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First-quarter 2008 real (inflation-adjusted) Gross Domestic Product (GDP) in Canada was -0.3% (on an annualized basis) versus fourth-quarter 2007. The negative figure was quite a rare event. It was only the third time in the past sixteen years that GDP has declined, on a quarter-to-quarter annualized basis. This report goes on to examine other periods of weakness in the Canadian economy and considers the question of whether or not “stagflation” is a concern at this time.
If there is one theme that comes from the recently released Statistics Canada report entitled Retail Trade: How the Provinces Fared in 2007, it is how much the strength of the housing market influenced retail trade.
Posted in
Market Insights,
Commercial Building & Heavy Engineering,
Construction Starts,
Housing,
Alberta,
British Columbia,
Manitoba,
New Brunswick,
Newfoundland and Labrador,
Nova Scotia,
Ontario,
Prince Edward Island,
Quebec,
Saskatchewan
Through April 2008, housing starts in Canada are about even with last year. So far, there has been scant evidence of a collapse in the market similar to what has transpired in the U.S. Nevertheless, one has to remain vigilant in order to spot developing trouble. Unsold inventory levels are a case in point. The accompanying graph shows that the inventory of unsold single and semi-detached units is on a fairly steep upward-climbing path and that the inventory of unsold multiples is too high by about double.
The table that accompanies this report sets out CanaData’s latest forecasts of some of the key statistical series that are used to measure and assess the performance of Canada’s economy. Real Gross Domestic Product (GDP) growth this year (+1.5%) will be about half of what might be considered normal and desirable (+3.0%). The loonie’s rise to parity with the greenback is acting as a drag on manufactured exports. Plus there are other negative fallouts from the slowdown that is currently underway in the U.S.
In first-quarter 2008, operating profits of Canadian corporations fell by 1.1% following a slightly smaller 0.9% decline in fourth-quarter 2007. There were three key contributors to this first-quarter weakness:
The quite-thorough Industrial Product Price Index (IPPI) report from Statistics Canada monitors price movements for a vast array of materials and products used in industrial processes. It provides a good means to examine some of the detail behind what is happening with respect to construction costs these days. As of April 2008, the most recent results for the relevant sub-groupings within the IPPI are examined in this story.
Posted in
Market Insights,
Costs & Materials,
Alberta,
British Columbia,
Manitoba,
New Brunswick,
Newfoundland and Labrador,
Nova Scotia,
Ontario,
Prince Edward Island,
Quebec,
Saskatchewan
Actual year-over-year Canadian retail sales in March 2008 dropped below +5.0% for the first time since last August. However, three-month-smoothed retail sales were still above the benchmark figure at +5.9% year over year. Smoothed retail sales have been consistently at or above +5.0% since the fall of 2004. The conclusion can only be that retail sales are still performing quite well in Canada. This report also looks at retail employment by region, since construction activity often ties in with job growth.
Posted in
Market Insights,
Economy & Finance,
Alberta,
British Columbia,
Manitoba,
New Brunswick,
Newfoundland and Labrador,
Nova Scotia,
Ontario,
Prince Edward Island,
Quebec,
Saskatchewan
Over the past few months, there has been increasing evidence that Canada’s housing market is taking a breather. First, existing home sales in April were down by 12.2% year over year in April 2008. Second, while still positive, year-over-year increases in both new and existing house prices have slowed since the middle of last year. Third, the number of completed and unoccupied vacant dwellings has trended steadily higher since late in 2006.
After four straight months of decline, the year-over-year change in Canada’s all-items Consumer Price Index (CPI) headed back up again in April 2008. The latest inflation rate of +1.7% was still quite restrained and well below the kind of increase that would set off any cries of alarm. Core inflation (+1.5%) was a shade lower than the all-items rate, although it also jogged up slightly versus the previous month. The Bank of Canada is likely to be quite cautious when it next sets interest rate policy on June 10th.
Despite being hobbled by a 17% year-over-year increase in the value of the Canadian dollar versus the U.S. dollar and against the headwind of slower U.S. demand for its manufactured goods, Ontario has added almost 70,000 jobs since the beginning of this year. Moreover, in April, the province’s employment rate (the % of the working age population with a job) stood at 64%, an eighteen year high.
