwhile, prices for digital computing equipment and devices (-4.4%) declined at a slower rate on a year-over-year basis in October than in September.

Consumer prices for household operations, furnishings and equipment rose 0.2 percent, after declining year over year for three consecutive months. Prices for telephone services increased 3.9 percent on a monthly basis, leading to a 0.1 percent year-over-year decline in October, following a 3.1 percent decrease in September. Prices for child care services went up 2.6 percent. Additionally, the tools and other household equipment index recorded a smaller year-over-year increase for the month than was seen in September.

The clothing and footwear index went down 1.5 percent in October 2017, after falling 2.3 percent in the prior month.

On a monthly basis, consumer prices edged up 0.1 percent, following a 0.2 percent increase in September.




Friday November 03 2017
Canada Jobless Rate Rises to 6.3% in October
Statistics Canada |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada unemployment rate went up 0.1 percentage point to 6.3% in October of 2017, above market expectations of 6.2 percent as more young people joined the labor market. Overall, employment increased by 0.2 percent or 35 000 to 18.489 Million. Employment gains were driven by full-time work (+89,000), while fewer people worked part time (-53,000).

There were 18,000 more youths aged 15 to 24 employed in October, with all of the growth in full-time work. At the same time, their unemployment rate rose 0.8 percentage points to 11.1%, as more of them searched for work. Total employment for core-aged 25- to 54-year-olds held steady in October, while their unemployment rate fell 0.2 percentage points to 5.4%.

The largest employment increase was in Quebec, followed by Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick. At the same time, there was a decline in Saskatchewan.

Employment rose in several industries, led by "other services;" construction; information, culture and recreation; and agriculture.

Employment was up by 21,000 in the "other services" industry in October. Compared with 12 months earlier, employment in this industry was little changed. "Other services" include services such as those related to civic and professional organizations, and personal and laundry services. In construction, employment rose by 18,000 in October. Compared with October 2016, employment in construction was virtually unchanged. There were 15,000 more people working in information, culture and recreation industries in October. On a year-over-year basis, employment in this industry was little changed. In October, employment in agriculture increased by 6,100, reaching a level similar to that observed in October 2016.

Employment in professional, scientific and technical services was little changed in the month, but this industry was the fastest growing on a year-over-year basis, up 85,000 or 6.1%. Much of the year-over-year increase was in computer system design services.

Manufacturing employment edged up in October (+7,800) and was up by 51,000 (+3.0 percent) on a year-over-year basis. Employment in this industry has been on an upward trend since the start of 2017. The increase in the 12 months to October was mostly attributable to subsectors such as electrical equipment, appliance and component manufacturing.

Employment was down by 36,000 in trade, mostly in wholesale. On a year-over-year basis, employment in this industry was up by 47,000 (+1.7 percent).

The number of private sector employees rose by 39,000 in October, while public sector employment was little changed. Compared with 12 months earlier, the number of private sector employees increased by 165,000 (+1.4 percent) and public sector employment rose by 83,000 (+2.3 percent).

Self-employment was little changed in October, but was up by 60,000 (+2.1 percent) on a year-over-year basis.




Friday November 03 2017
Canada Trade Deficit Unchanged in September
Statistics Canada | Marta Dubiel | marta.dubiel@tradingeconomics.com

Canada's merchandise trade deficit with the world totaled CAD 3.17 billion in September 2017, essentially unchanged from a CAD 3.18 billion gap in the previous month and above market expectations of CAD 3 billion shortfall. Exports were down 0.3 percent on lower passenger car and light truck sales, while imports decreased 0.3 percent on lower prices.

Total exports were down 0.3 percent to CAD 43.6 billion in September, the fourth consecutive monthly decline since the record high in May. Lower exports of motor vehicles and parts were largely offset by higher exports of energy products. Shipments of motor vehicles and parts fell 10.6 percent to CAD 6.5 billion. Prices decreased 0.6 percent, while volumes rose 0.3 percent. Exports excluding energy products fell 1.8 percent. However, exports excluding motor vehicles and parts were up 1.8 percent. Year-on-year, total exports rose 0.3 percent. 

Exports to the United States fell 1.2 percent to CAD 32.3 billion in September, due to lower exports of passenger cars and light trucks. Exports to countries other than the United States rose 2.4 percent to CAD 11.3 billion, as higher exports to China (unwrought gold) and Brazil (pharmaceutical products) were partially offset by lower exports to Japan (iron, coal and copper).

Total imports amounted to CAD 46.7 billion, down 0.3 percent from the previous month. Declines in the electronic and electrical equipment and parts and consumer goods sections were mostly offset by higher imports of energy products. Purchases of electronic and electrical equipment and parts were down 4.6 percent to CAD 5.1 billion. Prices decreased 1.5 percent, while volumes were up 1.3 percent. Year-on-year, total imports fell 2.0 percent.

Imports from the United States rose 0.4 percent to CAD 30.1 billion. As a result, Canada's trade surplus with the United States narrowed from CAD 2.7 billion in August to CAD 2.2 billion. Imports from countries other than the United States fell 1.4 percent to CAD 16.6 billion. Lower imports from Switzerland (pharmaceutical products) and Japan (gold bars) were partially offset by higher imports from Saudi Arabia (crude oil) and Singapore.




Wednesday October 25 2017
Canada Holds Overnight Rate at 1%
Bank of Canada | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Canada held its benchmark overnight rate at 1 percent on October 25th, 2017, after a surprise hike at the previous meeting, saying that the current stance of monetary policy is appropriate. Policymakers also said that inflation is set to hit the central bank's midpoint target of 2 percent in the second half of 2018 and that growth is projected to remain close to potential over the next two years.

Statement of the Bank of Canada:

Inflation has picked up in recent months, as anticipated in the Bank’s July Monetary Policy Report (MPR), reflecting stronger economic activity and higher gasoline prices. Measures of core inflation have edged up, in line with a narrowing output gap and the diminishing effects of lower food prices. The Bank projects inflation will rise to 2 per cent in the second half of 2018. This is a little later than anticipated in July because of the recent strength in the Canadian dollar. The Bank is also mindful that global structural factors could be weighing on inflation in Canada and other advanced economies.

The global and Canadian economies are progressing as outlined in the July MPR. Economic activity continues to strengthen and broaden across countries. The Bank still expects global growth to average around 3 1/2 per cent over 2017-19. However, this outlook remains subject to substantial uncertainty about geopolitical developments and fiscal and trade policies, notably the renegotiation of the North American Free Trade Agreement.

Canada’s economic growth in the second quarter was stronger than expected, and was more broad-based across regions and sectors. Growth is expected to moderate to a more sustainable pace in the second half of 2017 and remain close to potential over the next two years, with real GDP expanding at 3.1 per cent in 2017, 2.1 per cent in 2018 and 1.5 per cent in 2019. Exports and business investment are both expected to continue to make a solid contribution to GDP growth. However, projected export growth is slightly slower than before, in part because of a stronger Canadian dollar than assumed in July. Housing and consumption are forecast to slow in light of policy changes affecting housing markets and higher interest rates. Because of high debt levels, household spending is likely more sensitive to interest rates than in the past.

The Bank estimates that the economy is operating close to its potential. However, wage and other data indicate that there is still slack in the labour market. This suggests that there could be room for more economic growth than the Bank is projecting without inflation rising materially above target.

Based on this outlook and the risks and uncertainties identified in today’s MPR, Governing Council judges that the current stance of monetary policy is appropriate. While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.




Friday October 20 2017
Canada September Inflation Rate at 5-Month High
Statistics Canada | Joana Ferreira | joana.ferreira@tradingeconomics.com

Canada's consumer price inflation increased to 1.6 percent year-on-year in September 2017 from 1.4 percent in the previous month, as expected. It was the highest inflation rate since April, mainly boosted by rising cost of transportation and shelter. Meanwhile, the BoC's annual core inflation, which excludes volatile items, fell to 0.8 percent, the lowest since December 1984.

Prices were up in six of the eight major CPI components in the 12 months to September, with the transportation and shelter indexes contributing the most to the year-over-year rise. The clothing and footwear index and the household operations, furnishings and equipment index both declined on a year-over-year basis.

Transportation costs rose 3.8 percent on a year-over-year basis, following a 2.8 percent increase in August. For a third consecutive month, gasoline prices were the largest contributor to the gain in transportation prices and also to their acceleration. The gasoline index rose 14.1 percent, largely due to supply disruptions caused by Hurricane Harvey. The purchase of passenger vehicles index accelerated 1 percent, up from a 0.7 percent increase in August.

The shelter index rose 1.4 percent after an increase of 1.3 percent in August.

Consumer prices for food were up 1.4 percent, after increasing 0.9 percent in August. Prices for food purchased from stores grew 0.9 percent year over year, largely due to the price declines reported in September 2016 not counting as part of the current 12-month movement. Prices for food purchased from restaurants rose 2.7 percent, up slightly from a 2.6 percent year-over-year gain in August.

Recreation, education and reading costs rose 2.1 percent, matching the increase in August. Tuition fees grew 3 percent in the 12-month period ending in September.

In September, the household operations, furnishings and equipment index (-0.4 percent) declined for the third consecutive month. The telephone services index contributed the most to this continued decline, down 3.1 percent. Consumers also paid 3.3 percent less for furniture.

The clothing and footwear index declined 2.3 percent. Prices for women's clothing contributed the most to the decrease in this major component, falling 4.6 percent, following a 1.9 percent decline in August. Men's clothing prices also posted a year-over-year decrease, falling 2.7 percent. In contrast, prices for clothing material and notions rose 3.5 percent.


Friday October 06 2017
Canada Jobless Rate Remains Lowest Since 2008
Anna | anna@tradingeconomics.com

Unemployment Rate in Canada remained unchanged at 6.20 percent in September of 2017, matching the low of October 2008. Employment grew by 0.1 percent or 10,000 to 18,454 Million. Gains in full-time employment (+112,000) in September were mostly offset by declines in part time (-102,000).

From August to September, employment increased for people aged 55 and older, while it fell among men aged 25 to 54.

For the second consecutive month, Ontario was the lone province with a notable employment gain. There were employment declines in Manitoba and Prince Edward Island.

The number of people working in educational services increased by 20,000 in September, primarily in Ontario and Quebec. Employment in the industry was similar to the level observed in September 2016.

Employment in wholesale and retail trade rose by 17,000 in September, bringing gains to 99,000 (+3.6%) since September 2016.
Employment in information, culture and recreation decreased by 24,000 in September. On a year-over-year basis, employment in the industry edged down by 20,000 (-2.5%).

Public sector employment rose by 26,000 in September, while the number of private sector employees was little changed. Compared with 12 months earlier, the number of private sector employees increased by 162,000 (+1.4%) and public sector employment rose by 103,000 (+2.8%).

The number of self-employed workers held steady in September, with year-over-year gains totalling 55,000 (+2.0%).


Thursday October 05 2017
Canada August Trade Deficit Larger than Expected
Statistics Canada | Marta Dubiel | marta.dubiel@tradingeconomics.com

Canada's trade deficit widened to CAD 3.41 billion in August 2017 from a revised CAD 2.98 billion in the previous month and worse than market expectations of a CAD 2.60 billion gap.

Exports fell 1 percent from the previous month to CAD 43.6 billion in August, despite increases in six of eleven sections. Exports of consumer goods were down 3.8 percent to CAD 5.7 billion in August, the third consecutive monthly decline. Pharmaceutical and medicinal products (-8.6 percent) led the decrease, followed by prepared and packaged seafood products (-10.5 percent). Exports of basic and industrial chemical, plastic and rubber products declined 5.9 percent to CAD 2.7 billion, due to lower sales of basic chemicals (-8.3 percent). Exports of metal ores and non-metallic minerals, down 9.7 percent to CAD 1.5 billion, also contributed to the decrease, due to lower exports of radioactive ores and concentrates (-75.3 percent).

Imports were almost unchanged at CAD 47.0 billion, following the largest decline since January 2009 in July. Imports of motor vehicles and parts rose 2.5 percent in August to CAD 9.3 billion, boosted by purchases of motor vehicle engines and motor vehicle parts (5.3 percent). Also, imports of metal ores and non-metallic minerals rose 9.9 percent to CAD 1.2 billion in August. Other metal ores and concentrates (15 percent) were responsible for the increase, mostly on higher imports of lead. By contrast, imports of consumer goods fell 1.8 percent to CAD 10.1 billion in August, the fourth consecutive monthly decrease. Clothing, footwear and accessories (-5.9 percent) led the decline.


Friday September 22 2017
Canada Inflation Rate Rises to 1.4%, Below Forecasts
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada increased 1.4 percent year-on-year in August of 2017, following a 1.2 percent rise in July and below market expectations of 1.5 percent. It is the highest inflation rate in four months, mainly due to rising gasoline and homeowners' replacement costs.

Transportation costs rose 2.8 percent on a year-over-year basis in August, following a 1.9 percent increase the previous month. As in July, gasoline prices contributed the most to the gain in transportation prices and to their acceleration. The gasoline index rose 8.6 percent, following a 4.6 percent increase in July. Air transportation costs grew at a greater rate on a year-over-year basis in August than in July. In contrast, the rail, highway bus and other inter-city transportation index rose less.

The shelter index increased 1.3 percent year over year in August, matching the gain in July. Homeowners' replacement costs contributed the most to the increase in prices, rising 4.2 percent. Prices for natural gas (+8.6 percent) increased at a slower year-over-year rate in August than in July. The electricity index was down 8.9 percent, partly reflecting provincially legislated price reductions in Ontario earlier in 2017.

Consumer prices for food rose 0.9 percent after increasing 0.6 percent. Prices for food purchased from stores grew 0.3 percent, following a 0.1 percent decline in July. Meat (+1.1 percent) and fresh fruit (+5.6 percent) prices grew at greater rates in August than in July. Prices for food purchased from restaurants rose 2.6 percent in August, matching the year-over-year gain in July.

In August, the household operations, furnishings and equipment index (-0.2 percent) was down for the second consecutive month. The furniture index contributed the most to this decline, down 2.7 percent. Prices for household appliances declined 3 percent year over year in August, following a 2 percent decrease in July. Meanwhile, the tools and other household equipment index (+0.9 percent) rose less.

On a monthly basis, consumer prices edged up 0.1 percent after being flat in July.  

The core index rose 0.9 percent on the year, the same as in each of the previous three months and remaining the lowest annual core inflation since February of 2011.



Friday September 08 2017
Canada Jobless Rate Drops to New 2008 Low of 6.2%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in Canada fell to 6.2 percent in August of 2017 from 6.3 percent in July, beating market expectations of 6.3 percent. It reached a new low since October of 2008, the month prior to the 2008-2009 labour-market downturn. The economy added 22 thousand jobs, as more people were working in finance, insurance, real estate, rental and leasing as well as in transportation and warehousing.

An increase in the number of people working part time (+110,000) was mostly offset by a decline in the number of people employed full time (-88,000). While the increase in part-time employment was spread across the age groups, most of the decrease in full-time employment occurred for youth aged 15 to 24. The overall employment decline for youth was accompanied by a notable decrease in their labour force participation.

In the 12 months to August, employment rose by 374,000 (+2.1%), with gains in both full-time (+213,000 or +1.5%) and part-time work (+161,000 or +4.6%). Over this period, the number of hours worked increased by 2.2%.

Provincially, Ontario was the lone province with a notable employment gain in August. Employment declined in Nova Scotia and was little changed in the other provinces.

In August, more people were working in finance, insurance, real estate, rental and leasing as well as in transportation and warehousing. At the same time, employment fell in manufacturing, in the "other services" industry and in natural resources.

There were more self-employed workers in August, while the number of employees was little changed in both the private and public sectors.


Wednesday September 06 2017
Canada Unexpectedly Hikes the Key Rate to 1.0%
Bank of Canada |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Bank of Canada unexpectedly raised its benchmark overnight rate by 25 bps to 1 percent at its September 6th 2017 meeting, surprising markets who expected no changes. It is the second consecutive rise in borrowing cost as recent economic data have been stronger than expected, supporting the Bank’s view that growth in Canada is becoming more broadly-based and self-sustaining. The Bank Rate was also increased by 25 bps 1.25 percent and the deposit rate by 25 bps to 0.75 percent.


Statement by the Bank of Canada:

Recent economic data have been stronger than expected, supporting the Bank’s view that growth in Canada is becoming more broadly-based and self-sustaining. Consumer spending remains robust, underpinned by continued solid employment and income growth. There has also been more widespread strength in business investment and in exports. Meanwhile, the housing sector appears to be cooling in some markets in response to recent changes in tax and housing finance policies. The Bank continues to expect a moderation in the pace of economic growth in the secondhalf of 2017, for the reasons described in the July Monetary Policy Report (MPR), but the level of GDP is now higher than the Bank had expected.

The global economic expansion is becoming more synchronous, as anticipated in July, with stronger-than-expected indicators of growth, including higher industrial commodity prices. However, significant geopolitical risks and uncertainties around international trade and fiscal policies remain, leading to a weaker US dollar against many major currencies. In this context, the Canadian dollar has appreciated, also reflecting the relative strength of Canada’s economy.

Given the stronger-than-expected economic performance, Governing Council judges that today’s removal of some of the considerable monetary policy stimulus in place is warranted. Future monetary policy decisions are not predetermined and will be guided by incoming economic data and financial market developments as they inform the outlook for inflation. Particular focus will be given to the evolution of the economy’s potential, and to labour market conditions. Furthermore, given elevated household indebtedness, close attention will be paid to the sensitivityof the economy to higher interest rates.