February 2008 Market Research

[BMironov]

Toronto Star:CMHC expects housing starts to drop 7% (Feb 5, 2008)
http://www.thestar.com/Business/article/300299

QUOTE Housing starts will fall by about seven per cent this year but will remain strong as 2008 should be the seventh straight year with starts above 200,000 units, Canada Mortgage and Housing Corp. predicted Monday.The federal housing agency said it expects 211,700 housing starts this year, off from 228,343 in 2007.

"Despite some global financial instability with regards to the U.S. housing market, Canada continues to experience robust employment levels, ongoing income gains and low mortgage rates," Bob Dugan, chief economist for CMHC, said in a statement.

This has strongly supported Canada`s housing markets, he said.

"However, housing starts are expected to decrease in 2008 mainly due to recent increases in house prices, which will push mortgage carrying costs higher for home buyers."

Existing home sales, as measured by the Multiple Listing Service, are expected to fall by 3.9 per cent to 499,650 units in 2008, while 2009 will see an additional decrease to 488,300.

Last year, such sales increased by 7.6 per cent over 2006 to about 520,000 units.

As most resale markets move toward more balanced conditions, growth in the average MLS price is forecast to slow to 5.2 per cent in 2008 and 3.8 per cent in 2009.

Last year, the growth in the average MLS price remained high at 10.6 per cent, mainly because of continued strong price pressures in Canada`s western provinces.

Report is available at:
http://www.cmhc-schl.gc.ca/odpub/esub/6459...91_2008_Q01.pdf

 

[BMironov]

TD Economics:AUTOMAKERS BRACE FOR A DIFFICULT YEAR (Feb 6, 2008)
http://www.td.com/economics/special/dc0208_auto.pdf

QUOTE Over the past year, the challenges facing the Canadian auto sector have intensified. The outlook for U.S. sales has deteriorated markedly as the risks of U.S. recession have increased. But, while the U.S. sales picture should begin to turn the corner in 2009 – setting the stage for a modest bounce back in North American output – other structural impediments threaten to weigh on the Canadian auto and parts sector over the medium term. Most importantly, Canada`s eroding cost position has come onto centre stage in light of the surging Canadian dollar, moves by the Big Three in the U.S. industry to lower costs and rising competition from China. This negative swing in relative cost position has raised concerns about Canada`s ability to secure investment. Increasing environmental measures by governments also present a major longer-term challenge for the sector as a whole.

Table of Contents:

• U.S. sales to tumble by 5% in 2008
• Canadian auto sales` winning streak to end
• Mexico to outperform in 2008
• A bumpy road ahead for producers
• Big Three restructuring is underway
• Big Three market share fell further in 2007
• U.S. hit hard by Big Three production cutbacks
• UAW agreement a key development in 2007
• Toyota creeps up on GM as top seller
• Current trends to continue in 2008
• Loonie erodes Canadian competitive advantage CAW in for a tough fight Governments providing some support New environmental regulations a challenge Canada`s Feebate program yet to show results New U.S. regulations to take effect by 2011 Big Three turning green Parts sector fears 2008 to be the worst year yet China steps up competition U.S. parts producers get back in the game The bottom line
  All in all, 2008 will likely see a significant drop in Canadian production of both light vehicles and parts. Sluggish demand for new vehicles in the U.S. – which is where 85% of Canadian output is sent – coupled with further efforts by the Big Three to trim inventories, will translate into sizable production cutbacks. Toyota`s Woodstock expansion will underpin a healthy rebound in 2009, although the sector`s long-term fortunes in Ontario depend on continued progress in the Big Three`s restructuring plan and further improvements in the overall business climate for automakers. As such, all eyes will be on the upcoming CAW negotiations, which will set the tone for the assembly sector in Canada.

 

[BMironov]

Statistics Canada:Labour Force Survey (Feb 8, 2008)
http://www.statcan.ca/Daily/English/080208/d080208a.htm

QUOTE Employment grew by an estimated 46,000 in January, boosting the employment rate to a record high (63.8%). These gains pushed the unemployment rate back down to 5.8%, matching the 33-year low reported in October 2007.

With January`s gains, employment growth over the past 12 months was estimated at 337,000 (+2.0%).

Employment growth in January was wholly attributable to an increase in full time. Over the last 12 months, full-time work has grown at nearly double the rate of part time.

HIGHLIGHTS:

• Employment growth was spread across several sectors
• Public sector takes a breather Labour market still robust in the West An aging labour force

 

[BMironov]

Globe and Mail:Housing starts begin the year with a bang (Feb 8, 2008)
http://www.reportonbusiness.com/servlet/st...y/Business/home

QUOTE Housing starts in Canada jumped in January, yet another sign that the Canadian market continues strong while the U.S. market melts down.

Housing starts rose to 222,700 on a seasonally adjusted and annual basis, Canada Mortgage and Housing Corp. said Friday, up from 184,700 in December and more than economists had forecast.

“Historically low mortgage rates, solid employment and income growth, as well as a high level of consumer confidence, continue to underpin the high level of housing starts,” said Bob Dugan, chief economist at CMHC`s Market Analysis Centre, adding that January`s starts rebounded to a level more consistent with 2008 expectations of 211,700.

That would mark the seventh consecutive year of starts above 200,000.