Friday June 08 2018
Canada Jobless Rate Steady at 5.8% for 4th Month
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Canada stood at 5.8 percent in May of 2018, the same as in the previous month and matching market expectations. The jobless rate remained at its lowest level since 1976 for the fourth consecutive month. Employment unexpectedly decreased by 7.5 thousand, against market expectations of a 17.5 thousand recovery. A decline in full-time work was only partially offset by an increase in part-time jobs, with main job losses being registered in health care and social assistance, manufacturing and construction.

In May, among the core-age population (25 to 54 years old), employment fell among both men (-19,000) and women (-19,000). It increased for people aged 55 and older (+29,000), and was little changed among youth aged 15 to 24 on both a monthly and year-over-year basis. The unemployment rate for this age group held steady at 11.1% in May.

Employment increased in Prince Edward Island (+800), while it decreased in British Columbia (-12,000) and Nova Scotia (-3,600). There was little change in the other provinces.

There were employment increases in four industries in May: accommodation and food services (+18,000); professional, scientific and technical services (+17,000); transportation and warehousing (+12,000); and finance, insurance, real estate, rental and leasing (+12,000). At the same time, employment declined in health care and social assistance (-24,000), manufacturing (-18,000), construction (-13,000), and "other services"(-12,000).

There was little change in the number of employees in both the private and public sectors, as well as the number of self-employed workers.




Wednesday June 06 2018
Canada Trade Deficit Narrows in April
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's merchandise trade deficit narrowed to CAD 1.9 billion in April of 2018 from a downwardly revised CAD 3.9 billion in March and well below market expectations of a CAD 3.4 billion gap. Exports increased 1.6 percent, boosted by higher sales of metal and non-metallic mineral products, consumer goods and energy products. Meantime, imports declined 2.5 percent, after reaching a record high in March, mainly due to lower purchases of motor vehicles and parts and consumer goods.

Total exports advanced 1.6 percent month-over-month to a record high CAD 48.6 billion in April. Sales went up mostly due to metal and non-metallic mineral products (+9.1 percent to CAD 5.8 billion), namely unwrought precious metals and precious metal alloys unwrought gold to Hong Kong. Also, exports of consumer goods increased 5.4 percent to CAD 6.2 billion and sales of pharmaceutical and medicinal products rose 33.3 percent, mostly  due to higher shipments to the United States. In addition, sales increased for other food (+8.3 percent), mainly higher exports of dried peas to Asia; energy products (+2.3 percent) due to crude oil and crude bitumen (+4.9 percent). 

Exports to the United States were up 3.2 percent, due to higher sales of crude oil and crude oil bitumen. Exports to countries other than the US decreased 3.0 percent, mostly on lower shipments to the UK (crude oil), Saudi Arabia (other transportation equipment), Japan (coal) and South Korea (aircraft and coal).

Imports dropped 2.5 percent to CAD 50.5 billion in April, after reaching a record high in March. The biggest contribution for the decline was given by motor vehicles and parts (-5.8 percent to CAD 9.7 billion), as passenger cars and light trucks fell 8.9 percent, returning to normal levels following higher light trucks import levels in March and motor vehicle engines and motor vehicle parts (-4.4 percent). Additionally, purchases decreased for consumer goods (-4.9 percent to CAD 10.5 billion), namely pharmaceutical and medicinal products mostly on lower imports from Switzerland, Belgium and the United States. On the other hand, imports picked up for energy (+8.5 percent to CAD 3.4 billion), mostly refined petroleum energy products (+28.5 percent to a record CAD 1.4 billion). Temporary shutdowns in Canadian refineries in April led to higher imports of motor gasoline and diesel fuel to meet domestic demand. 

Imports from the US edged down 1.4 percent, dragged by lower purchases of passenger cars and light trucks. Imports from countries other than the US went down 4.3 percent, mainly on lower imports from China (computers).




Thursday May 31 2018
Canada's Economy Expands the Least Since 2016
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Canada gross domestic product grew 0.3 percent in the first quarter, following an increase of 0.4 percent in each of the previous two quarters. It was the slowest expansion since a 0.3 percent contraction was seen in the second quarter of 2016. Final domestic demand rose by 0.5 percent. Growth was moderated by a deceleration in household spending, lower exports of non-energy products and a decline in housing investment (-1.9 percent). Expressed at an annualized rate, real GDP was up 1.3 percent in the first quarter, but below market expectations of a 1.8 percent growth.

Household spending grew 0.3 percent in the first quarter of 2018, the slowest pace since the first quarter of 2015. Growth was driven by increased outlays on services (+0.5 percent). Household spending on goods was unchanged, following 11 consecutive quarterly increases.

Investment in machinery and equipment rose 4.2 percent, with medium and heavy trucks, buses and other motor vehicles (+12.5 percent) and industrial machinery and equipment (+3.9 percent) contributing to the growth. Intellectual property products rose 3.3 percent, as mineral exploration and evaluation (+8.0 percent) rebounded and software (+3.2 percent) accelerated. Investment in non-residential structures increased 1.5 percent.

Investment in housing fell 1.9 percent, the largest decline since the first quarter of 2009, due to a drop in ownership transfer costs (-13.5%). Lower resale activity coincided with new mortgage stress measures introduced nationwide in January. Business outlays on new construction slowed to 1.2 percent growth, while renovations increased 1.4 percent.

Businesses added CAD 15.2 billion to their inventories in the first quarter, following an accumulation of CAD 15.9 billion in the previous quarter. Wholesalers (+CAD 5.4 billion), manufacturers (+CAD 4.0 billion) and retailers (+CAD 2.6 billion) all added to their stocks. Farm inventories grew by CAD 567 million, compared with an accumulation of CAD 2.7 billion in the fourth quarter of 2017. The economy-wide stock-to-sales ratio increased from 0.760 to 0.765 in the first quarter.

Export volumes rose 0.4 percent after increasing 1.0 percent in the fourth quarter of 2017. Exports of crude oil and crude bitumen (+9.9 percent) largely contributed to the gains. Exports of services grew 1.7 percent in the first quarter, following a 1.3 percent increase in the previous quarter. Imports rose by 1.2 percent in the first quarter, with similar increases in goods and services.

Growth in imports of goods was led by passenger cars and light trucks (+5.9 percent), tires, motor vehicle engines and parts (+6.0 percent) and basic chemicals and industrial chemical products (+8.6 percent).Imports of services rose 1.1%, as those of commercial (+1.3 percent), transportation (+1.4 percent) and travel (+0.6 percent) services all increased.

Business investment in machinery and equipment (+4.2 percent) and intellectual property products (+3.3 percent) increased at a faster pace than in the fourth quarter of 2017.




Wednesday May 30 2018
Canada Leaves Monetary Policy Unchanged
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada left its key overnight rate at 1.25 percent on May 30th 2018, in line with market expectations. Policymakers said core measures of inflation remain near 2 percent and recent data support the Bank’s outlook for growth at around 2 percent in the first half of 2018. The Bank Rate is correspondingly 1.5 percent and the deposit rate is 1 percent.

Statement by the Bank of Canada:

Global economic activity remains broadly on track with the Bank’s April Monetary Policy Report (MPR) forecast. Recent data point to some upside to the outlook for the US economy. At the same time, ongoing uncertainty about trade policies is dampening global business investment and stresses are developing in some emerging market economies. Global oil prices have been higher than assumed in April, in part reflecting geopolitical developments.

Inflation in Canada has been close to the 2 per cent target and will likely be a bit higher in the near term than forecast in April, largely because of recent increases in gasoline prices. Core measures of inflation remain near 2 per cent, consistent with an economy operating close to potential. As usual, the Bank will look through the transitory impact of fluctuations in gasoline prices.

In Canada, economic data since the April MPR have, on balance, supported the Bank’s outlook for growth around 2 per cent in the first half of 2018. Activity in the first quarter appears to have been a little stronger than projected. Exports of goods were more robust than forecast, and data on imports of machinery and equipment suggest continued recovery in investment. Housing resale activity has remained soft into the second quarter, as the housing market continues to adjust to new mortgage guidelines and higher borrowing rates. Going forward, solid labour income growth supports the expectation that housing activity will pick up and consumption will continue to contribute importantly to growth in 2018.

Overall, developments since April further reinforce Governing Council’s view that higher interest rates will be warranted to keep inflation near target. Governing Council will take a gradual approach to policy adjustments, guided by incoming data. In particular, the Bank will continue to assess the economy’s sensitivity to interest rate movements and the evolution of economic capacity.




Wednesday May 30 2018
Canada Current Account Deficit Widens in Q1
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

Canada's current account gap widened by CAD 3.0 billion to CAD 19.5 billion in the first quarter of 2018 from an upwardly revised CAD 16.5 billion in the previous period and worse than market expectations of a CAD 18 billion shortfall. The goods and service balance recorded the largest deficit since the second quarter of 2016.

The goods deficit advanced by CAD 1.5 billion to CAD 9.0 billion in the first quarter of 2018 from a CAD 7.5 billion in the prior quarter. 

On a geographical basis, the goods gap with non-US countries decreased by CAD 1.3 billion to CAD 16.0 billion in the first quarter, mainly due to lower deficits with Korea and the Netherlands and a higher surplus with the UK. Meantime, the surplus with the United States narrowed by CAD 2.7 billion to CAD 7.1 billion.

Total exports of goods increased by CAD 1.5 billion to CAD 139.3 billion in the first quarter of the year. Exports of energy products edged up by CAD 2.2 billion, mostly on higher crude petroleum prices and volumens. 

Total imports of goods rose by CAD 3.0 billion to CAD 148.2 billion. Imports of motor vehicles and parts went up by CAD 1.5 billion, boosted by higher volumes. Also, purchases of energy products and basic and industrial chemical, plastic and rubber increased by CAD 0.7 billion each one.

The non-goods deficit narrowed by CAD 0.2 billion to CAD 6.2 billion in the first quarter from a CAD 6.4 billion in the fourth quarter of 2017, mainly due to a higher commercial services surplus. The surplus on commercial services rose by CAD 0.3 billion, as exports advanced more than imports. These gains were led by stronger financial services. The travel deficit remained at CAD 3.7 billion, as higher receipts from foreigner visitors were offset by the Canadian travelers spending in the US.




Friday May 18 2018
Canada Inflation Rate Slows to 2.2%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The annual inflation rate in Canada eased to 2.2 percent in April of 2018 from 2.3 percent in March, which was the highest reading since October of 2014. Figures came below market expectations of 2.3 percent amid a slowdown in gasoline cost and a fall in travel services.

Year-on-year prices rose less for transportation (4.7 percent compared to 5.3 percent in March), mainly due to gasoline (14.2 percent compared to 17.1 percent). Also, cost fell for recreation, education and reading (-0.2 percent compared to 1.3 percent), mainly due to a 6 percent slump in prices of travel services. A smaller annual increase in the cost of air transportation (11.9 percent) coincided with the price decrease in travel services.

On the other hand, inflation was steady for shelter (1.7 percent); went up for food (1.8 percent compared to 1.7 percent); and household operations, furnishings and equipment (1.4 percent compared to 1.2 percent); and prices recovered for clothing and footwear (2.2 percent compared to -0.1 percent), namely clothing (2.5 percent). 

On a monthly basis, consumer prices were up 0.3 percent, the same as in March. 

The BoC's annual core inflation, which excludes volatile items, rose to 1.5 percent from 1.4 percent in March.




Friday May 11 2018
Canada Jobless Rate Unchanged at 5.8% in April
Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Canada remained unchanged at 5.8 percent in April of 2018 from the previous month and in line with market expectations. The jobless rate was at its lowest level since 1976 for the third consecutive month. Employment declined by 1,100, well below than an expected 17,400 gain, mainly due to job losses in wholesale and retail trade and in construction sector.

In April, among the core-age population (25 to 54 years old), employment increased by 29,000, boosted by a rise for women (+20,000). Meantime, employment dropped by 23,000 for youth aged (15 to 24 years old) and was little changed among people aged 55 and over.

Employment went up in Manitoba (+4,100) and Nova Scotia (+2,700) while fell in Saskatchewan (-4,900). In Ontario, employment was steady while in Quebec and British Columbia there was almost no change.

There were more people working in professional, scientific and technical services (+21,000) and accommodation and food services (+17,000). On the other hand, jobs were shed in wholesale and retail trade (-22,000) and construction (-19,000).

The number of public and private sector employees and the number of self-employed workers were little changed in April.

On a year-over-year basis, employment rose by 278,000 (+1.5 percent), as the number of full-time workers jumped by 378,000  (+2.6 percent), while the part-time workers edged down by 100,000 (-2.8 percent).


Thursday May 03 2018
Canada Posts Largest Trade Deficit on Record
Statistics Canada | Gabriela Costa | gabriela.costa@tradingeconomics.com

Canada's merchandise trade deficit widened to a record CAD 4.1 billion in March of 2018 from an upwardly revised CAD 2.9 billion in February and above market expectations of a CAD 2.24 billion gap. Imports advanced 6 percent, mostly due to higher purchases of motor vehicles & parts and consumer goods. Exports rose at a softer 3.7 percent, boosted by higher sales of aircraft & transportation equipment; farm, fishing & intermediate food products and energy products.

Total imports increased 6 percent month-over-month to a record high CAD 5.17 billion in March, after a 1.9 percent gain in the previous month. The biggest contribution was given by imports of motor vehicles & parts, which rose 8.3 percent to CAD 10.3 billion, the strongest increase since 2011, mostly due to higher purchases of passenger cars & light trucks. Additionally, imports increased for consumer goods (+7.7 percent to a record of CAD 11 billion); clothing, footwear & accessories (+20.8 percent) and pharmaceutical & medicinal products (+13.2 percent), particularly from the United States and Belgium.

Imports from the United States increased 3.1 percent in March, easing from a 3.8 percent gain in the previous month. Imports from China (+26.6 percent) led the increase, mainly on higher purchases of computers & computer peripheral equipment and of communications & audio and video equipment. Other notable increases were in imports from the Netherlands (motor gasoline) and Germany (passenger cars & light trucks).

Exports rose 3.7 percent in March to CAD 47.6 billion. Sales rose sharply for aircraft & other transportation equipment (+24.3 percent to CAD 2.3 billion), as exports of boats & other personal transportation equipment almost tripled, mainly due to higher exports of other transportation equipment to Saudi Arabia. Also, sales increased for aircraft engines & aircraft parts (+15.2 percent), primarily on higher shipments to the United States. Additionally, exports of farm, fishing & intermediate food products went up 14.7 percent to CAD2.8 billion and wheat exports (+51.9 percent) rebounded, following a sharp decline in February, which coincided with rail transportation disruptions in Western Canada.

Exports to the United States rose 1.2%, led primarily by higher exports of crude oil. Exports to countries other than the United States increased mainly from the United Kingdom (unwrought gold), Saudi Arabia (other transportation equipment), South Korea (aircraft) and Japan (copper and coal).


For the first quarter of 2018, Canada's trade gap widened 23 percent quarter-on-quarter to CAD 9.1 billion, as imports rose 2.1 percent to CAD 148.3 billion and exports went up at a softer pace of 1 percent to CAD 139.2 billion.



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.