Friday February 24 2017
Canada Inflation Rate At Over 2-Year High
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada increased 2.1 percent year-on-year in January of 2017, following a 1.5 percent rise in the previous month and beating market expectations of 1.6 percent. It is the highest gain in consumer prices since October of 2014, boosted by gasoline and shelter, bringing inflation to above the central bank target of 2 percent.

Year-on-year, prices were up in seven of the eight major components: transportation rose 6.3 percent after a 3 percent gain in December, led by gasoline prices, which posted their largest increase since September 2011, up 20.6 percent. The increase was partly attributable to higher crude oil prices in January, as well as a monthly decline one year earlier. The purchase of passenger vehicles index rose more in January (+3.8 percent) than in December (+2.6 percent). This acceleration was partly attributable to the greater availability of new 2017-model-year vehicles. The rail, highway bus and other inter-city transportation index was up 3.2 percent.

The shelter index rose 2.4 percent, with the homeowners' replacement cost index (+4.3 percent) contributing the most to the gain. The natural gas index increased 15.6 percent, after decreasing the previous month. Fuel oil prices rose 18.3 percent after increasing 4.2 percent a month earlier. At the same time, electricity prices (-0.7 percent) were down year over year for the first time since February 2013.

Consumers paid 2.1 percent less for food in January than they did a year earlier. The food purchased from stores index decreased 4.0 percent, with broad-based declines among its components. The fresh vegetables (-15.5 percent), fresh fruit (-10.8 percent) and meat (-1.7 percent) indexes all posted larger year-over-year declines in January than in December. A limited number of food product categories recorded price increases. Prices for food purchased from restaurants were up 2.3 percent, matching the gain in December.

On a monthly basis, consumer prices jumped 0.9 percent after declining 0.2 percent in December.

Excluding food and energy, consumer prices were up 1.7 percent on the year and excluding gasoline only, prices gained 1.5 percent. 





Friday February 10 2017
Canada Jobless Rate Falls To 6.8% In January
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in Canada declined to 6.8 percent in January of 2017 from 6.9 percent in December and below market expectations of 6.9 percent. Employment rose by 48.3 thousand, beating expectations of a 5 thousand decline for the second month.

Full time employment increased by 15.8 thousand, following a 0.4 thousand fall in December. Part time employment rose  by 32.4 thousand after a 0.5 thousand gai in the previous month.

Nearly all of the employment growth in January came from the service sector, with increases in finance, insurance, real estate, rental and leasing; business, building and other support services; transportation and warehousing; and public administration. On the other hand, there were fewer people working in information, culture and recreation.

The number of private sector employees edged up in January, while public sector employment and the number of self-employed workers were little changed.

Among regions, employment rose in Ontario, British Columbia, Nova Scotia and Newfoundland and Labrador. In contrast, there were fewer people working in New Brunswick. Employment was little changed in the remaining provinces.

Employment increased among core-aged men and women (25 to 54 years old). There was little overall employment change among the other demographic groups.




Tuesday February 07 2017
Canadian Trade Surplus Beats Expectations In December
Statistics Canada | Joana Ferreira | joana.ferreira@tradingeconomics.com

Canada's merchandise trade surplus narrowed to CAD 0.92 billion in December 2016 from an upwardly revised CAD 1.01 billion a month earlier, but better than market expectations of a CAD 0.35 billion surplus. Exports were up 0.8 percent on the strength of higher energy product prices; and imports increased 1 percent, mainly on stronger imports of aircraft and industrial machinery.

Exports rose 0.8 percent to a record CAD 46.4 billion in December, as higher sales of energy products were partially offset by lower exports of motor vehicles and parts; metal ores and non-metallic minerals; and metal and non-metallic mineral products. It was the third consecutive monthly gain in exports. Exports excluding energy products were down 2.1 percent. 

Energy product exports rose 15.9 percent to CAD 8.5 billion, the highest value since November 2014. Crude oil and crude bitumen was the main contributor to the increase, up 17.2 percent to CAD 5.7 billion on higher prices. Partially offsetting this increase were lower exports of motor vehicles and parts, down 5.2 percent to CAD 7.4 billion, the lowest level since June 2015. Also, exports of metal ores and non-metallic minerals decreased 12.6 percent to CAD 1.4 billion. 

Among major trading partners, exports rose to the US (0.8 percent), China (3.2 percent), the UK (2.8 percent) and Mexico (0.4 percent).

Total imports were up 1 percent to CAD 45.5 billion, as higher imports of aircraft and other transportation equipment and parts; industrial machinery, equipment and parts; and metal and non-metallic mineral products were partially offset by lower imports of energy products. 

Imports of aircraft and other transportation equipment and parts increased 21.8 percent to CAD 1.5 billion; industrial machinery, equipment and parts rose 6.4 percent to CAD 4.3 billion with all commodity groupings recording gains; and imports of metal and non-metallic mineral products went up 6.3 percent to CAD 3.9 billion. Partially offsetting these gains were lower imports of energy products, down 11.9 percent to CAD 2.2 billion.

Among major trading partners, imports increased from the US (1.3 percent), China (1.6 percent), Germany (2.1 percent) and Mexico (14.7 percent).

Considering 2016 full year, Canada's merchandise trade deficit with the world widened to CAD 26.1 billion from CAD 23.0 billion in 2015, as exports fell 0.7 percent to CAD 521.1 billion, dragged by lower exports of energy products; while imports edged down 0.1 percent to CAD 547.2 billion, due to fewer purchases of energy products; aircraft and other transportation equipment and parts; and metal and non-metallic mineral products.




Friday January 20 2017
Canada Inflation Rate Rises To 1.5% In December
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada increased 1.5 percent year-on-year in December of 2016, higher than 1.2 percent in November but below market expectations of 1.7 percent. Higher gasoline and shelter prices were the main contributors to the rise while food cost fell the most since July of 1992.

Year-on-year, the transportation index rose for the fifth consecutive month, up 3 percent in December, after a 1.4 percent gain in November. This increase was led by gasoline prices (5.5 percent following a 1.7 percent decline in November). Meanwhile, air transportation index registered its largest year-over-year gain since August 2013. In contrast, the purchase of passenger vehicles index rose less (2.6 percent from 3 percent).

The clothing and footwear index increased 0.2 percent, following a 1.2 percent decline in November, partly due to the women's clothing index, up 2.0 percent after decreasing 0.2 percent. Additionally, prices for footwear were flat after declining 1.7 percent the previous month. Meanwhile, the children's clothing index (-4.5 percent) posted a year-over–year decrease for the eighth consecutive month.

Consumers paid 1.3 percent less for food. Cost for food purchased from stores decreased 2.8 percent, with the fresh vegetables, fresh fruit, and cereal products indexes contributing most to the decline. In contrast, prices for fish, seafood and other marine products, and prices for sugar and confectionery rose. Prices for food purchased from restaurants were up 2.3 percent, following a 2.5 percent gain in November.

On a monthly basis, consumer prices fell 0.2 percent after declining 0.4 percent in November.

Excluding food and energy, consumer prices fell 0.3 percent on the month and rose 1.6 percent on the year.



Wednesday January 18 2017
Canada Leaves Key Rate Steady At 0.5%
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its overnight rate at 0.5 percent on January 18th, 2017 as widely expected, saying inflation is expected to move close to the 2 percent target in the months ahead while consumption and fiscal measures are expected to support growth in 2017. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent.

Statement by the Bank of Canada:

Uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States. The Bank has made initial assumptions about prospective tax policies only, resulting in a modest upward revision to its US growth outlook. Overall, the global economy is strengthening largely as expected and prices of some commodities, including oil, have risen. The rapid back-up in global bond yields, partly reflecting market anticipation of US fiscal expansion, has pulled up Canadian yields relative to the October Monetary Policy Report (MPR).

In contrast to the United States, Canada’s economy continues to operate with material excess capacity. While employment growth has remained firm, indicators still point to significant slack in the labour market. The resource sector’s adjustment to past commodity price declines appears to be largely complete, but negative wealth and income effects will persist. Meanwhile, the Canadian dollar has strengthened along with the US dollar against other currencies, exacerbating ongoing competitiveness challenges and muting the outlook for exports. Consumption is expected to remain solid, while residential investment will be tempered by previously announced changes to housing finance rules and by mortgage rates that have risen in response to higher bond yields. Federal and provincial fiscal measures are still expected to support growth in 2017.

Bearing in mind the important assumptions embedded in its forecast, the Bank projects that Canada’s real GDP will grow by 2.1 per cent in both 2017 and 2018. This implies a return to full capacity around mid-2018, in line with October’s projection. 

Inflation in Canada has been lower than anticipated since October, mainly because of declines in food prices. Measures of core inflation are below 2 per cent, reflecting material excess capacity in the economy. As consumer energy prices rise and the impact of lower food prices dissipates, inflation is expected to move close to the 2 per cent target in the months ahead and remain there throughout the projection horizon while excess capacity is being absorbed.

In the context of a projection that is largely unchanged, the Bank’s Governing Council judges that the current stance of monetary policy is still appropriate and maintains the target for the overnight rate at 1/2 per cent. Governing Council will continue to assess the impact of ongoing developments, mindful of the significant uncertainties weighing on the outlook.








Friday January 06 2017
Canada Posts First Trade Surplus Since September 2014
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Canada's trade balance posted a surplus of CAD 0.53 billion in November of 2016, following a downwardly revised CAD 1.02 billion shortfall in the previous month and beating market expectations of a CAD 1.6 billion deficit. It was the first trade surplus since September 2014, as exports rose 4.3 percent, boosted by sales of metal and non-metallic mineral products. Imports increased 0.7 percent.

Exports increased to  CAD 45.6 billion in November, the highest level since the record CAD 45.7 billion in January 2016. Export volumes rose 3.5 percent and prices were up 0.8 percent. Overall, 10 of 11 sections increased. In November, exports excluding energy products were up 4.7 percent. 

Exports of metal and non-metallic mineral products increased 10.6 percent to CAD 5.3 billion in November, the highest value since December 2014. Exports of unwrought precious metals and precious metal alloys led the gain, up 24.3 percent to CAD 1.9 billion on larger shipments to Hong Kong and Switzerland. For the section as a whole, volumes rose 6.2 percent and prices 4.1 percent.

Exports of metal ores and non-metallic minerals rose 26.4 percent to CAD 1.7 billion in November, with widespread increases throughout the section. Exports of potash increased 38.3 percent to CAD 431 million on higher volumes. Exports of iron ores and concentrates also contributed to the gain, up 43 percent to CAD 396 million, as prices rose 25.7 percent. Overall, volumes increased 15 percent and prices were up 9.9 percent.

Exports to countries other than the United States rose 9.5 percent to a record CAD 12.0 billion in November, surpassing the previous record set in December 2011. This was also the largest monthly percentage increase since May 2008. Exports to China were up 11.1 percent to CAD 2.0 billion in November, mostly on higher exports of coal. Exports to South Korea, Brazil and Japan also increased in November.

Total imports were up to CAD 45.1 billion in November, with 7 of 11 sections recording gains. Prices increased 1 percent, while volumes were down 0.3 percent. Higher imports of energy products and consumer goods were mostly offset by lower imports of aircraft and other transportation equipment and parts, and motor vehicles and parts. Year over year, total imports declined 0.8 percent.

Imports from countries other than the United States were up 3.5 percent to CAD 15.6 billion in November. This increase was largely led by higher imports of crude oil from Norway, Algeria and Saudi Arabia. Lower imports from China partially offset these gains. Consequently, Canada's trade deficit with countries other than the United States narrowed from CAD 4.2 billion in October to CAD 3.7 billion in November, the smallest deficit since November 2014.

Exports to the United States also rose in November, up 2.5 percent to CAD 33.7 billion, while imports from the United States were down 0.7 percent to CAD 29.5 billion. Consequently, Canada's trade surplus with the United States widened from CAD 3.2 billion in October to CAD 4.2 billion in November, the largest surplus since June 2015.


Friday January 06 2017
Canada Unemployment Rate Rises to 6.9%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The jobless rate in Canada increased to 6.9 percent in December of 2016 from 6.8 percent in the previous month, in line with market expectations as more people participated in the labour market. Employment rose by 54,000 (+0.3 percent) in December, the result of gains in full-time work.

In the fourth quarter of 2016, employment increased by 108 thousand (+0.6 percent), the largest increase since the second quarter of 2010. This followed a gain of 62 thousand (+0.3 percent) in the third quarter.

In the 12 months to December, employment gains totalled 214 thousand or 1.2 percent, compared with a growth rate of 0.9 percent observed over the same period one year earlier. A year-end review is presented in a separate section below.

In December, employment increased among women aged 25 to 54. There was little overall employment change among the other demographic groups.

Quebec and British Columbia recorded increases in employment, while there was little change in the other provinces.

More people were employed in professional, scientific and technical services, and in health care and social assistance. At the same time, employment declined in agriculture.

The number of employees increased in both the public and private sectors in December, while self-employment was little changed.


Thursday December 22 2016
Canada Inflation Rate At 3-Month Low Of 1.2%
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Consumer prices in Canada increased 1.2 percent year-on-year in November of 2016, following a 1.5 percent rise in October and below market estimates of 1.4 percent. It was the lowest inflation rate since August, as cost dropped for food, clothing and footwear, and transport prices rose at a slower pace. On a monthly basis, prices fell 0.4 percent.

Year-on-year, transport cost rose 1.4 percent, following a 3 percent gain in October: gasoline prices went down 1.7 percent after increasing 2.5 percent and purchase of passenger vehicles rose less (+3 percent compared to 4.4 percent) but remained the top upward contributor to the 12-month change in the transportation index.

The clothing and footwear prices were down 1.2 percent, led by a 6.5 percent decline in children's clothing. The jewellery index posted its largest decline since April 1997, down 3 percent, after rising 4 percent in October.

Food prices went down 0.7 percent, matching the decline in October. Prices for food purchased from stores declined 2 percent, with the fresh vegetables, meat, and fresh fruit indexes contributing the most to the decline. In contrast, the fish, seafood and other marine products index and the non-alcoholic beverages index posted gains. Prices for food purchased from restaurants were up 2.5 percent, following a 2.6 percent increase in October.

The shelter index rose 2.1 percent, after 1.9 percent growth in October. Homeowners' replacement cost contributed the most to this gain, rising 4.4 percent. Electricity prices remained a principal upward contributor, despite a deceleration in price growth, up 3.5 percent, following a 5.3 percent increase in October. The natural gas index (-0.2 percent) recorded its smallest year-over-year decline since an increase in March 2015.

On a monthly basis, consumer prices fell 0.4 percent after edging up 0.2 percent in October.

Excluding food and energy, consumer prices fell 0.5 percent on the month and rose 1.5 percent on the year.


Wednesday December 07 2016
Canada Holds Overnight Rate At 0.5%
Bank of Canada | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Canada held its overnight rate at 0.5 percent on December 7th, as widely expected, saying that although the global economy has strengthened, uncertainty persists. Policymakers also said they are anticipating a more moderate growth in the fourth quarter while inflation is still below expectations, largely because of lower food prices. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent.

Statement by the Bank of Canada:

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

Economic data suggest that global economic conditions have strengthened, as the Bank anticipated in its October Monetary Policy Report (MPR). However, uncertainty, which has been undermining business confidence and dampening investment in Canada’s major trading partners, remains undiminished. Following the election in the United States, there has been a rapid back-up in global bond yields, partly reflecting market anticipation of fiscal expansion in a US economy that is near full capacity. Canadian yields have risen significantly in this context.

In Canada, the dynamics of growth are largely as the Bank anticipated. Following a very weak first half of 2016, growth in the third quarter rebounded strongly, but more moderate growth is anticipated in the fourth quarter. Consumption growth was robust in the third quarter, supported by the new Canada Child Benefit, while the effects of federal infrastructure spending are not yet evident in the GDP data. Meanwhile, business investment and non-energy goods exports continue to disappoint. There have been ongoing gains in employment, but a significant amount of economic slack remains in Canada, in contrast to the United States. While household imbalances continue to rise, these will be mitigated over time by announced changes to housing finance rules.

Total CPI inflation has picked up in recent months but is slightly below expectations, largely because of lower food prices. Core inflation is close to 2 per cent because the effect of persistent economic slack is still being offset by that of past exchange rate depreciation, although the latter effect is dissipating.

Overall, the Bank’s Governing Council judges that the current stance of monetary policy remains appropriate. Therefore, the target for the overnight rate remains at 1/2 per cent.


Tuesday December 06 2016
Canadian Trade Deficit At 9-Month Low In October
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Canada's merchandise trade gap was recorded at a CAD 1.1 billion in October of 2016, following an upwardly revised CAD 4.38 billion shortfall in the previous month while markets expected CAD 2 billion deficit. It is the lowest trade gap since January, as imports fell 6.3 percent while imports rose 0.5 percent.

Following a record high in September, total imports were down 6.3 percent to CAD 44.7 billion in October, the lowest level since February 2015. The large decline was mostly attributable to lower imports of industrial machinery, equipment and parts (-42 percent to CAD 4.0 billion) This decrease followed a high-value shipment from South Korea destined for the Hebron offshore oil project, which was responsible for the large increase in September. Also, imports fell for energy products (-11.6 percent to CAD 2.0 billion, the third consecutive monthly decrease) and metal ores and non-metallic minerals. Meanwhile, imports rose by 1.6 percent to CAD 5.3 billion for electronic and electrical equipment. Excluding the CAD 2.9 billion increase in imports of industrial machinery, equipment and parts, total imports would have decreased 0.3 percent, and the trade deficit would have narrowed from CAD 1.5 billion in September to CAD 1.1 billion in October. 

Imports from the United States edged down 0.1 percent to CAD 29.7 billion and from countries other than the United States fell 16.7 percent to CAD 15.0 billion. Lower imports from South Korea (-CAD 3.0 billion) were primarily responsible for the decrease, mainly reflecting the large shipment intended for the Hebron offshore oil project in September. There were also lower imports from Algeria and Saudi Arabia, while imports increased from China and Switzerland. 

Total exports rose 0.5 percent to CAD 43.6 billion. Higher sales of energy products (+5.5 percent to CAD 6.5 billion, the eighth consecutive monthly increase) and motor vehicles and parts (+3.2 percent to CAD 8 billion) were partially offset by lower exports of consumer goods (-3.2 percent to CAD 6 billion) and aircraft and other transportation equipment and parts (-4.5 percent to CAD 1.9 billion). Exports excluding energy products were down 0.3 percent. 

Exports to the United States increased 1.6 percent to  CAD 32.8 billion, led by crude oil and crude bitumen. Sales to countries other than the United States decreased 2.7 percent to CAD 10.8 billion. Sales to the United Kingdom fell 469 million on fewer exports of precious metals. There were also lower exports to Brazil, while exports to Saudi Arabia and the Netherlands increased.

Year over year, total exports increased 1.3 percent while imports were down 1.3 percent.