Friday April 21 2017
Canada Inflation Rate Down To 3-Month Low Of 1.6%
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Canada rose 1.6 percent year-on-year in March of 2017, easing from a 2 percent increase in February and below market expectations of 1.8 percent. Gasoline prices slowed and food and clothing cost declined.

Year-on-year, transportation cost rose 4.6 percent after increasing 6.6 percent in February, led by the gasoline index. Gasoline prices rose 15.2 percent, following a 23.1 percent increase in February. The purchase of passenger vehicles index was up 2.1 percent in the 12 months to March, following a gain of 3.6 percent in February.

The clothing and footwear index fell 0.9 percent, following a 0.9 percent increase the previous month. This turnaround was led by a decrease in the women's clothing index, down 1.0 percent, following a 3.5 percent increase. A larger year-over-year decline in the children's clothing index (-4.4 percent) more than offset a 0.3 percent increase in the footwear index.

Food cost went down for the sixth consecutive month, dropping 1.9 percent. Prices for food purchased from stores declined 3.6 percent while prices for food purchased from restaurants posted a 2.4 percent increase.

Shelter cost increases in March matched those of February, up 2.2 percent. The homeowners' replacement cost index was the main upward contributor to the 12-month change in the shelter index, up 4.0 percent, despite slowing growth since November 2016. At the same time, rent increased 0.6 percent, after posting a 0.5 percent increase for six consecutive months.

The recreation, education and reading index rose 3.6 percent, following a 3.3 percent gain in February. This acceleration was led by the travel tours index, up 6.8 percent, following a 0.5 percent decline the previous month. In contrast, traveller accommodation prices rose less in March than in February.

On a monthly basis, consumer prices went up 0.2 percent, the same as in February.

The core index rose 0.3 percent on the month and 1.3 percent on the year.





Wednesday April 12 2017
Canada Leaves Monetary Policy Unchanged
BoC | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of Canada held its overnight rate steady at 0.5 percent on April 12th, 2017, matching market expectations. Policymakers said growth was stronger than anticipated and inflation is in line with the target although significant uncertainties weigh on the outlook. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent. Policymakers also revised GDP and inflation forecasts.

The economy is expected to expand 2.6 percent in 2017 (2.1 percent in the January estimate) and 1.9 percent in 2018 (2.1 percent in the January estimate). Forecasts for inflation were revised higher to 1.9 percent this year (1.8 percent) and 2 percent in 2019 (1.9 percent).

Statement by the Bank of Canada:

Global economic growth is strengthening and becoming more broadly-based than the Bank had expected in its January Monetary Policy Report (MPR), although there is still considerable uncertainty about the outlook. In the United States, some temporary factors weighed on economic activity in the first quarter but the drivers of growth remain solid. The US is close to full employment, unlike many other advanced economies, including Canada, where material slack remains. Global financial conditions remain accommodative. The Bank expects global GDP growth to increase from 3 1/4 per cent this year to about 3 1/2 per cent in 2018 and 2019.

In Canada, recent data indicate that economic growth has been faster than was expected in the January MPR. Growth was temporarily boosted by a resumption of spending in the oil and gas sector and the effects of the Canada Child Benefit on consumer spending. Residential investment has also been stronger than expected. Employment data have been robust, although gains in hours worked are still soft. Meanwhile, export growth has been uneven in the face of ongoing competitiveness challenges. Further, despite a recent uptick in sentiment, business investment remains well below what could be expected at this stage in the recovery. Accordingly, while the recent rebound in GDP is encouraging, it is too early to conclude that the economy is on a sustainable growth path.

During the rest of this year and into 2018 and 2019, growth in Canada is expected to moderate but remain above potential. At the same time, its composition is expected to broaden as the pace of household spending, especially residential investment, slows while the contributions from exports and business investment increase. The Bank now projects real GDP growth of 2 1/2 per cent in 2017 and just below 2 per cent in 2018 and 2019. Meanwhile, the Bank has revised down its projection of potential growth, reflecting persistently weak investment. With this combination of a higher profile for economic activity and a lower profile for potential, the output gap is projected to close in the first half of 2018, a bit sooner than the Bank anticipated in January.  

CPI inflation is now at the 2 per cent target, largely because of the transitory effects of higher oil prices and carbon pricing measures in two provinces, as well as other temporary factors. The Bank’s three measures of core inflation, on the other hand, have been drifting down in recent quarters and wage growth remains subdued, consistent with material excess capacity in the economy. CPI inflation is expected to dip in the months ahead, as the temporary factors unwind, and then return to 2 per cent later in the projection horizon as the output gap closes.

The Bank’s Governing Council acknowledges the strength of recent data, some of which is temporary, and is mindful of the significant uncertainties weighing on the outlook. In this context, 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.




Friday April 07 2017
Canada Jobless Rate Rises To 6.7% In March
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Canada increased to 6.7 percent in March of 2017 from 6.6 percent in the previous month and in line with market expectations. Employment rose by 19.4 thousand, beating market consensus of a 5 thousand increase, while the unemployment went up by 27.6 thousand.

Unemployment increased by 27,600 to 1,313,700, and employment went up by 19.4 thousand to 18,308,00. Full-time employment increased by 18.4 thousand, following a 105.1 thousand rise in February. Part-time employment rose by 1 thousand after a 89.8 thousand drop in the previous month.

There were more people working in manufacturing (24.4 thousand, the largest increase since August 2002); business, building and other support services (18.2 thousand); wholesale and retail trade (16.9 thousand); and information, culture and recreation (10.7 thousand). On the other hand, declines were recorded in educational services (-14.9 thousand); transportation and warehousing (-12.8 thousand); "other services" (-9.5 thousand); and public administration (-7.8 thousand).

Employment rose in Alberta, Nova Scotia and Manitoba. At the same time, employment fell in Saskatchewan, while it was relatively stable in the remaining provinces.

In March, employment increased for men aged 25 to 54, while there was little change among other demographic groups.

The participation rate increased to 65.9 percent from 65.8 percent in the previous month.




Tuesday April 04 2017
Canada Trade Balance Shifts To Deficit In February
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Canada's trade balance posted a deficit of CAD 0.97 billion in February 2017, following a downwardly revised CAD 0.42 billion surplus in the previous month while market expected of a CAD 0.5 billion surplus. Exports were down 2.4 percent to CAD 44.3 billion on lower sales of farm, fishing and intermediate food products, aircraft and other transportation equipment and parts, and consumer goods. Imports increased 0.6 percent to CAD 46.3 billion, mainly due to higher purchases of special transactions trade, motor vehicles, and parts, and farm, fishing and intermediate food products.

After reaching a record high in January, total exports fell 2.4 percent to CAD 45.3 billion. There were lower exports of farm, fishing and intermediate food products (-10.6 percent), mainly canola (-33.7 percent); aircraft and other transportation equipment and parts (-15.2 percent); and consumer goods (-4.3 percent). Sales excluding energy products were also down 2.4 percent.

Exports to the United States were down 1.2 percent to CAD 34.4 billion. Also, exports to countries other than the United States fell 5.9 percent to CAD 11.0 billion. Lower exports to China (mainly canola) and South Korea (mainly coal) were responsible for the decrease.

Total imports edged up 0.6 percent to CAD 46.3 billion. Higher imports of special transactions trade (33.1 percent); motor vehicles and parts (1.8 percent), and farm, fishing and intermediate food products (8.7 percent) contributed the most to the increase.

Imports from the United States decreased 1.6 percent to CAD 29.9 billion, led by lower purchases of aircraft and crude oil.  In contrast, imports from countries other than the United States increased 4.9 percent to CAD 16.4 billion, mainly on higher imports from Japan, Norway, and Brazil.

Year-over-year, exports rose 4.4 percent while imports were up 1.4 percent.





Friday March 24 2017
Canada Inflation Rate Slows To 2% In February
Statistics Canada | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Canada increased 2 percent year-on-year in February of 2017, easing from a 2.1 percent rise in the preceding month and below market expectations of 2.1 percent. Telephone services declined and food prices posted the biggest drop since 1971. In contrast, transportation and shelter contributed the most to the rise in the CPI.

Year-on-year, transportation cost rose 6.6 percent after a 6.3 percent increase in January, led by gasoline prices. This acceleration occurred despite a 0.8 percent monthly decline in February. The purchase of passenger vehicles index increased less in February (3.6 percent) than in January (3.8 percent).

Prices of recreation, education and reading advanced 3.3 percent, following a 3.2 percent increase in January. A 6.2 percent rise in the traveller accommodation was partly attributable to major sporting events that took place in February. The travel tours index fell 0.5 percent, after increasing 5.5 percent a month earlier.

The household operations, furnishings and equipment index went up 0.6 percent, after rising 1.2 percent in the previous month. This deceleration was led by the telephone services index, which declined 2.2 percent, following a 1.6 percent increase in January. In contrast, the Internet access services cost rose 0.2 percent, following a 1 percent decline in January.

Consumers paid 2.3 percent less for food compared with a year ago, due to lower prices for fresh vegetables (-14.0 percent) and fresh fruit (-13.3 percent) which reflect a spike in their prices last winter. Also, the prices of dairy products fell 2.5 percent, its largest decrease since March 1994, namely lower cheese prices. Prices for food purchased from restaurants rose 2.3 percent, matching the gain in January.

On a monthly basis, consumer prices went up 0.2 percent after a 0.9 percent rise in January.

Excluding food and energy, consumer prices were up 0.4 percent on the year and excluding gasoline only, prices gained 1.3 percent. 


Friday March 10 2017
Canada Jobless Rate At 2-Year Low Of 6.6%
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Canada decreased to 6.6 percent in February of 2017 from 6.8 percent in the previous month and below market expectations of 6.8 percent. It was the lowest jobless rate since January of 2015. Employment rose by 15.3 thousand, beating market consensus of a 2.5 thousand increase.

Full time employment jumped by 105.1 thousand, following a 15.8 thousand increase in January. Part time employment fell by 89.8 thousand after a 32.4 thousand gain in the previous month.

The employment growth was recorded mainly in the service sector, with increases in retail and wholesale trade (by 19100) and public administration (by 11900).

Meanwhile, the labor force participation rate fell to 65.8 percent from 65.9 percent in the previous month.


Tuesday March 07 2017
Canadian Trade Surplus Widens In January
Statistics Canada | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Canada's merchandise trade surplus widened to CAD 0.81 billion in January 2017 from a downwardly revised CAD 0.45 billion a month earlier and above market expectations of a CAD 0.7 billion surplus. Exports were up 0.5 percent to a record CAD 46.5 billion on higher sales of motor vehicles and canola. Imports decreased 0.3 percent to CAD 45.6 billion, mainly due to lower purchases of unwrought gold.

Exports rose 0.5 percent to a record CAD 46.5 billion. Higher exports of motor vehicles and parts (7.7 percent), as well as farm, fishing, and intermediate food products (12.8 percent) were the largest contributors to the increase. Also, canola exports jumped 38.4 percent to a record high of  CAD 845 million, reflecting higher Chinese demand for Canadian canola.

These increases were partially offset by declines in exports of consumer goods, as well as metal and non-metallic mineral products. In January, exports excluding energy products rose 0.9 percent.

Exports to the United States rose 2.3 percent to CAD 34.6 billion, led by higher exports of passenger cars and light trucks. Exports to countries other than the United States fell 4.4 percent to CAD 11.8 billion. Lower exports to Switzerland (-CAD 298 million) and Spain (-CAD 200 million) contributed to the decline, both due to fewer aircraft sales.

Total imports edged down 0.3 percent to CAD 45.6 billion. The decline in imports of metal and non-metallic mineral products (-5.5 percent), as well as industrial machinery, equipment and parts was partially offset by higher imports of motor vehicles and parts (3.6 percent). 

Imports from the United States went up 0.3 percent to CAD 30.1 billion. Imports from countries other than the United States decreased 1.3 percent to CAD 15.5 billion. Imports from Japan fell 27.2 percent, on lower purchases of passenger cars and light trucks.

Year-over-year, exports rose 1.8 percent while imports were down 2.1 percent.



Thursday March 02 2017
Canada GDP Growth Slows to 0.6% In Q4
Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com

The Canadian economy expanded 0.6 percent on quarter in the last three months of 2016, slowing from a 0.9 percent growth in the previous quarter. Final domestic demand continued to decelerate, with ongoing weakness in business investment. Considering full 2016, the economy expanded 1.4 percent, following a 0.9 growth in 2015.

Household expenditure grew 0.6 percent, a slightly slower pace than the previous quarter (0.7 percent). Growth was driven by higher outlays on durable goods (2 percent) and financial services such as mutual funds and stock and bond commissions (1.6 percent). Investment in housing increased 1.2 percent.

Exports rose 0.3 percent, following a 2.3 percent gain in the third quarter. Exports of both goods (0.3 percent) and services (0.5 percent) increased. Imports of goods fell 4.1 percent, leading to a 3.5 percent drop in overall imports. Some of this decline was attributable to the one-time import of a large module destined for the Hebron offshore oil project in the third quarter.

Business gross fixed capital formation decreased 2.1 percent, following a 0.5 percent decline in the third quarter. Business investment in non-residential structures fell 5.9 percent following the strong growth in the third quarter (3.5 percent), partly due to a large one-time investment in the Hebron offshore oil project. Investment in machinery and equipment (-2.7 percent) and intellectual property products (-1.9 percent) was also down.

Businesses reduced their inventories by CAD 5.0 billion in the fourth quarter, after accumulating CAD 7.4 billion in the third quarter. Manufacturing inventories were drawn down by CAD 6.9 billion. Retail inventories of motor vehicles were reduced by CAD 1.9 billion, as household purchases of vehicles increased 1.5 percent and imports of passenger cars and light trucks fell 6 percent.

Expressed at an annualized rate, real GDP rose 2.6 percent in the fourth quarter, below an upwardly revised 3.8 percent surge in the third quarter but beating market estimates of a 2 percent growth.




Wednesday March 01 2017
Canada Holds Key Rate At 0.5%
BoC | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Bank of Canada held its overnight rate at 0.5 percent on March 1st, 2017 as widely expected. 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:

CPI inflation rose to 2.1 per cent in January, reflecting higher energy prices due in part to carbon pricing measures introduced in two provinces. The Bank is looking through these effects, as their impact on inflation will be temporary. The Bank’s three measures of core inflation, taken together, continue to point to material excess capacity in the economy.

Overall, recent data on the global and Canadian economies have been consistent with the Bank’s projection of improving growth, as set out in the January Monetary Policy Report (MPR). In Canada, recent consumption and housing indicators suggest growth in the fourth quarter of 2016 may have been slightly stronger than expected. However, exports continue to face the ongoing competitiveness challenges described in the January MPR. The Canadian dollar and bond yields remain near levels observed at that time. While there have been recent gains in employment, subdued growth in wages and hours worked continue to reflect persistent economic slack in Canada, in contrast to the United States.

The Bank’s Governing Council remains attentive to the impact of significant uncertainties weighing on the outlook and continues to monitor risks outlined in the January MPR. In this context, 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.


Wednesday March 01 2017
Canada Current Account Gap Narrows Sharply in Q4
Statistics Canada | Deborah Neves | deborah.neves@tradingeconomics.com

Canada current account gap narrowed CAD 9 billion to CAD 10.7 billion in the fourth quarter of 2016 from an upwardly revised CAD 19.8 billion in the previous period, but above market expectations of CAD 9.8 billion deficit. It was the lowest current account gap recorded since third quarter of 2011 as the goods balance posted its first surplus in more than two years.

The balance on the international trade in goods posted a $0.8 billion surplus in the fourth quarter, following an $8.6 billion deficit the previous quarter. Total exports of goods rose $6.3 billion to $136.5 billion in the fourth quarter. Energy products, led by crude petroleum, were the major contributor with exports up $4.7 billion on higher prices and, to a lesser extent, higher volumes. Total imports of goods were down $3.1 billion to $135.8 billion. Industrial machinery, equipment and parts recorded the largest reduction, down $2.7 billion. This followed a high in the third quarter, with activity dominated by the import of a large module for the Hebron offshore oil project in Newfoundland and Labrador. 

On a geographical basis, the goods surplus with the United States, led by stronger exports of energy products, increased $3.7 billion to $12.0 billion in the fourth quarter. Meanwhile, the deficit with non-US countries narrowed by $5.7 billion to $11.2 billion, mainly on record exports.

The overall deficit on international trade in services remained at $5.5 billion in the fourth quarter.In the fourth quarter, the travel deficit was unchanged at $3.6 billion. Receipts and payments rose as both the number of international overnight travellers visiting Canada and the number of Canadians travelling abroad for one or more nights increased. In the fourth quarter, the travel deficit was unchanged at $3.6 billion. Receipts and payments rose as both the number of international overnight travellers visiting Canada and the number of Canadians travelling abroad for one or more nights increased.

The investment income deficit, the difference between incomes generated on Canada's international assets and liabilities, increased $0.5 billion to $4.8 billion in the fourth quarter. Profits earned by foreign direct investors on their Canadian assets were up $1.3 billion to their highest level since the end of 2014. On the receipt side, profits earned by Canadian direct investors on their assets abroad increased by $1.1 billion. Higher income payments on foreign holdings of Canadian securities, both equity and debt securities, also contributed to the increase in the deficit in the fourth quarter.

For the year 2016, the current account deficit edged up $0.1 billion to $67.7 billion. The goods deficit was up $2.9 billion to a record $25.9 billion, mainly due to decline by $3.6 billion in exports as energy products continued to fall. By contrast, imports edged down by $0.7 billion. The services deficit narrowed $2.4 billion to $22.1 billion on a lower travel deficit. Spending by foreign travellers in Canada increased by $2.9 billion.