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The accompanying table shows CanaData’s latest square footage forecasts for ICI (industrial, commercial and institutional) construction in Canada, by region, out to 2010. The 2008 commercial starts figure has been bumped up a bit since the last forecast in January and institutional starts have been cut by the same amount. The net result leaves the total square footage forecast for 2008 at 79.5 million, down from 89.1 in 2007. A further decline is expected in 2009 (73.0 million) before recovery in 2010 (76.5 million).
Posted in
Market Insights,
Construction Forecasts,
Alberta,
British Columbia,
Manitoba,
New Brunswick,
Newfoundland and Labrador,
Nova Scotia,
Ontario,
Prince Edward Island,
Quebec,
Saskatchewan
Retail sales in Canada continue to perform very well. The year-over-year level of actual retail sales in January 2008 was +7.5%. The three-month smoothed level was +6.6%. Lying behind the retail spending strength are continuing healthy numbers on job growth in the country as a whole and a level of housing starts that is showing no significant moderation so far, unlike in the U.S. This is important because a lot of retail spending is home related. Canadian consumers are still spending “like a good thing”.
The year-over-year increase in the all-items Consumer Price Index in Canada dropped for the third straight month in February 2008 to only +1.8%. Furthermore, the “core” inflation rate was also quite restrained in the latest month, at only +1.5%. Therefore, both key measures of inflation were below the mid-point of the Bank of Canada’s target range that runs from +1.0% to +3.0%. Canada’s price-change performance is less than one-half of the overall inflation rate in the United States.
With an increasing number of economists using the term “recession” and “U.S. economy” in the same sentence, the term “recession proof” is also popping up more frequently, too.
Housing starts in Canada in January 2008 climbed back over 220,000 units on an annualized basis, after the lowest figure in many months in December (185,000 units), according to Canada Mortgage and Housing Corporation (CMHC). Strong housing markets have been one of the saviors of the Canadian economy over the past two years. While U.S. new home starts have declined dramatically from their peak level in January 2006, homebuilding activity in Canada has stayed strong and relatively even.
The attached table records the 10 largest construction project starts in Canada in February 2008, according to dollar volume. In the latest month, five of the projects were in Ontario, two were in Alberta, two were in British Columbia and there was one in Québec. Also included is the latest trend graph on starts. This looks at 12-month moving totals (again based on dollar volume) of the two major non-residential building categories in Canada − total ICI starts and engineering work. ICI stands for industrial, commercial and institutional.
Capital spending plans in Canada are still quite robust, despite signs that the U.S. economy is in, or about to enter, a recession. This is the finding of Statistics Canada’s annual survey of Public and Private Investment.
Consumer spending is 70% of U.S. Gross Domestic Product (GDP) and about 55% to 60% of Canada’s GDP. There is a symbiotic relationship between consumer demand and costing and pricing that runs throughout the economy. This report takes a look at some of the key issues.
The Bank of Canada has just announced that it is cutting its key policy-setting interest rate, the overnight rate, by 50 basis points (100 basis points =1.00%). This will drop the overnight rate from 4.00% to 3.50%. The lowering of the rate is being initiated to help with a slowing economy, partly in response to the slowdown/recession underway in the United States. The peak level for the Bank’s key rate in this cycle was 4.50%, which occurred in late summer-early fall of last year.
Canada’s Gross Domestic Product (GDP) increased at only a +0.8% quarter-to-quarter annualized rate in the final quarter of 2007. This compared with +3.0% in the third quarter, +3.8% in the second and +4.0% in the first. With fourth-quarter results now in, the year-over-year annual GDP growth number is available. Canada’s GDP growth for all of 2007 versus 2006 was +2.7% (versus +2.8% the year before). Consumers made a big contribution to 2007 GDP by increasing their spending at a rate of +4.7%.
