Canada economy by awaisjameel555

VIEWS: 3 PAGES: 3

Despite a very challenging external environment,
Canada’s economy has outperformed its G7 peers
in many respects. It weathered the financial and
economic crisis better than most industrialized
countries and it staged an impressive turnaround.
Real GDP grew 4.9 per cent (annualized) in the
final quarter of 2009 and a resounding 5.6 per
cent in the first quarter of 2010, fueled by a strong
rebound in consumer spending, residential investment
and government expenditures.

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									                                                                                CURRENT TRENDS UPDATE — CANADA
Overview and highlights                                                                                           Update - November 10, 2011
                                                          August GDP rises
                                                          Latest available: August
Real GDP
% change, month-over-month                                Release date: October 31, 2011
0.8
                                                          GDP output in August rose 0.3% following an upwardly revised 0.4% rise in
0.6
0.4                                                       July, originally reported as up 0.3%. All of the strength in the month was in
0.2                                                       the goods-producing side of the economy where activity rose 0.9% following a
0.0
-0.2
                                                          revised 0.7% gain in July (was 0.4%). These increases along with a 0.6% rise
-0.4                                                      in June have more than offset the 1.7% drop in goods-production that occurred
-0.6
-0.8
                                                          in May where various factors including wildfires in Northern Alberta weighed
-1.0                                                      on the mining sector. Service-producing industries were unchanged in August
-1.2
                                                          though this followed an upwardly revised 0.3% gain in July (0.2% previously).
-1.4

       2006       2007        2008   2009   2010   2011
                                                          The strength in goods-producing industries largely reflected a 3.3% jump in
       Source: Statistics Canada
                                                          mining output. This in part reflected a 2.6% jump in oil and gas extraction
                                                          though the mining support component soared 16.5% in the month reflecting
                                                          increased drilling activity. Manufacturing fell 0.4% in the month despite motor
                                                          vehicle production rising a robust 3.9%. The offset was mainly in various non-
                                                          durables components declining in the month including: non-metallic mineral
▲ The gain in August GDP provides further evi-            products, wood products, chemicals and paper products. The latter three com-
                                                          ponents all showed sizeable gains in July. In terms of the other major goods-
dence of the transitory nature of the economic
                                                          producing industries, utilities fell 0.8% after a 1.4% jump in July while con-
weakness in the second quarter of 2011 where
                                                          struction was up a modest 0.1%. Within-service-producing industries, finan-
activity dropped to an annualized 0.4%.
                                                          cial services managed to rise 0.6%. However, this was offset by sizeable de-
▲ Despite a drop in employment in October, the            clines in wholesale trade (1.4%) and the arts and entertainment component
economy has still generated a solid increase in           (1.4%). The former followed a 1.8% jump in July.
employment this year.
▲ Retail sales in August rose 0.5% which offset
an equal-sized decline in July.                           Economy at a glance                                                   % change from
▲ The pace of housing starts in Canada has                                                                               Previous
                                                                                                    Lastest month         month          Year ago
picked up substantially during the course of 2011,
increasing by 8.3% and 6.3% in second and third           Real GDP                                        Aug.              0.3            2.4
quarters, respectively.                                   Industrial production                           Aug.              1.2            3.1
▲ September’s trade surplus improvement was               Employment                                      Oct.              -0.3           1.4
due to exports rising $1.6 billion (4.2%) with only       Unemployment rate*                              Oct.              7.3            7.8
                                                          Manufacturing
a small decline in imports of $0.1 billion.
                                                             Production                                   Aug.              -0.4           0.8
▲ The overall inflation rate averaged 3.0% in                Employment                                   Oct.              -2.8           -2.7
the third quarter of 2011, slightly higher than the          Shipments                                    Aug.              1.4            6.7
Bank of Canada's July forecast of 2.8%.                      New orders                                   Aug.              0.8            6.5
                                                             Inventories                                  Aug.              0.3            7.0
                                                          Retail sales                                    Aug.              0.5            3.9
                                                          Car sales                                       Aug.              -0.4           1.1
                                                          Housing starts (000s)*                          Oct.             207.6          172.1
                                                          Exports                                         Sept.             4.2            20.3
                                                          Imports                                         Sept.             -0.3           8.9
                                                          Trade balance ($billlions)*                     Sept.             1.2            -2.3
                                                          Consumer prices                                 Sept.             0.2            3.2
                                                          * Levels are shown for the latest period and the same period a year earlier.
                                                                                 Employment tumbled in October
    Employment                                                                   Latest available: October
    Change in thousands, month-over-month
    100
                                                                                 Release date: November 4, 2011
                                                                                 Canadian employment fell by 54,000 in October. The labour force contracted by
     50                                                                          13,800 in October and the unemployment rate rose to 7.3% from 7.1% in Sep-
       0
                                                                                 tember. The October report showed a decline in employment in the goods pro-
                                                                                 ducing industries where the number of employed fell by 51,900. Construction
     -50                                                                         (-20,100) and manufacturing (-48,400) jobs were cut in the month. In the ser-
                                                                                 vices side of the economy, employment dipped by 2,000. All jobs lost were full-
    -100
                                                                                 time with 71,700 positions cut. Part-time employment rose by 17,700. On net,
    -150                                                                         full-time employment is still up by 198,200 in 2011. The public sector shed
           2005     2006      2007          2008          2009     2010   2011   3,800 positions. Private sector employment reported 32,000 jobs cuts. Still, the
           Source: Statistics Canada
                                                                                 declines over the three month period only reversed 71% of July's 94,500 surge.
                                                                                 The number of self-employed individuals was down by 18,100 following the
    Unemployment rate                                                            38,900 increase in September. The year-over-year gain in average hourly wages
    % of labour force                                                            for permanent workers slipped to 1.3%, a tad slower than September's 1.6% pace
    9.0
                                                                                 and still well below the average 2.3% in the first half of the year.
    8.5

    8.0                                                                          Retail sales rise in August
    7.5                                                                          Latest available: August
    7.0                                                                          Release date: October 25, 2011
    6.5
                                                                                 Canadian nominal retail sales rose 0.5% in August. The increase managed to
    6.0
                                                                                 offset the 0.5% drop recorded in July that had originally been reported as down
    5.5
                                                                                 0.6%. Most of the retail sales strength reflected the 1.0% jump in auto sales that
    5.0
                                                                                 occurred despite indications of unit auto sales falling 0.4%. Excluding motor
      2005         2006       2007          2008      2009         2010   2011

       Source: Statistics Canada
                                                                                 vehicles, sales rose 0.4% following an upwardly revised 0.1% gain in July
                                                                                 (previously reported as unchanged). On a volumes basis, overall retail sales man-
                                                                                 aged to rise 0.3% which represented a more moderate change compared to the
    Retail sales                                                                 0.9% decline in July and 1.7% surge in June. Excluding both motor vehicles and
    % change, month-over-month
    4.0
                                                                                 gasoline stations, sales were up a disappointing 0.1% though the monthly gain in
    3.0                                                                          July was revised up to 0.2% from the previously-estimated 0.1%. Though the
    2.0                                                                          report indicated solid sales gains at furniture (1.6%) and sporting goods stores
    1.0                                                                          (1.5%), it was almost fully offset by declines in electronic and appliance (1.1%)
    0.0
                                                                                 and clothing stores (0.7%).
    -1.0
    -2.0
                                                                                 Housing starts decline slightly in October
    -3.0

    -4.0
                                                                                 Latest available: October
    -5.0
                                                                                 Release date: November 8, 2011
           2006       2007           2008          2009          2010     2011   Canadian housing starts remained essentially steady in October, falling 0.6% to
          Source: Statistics Canada                                              207,600 annualized units from September’s 208,800 (earlier reported as
                                                                                 207,600). October’s slight decline in the pace of housing starts was entirely due
                                                                                 to a 9.0% drop in the urban singles component, to 60,900 from 66,900 in Sep-
    Housing starts
    Thousands                                                                    tember. The volatile urban multiples component continued to climb in October,
    300                                                                          with a 1.7% increase to 123,600. Rural starts also rose, from 20,400 annualized
    280
    260
                                                                                 units to 23,100. On a regional basis, big declines in urban starts were seen in
    240                                                                          Quebec (-28.8%) and the Atlantic provinces (-43.5%), following strength in
    220                                                                          these areas last month. These declines were the result of a slower pace of con-
    200
                                                                                 struction in both the singles and multiples components. Ontario, the Prairies and
    180
    160
                                                                                 British Columbia all saw gains, of 11.7%, 28.2% and 1.5%, respectively. These
    140                                                                          gains were entirely driven by multiples starts, with singles declining in all areas.
    120
                                                                                 Growth in multiples was particularly pronounced in the Prairies, with the multi-
    100
                                                                                 ples component increasing by over 93%.
          2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

      Source: Statistics Canada




ECONOMICS | RESEARCH

2
September trade balance returns to a surplus
Latest available: September
Release date: November 10, 2011
Canada’s September merchandise trade returned to a surplus position of $1.2
billion with the deficit in August lowered to $0.5 billion from a previously esti-
mated $0.6 billion. The improvement in the balance was due to exports rising
$1.6 billion (4.2%) with a decline in imports contributing the additional $0.1
billion (-0.3%) to the overall improvement in the trade balance. A lion’s share of
the increase in exports reflected a $1.0 billion (11.3%) jump in energy exports.
Most major export categories rose in the month with automotive products in-
creasing $0.2 billion (5.6%), industrial goods up $0.3 billion (3.4%), and the
agriculture component up $0.3 billion (9.4%).The main offset was a $0.4 billion
(4.9%) drop in machinery and equipment. The drop in imports reflected declines                                Merchandise trade
                                                                                                             C$ billions, annualized
in automotive products of $0.3 billion (5.5%), and in machinery and equipment                                550
                                                                                                                                                              Exports
of $0.3 billion (3.3%). The main offsets were in $0.2 billion gains in energy
                                                                                                             500
products (5.7%) and industrial goods (2.6%). The volume (constant 2002 dollar
chained) of exports rose 1.2% while the volume of imports dropped 1.9%. This                                 450
resulted in the real net export deficit narrowing to $7.5 billion from $8.7 billion
                                                                                                             400
in August.
                                                                                                                          Imports
                                                                                                             350
Annual headline and core inflation rates up in September
Latest available: September                                                                                  300

Release date: October 21, 2011                                                                                     2006        2007           2008     2009         2010   2011
                                                                                                                   Source: Statistics Canada
The September consumer price report showed the headline index rose 0.2% in
the month however, the core rate ran much hotter, rising 0.5%. The year-over-
year headline inflation rate edged up to 3.2% in September from August's 3.1%
pace. The annual core rate was 2.2%, above the 1.9% recorded in August.
Women's clothing prices spurted by 10.5% in September, which, supplemented                                    Consumer price index
                                                                                                              % change, year-over-year
by rising tuition fees (4.2%), car prices, and air transportation costs, boosted the                          5
inflation rates. Financial services costs also rose 4.8% in September. Moderating
                                                                                                              4
these increases were declines in electricity costs (which partially reversed in-
creases in July and August) and insurance costs. The rise in the headline rate was                            3

also dampened by declining prices for fresh fruit and vegetables, and gasoline,                               2
three items that are not included in the core measure. The rise in vehicle prices
                                                                                                              1
and larger than seasonal increase in clothing prices accounted for about 0.2% of
                                                                                                              0
the monthly increase. Compared to September 2010, prices for gasoline were up
22.7%, fuel oil prices rose 27.4%, vehicle insurance premiums rose 5.6%, and                                 -1

food from restaurants and meat prices were also higher. At the same time, mort-                                2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
                                                                                                                  Source: Statistics Canada
gage interest costs, furniture prices, computer equipment, and natural gas prices
declined. On balance, the annual inflation rates, both headline and core, moved
higher in the month.




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