January 2008 Market Research

[BMironov]

Globe and Mail:$100 oil puts a new shine on Alberta (Jan 3, 2008)
http://www.theglobeandmail.com/servlet/sto...PStory/Business

Record prices will fuel the world`s interest in the oil sands, even as extraction costs soar

QUOTE Deepening nervousness over long-term global energy supplies will put Canada`s rich oil sands even more in the global energy spotlight, economists said yesterday as crude touched $100 (U.S.) a barrel for the first time.

Observers said the high development and production costs associated with the massive, complex Athabasca oil sands deposit are becoming less of an obstacle to investors, both inside and outside Canada. At the same time, the underlying source of oil`s unprecedented price climb - fears that new oil supplies are becoming fewer and harder to exploit, while demand from the developing world is growing rapidly - also points to the oil sands, the world`s biggest largely untapped oil source.

"These levels are enough to make Canadian oil sands a lot more important as a focus of the global energy industry," said CIBC World Markets Inc. chief economist Jeff Rubin.
...
He called such price levels "a major validation" of the multibillion-dollar oil sands projects proposed over the next decade, and suggested they could also trigger a wave of international takeovers of Canadian companies with a strong foothold in the oil sands.
...
"This is very good for the oil sands," said University of Calgary economist Frank Atkins, noting that total oil sands costs are running at about $50 a barrel.

 

[BMironov]

The Vancouver Sun:Real estate value jumps $110 billion (Jan 3, 2008)
http://www.canada.com/vancouversun/news/we...6e-62f169261776

Province`s assessments increase by 16 per cent to top $940 billion

QUOTE Another record year of construction and continued high demand for property in 2007 pumped up the assessed value of B.C.`s real estate by 16 per cent to top $940 billion, the B.C. Assessment Authority says.
...
BC Assessment said new construction accounted for some $21.6 billion of the increase, and the authority added 36,905 properties to B.C.`s property rolls, which now total 1.82 million addresses.
...
That means most of the increase in provincial property values, some $110 billion, represents inflation in real estate markets that have risen for the last seven years.

"Obviously we`ve had strong economic growth so we continue to see fairly strong growth in pretty well all aspects of real estate markets across the province," Mark Katz, area assessor for the South Fraser region in the Lower Mainland, said Wednesday.

Across the Lower Mainland, Katz said property assessment increases in the range of 10 to 20 per cent were not uncommon.
...
And in the Lower Mainland, construction of the Canada Line rapid-transit system has had a significant impact on commercial property values, Katz said.
...
Assessments also revealed that rural playgrounds of the Kootenays are seeing some of the biggest increases in property values, with the rural area around the tiny village of Nakusp leading the way.

Nakusp, on the shores of Upper Arrow Lake north of Nelson, saw the value of its 2008 property roll increase 53 per cent from the previous year to reach $924.6 million.

 

[BMironov]

Financial Post:What to build in Canada? (Jan 2, 2008)
http://www.financialpost.com/money/story.html?id=209526

With the loonie knocking the stuffings out of industries, the country`s future in manufacturing is unclear

QUOTE General Motors Corp. is sniffing out ways to boost its local research and development work. Canada`s biggest carmaker could expand its collaboration with Canadian universities and suppliers on things like cutting vehicle weight as new fuel economy regulations in the United States and tougher competition has GM racing to make its cars run longer on a tank of gas and make them more appealing to buyers.

But at the same time the carmaker explores such made-in-Canada innovations, GM is also warning its number of manufacturing employees here might shrink in the years ahead.
...
Canada is now the most expensive country in the world for many carmakers to operate, according to the Canadian Vehicle Manufacturers Association, an industry trade group that represents Ford Motor Co., Chrysler LLC and GM in Canada. And that new reality has forced the six automakers with a local presence to ask themselves a simple question: What does it make sense to build and do here?
...
The answer, for GM at least, is more complex manufacturing and more engineering and research. In short, more brain power and less assembly.

The reality is that it will be "very hard" for GM`s Canadian assembly factories to win new vehicle mandates with the high dollar, says David Paterson, vice-president of corporate and environmental affairs for GM of Canada Ltd.

But that does not mean the work will dry up. Rather, GM`s footprint in Canada could shift towards work that is less cost-sensitive.
...
There is evidence GM is moving in the direction of more complex work.

Its pickup truck plant in Oshawa, Ont., is the only one worldwide where hybrid versions of the GMC Sierra and Chevrolet Silverado are made in addition to regular models. A small team of workers is also busy building hydrogen fuel-cell vehicles. And the company`s Oshawa engineering centre, which started years ago simply as a place where vehicles were altered to meet Canada`s special weather conditions and standards, is now a critical part of GM`s global product planning and testing. GM first developed the capability to run ethanol-gasoline blended fuel there.
...
GM Canada wants to expand its research collaboration with its eight current university partners on vehicle weight reduction to "hundreds of millions" of dollars from tens of millions now, Mr. Paterson says. Its biggest academic partner for R&D now is McMaster University in Hamilton, Ont. The company is also looking at whether it can do other advanced technology R&D work, on such things as lithium ion batteries, in Canada instead of the United States, he says.

 

[BMironov]

Globe and Mail:Canadian exports to China rise strongly (Jan 7, 2008)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE Exports rose about 27 per cent according to preliminary figures, International Trade Minister David Emerson said following a ceremony to open a new commercial annex at the Canadian Embassy in Beijing. "We`re starting to the turn the corner. It`s not where you want it to be, but you`ve got to start somewhere," Mr. Emerson said, referring to Canada`s substantial trade deficit with China.

Mr. Emerson said there had been no sign of Chinese retaliation against Canadian business following a recent meeting between Prime Minister Stephen Harper and the Dalai Lama — the first time a Canadian prime minister has met with the Dalai Lama at federal government offices.
...
Canada recorded a $26.8-billion trade deficit with China in 2006 against an overall trade surplus of $43.6-billion.

"We are of the view that Canada has underperformed over the last 10-15 years in terms of trade with China and our export performance in particular," Mr. Emerson said.

He said Canada hoped to improve the trade balance with China with agreements boosting air transport, tourism and investment.

 

[BMironov]

Statistics Canada:Crude oil and natural gas: Supply and disposition (Jan 8, 2008)
http://www.statcan.ca/Daily/English/080108/d080108b.htm

QUOTE Canadian companies produced 13.8 million cubic metres of crude oil and equivalent hydrocarbons in October, up 0.6% from October 2006.Exports of crude oil and equivalent hydrocarbons rose 5.7% compared with October 2006. Nearly two-thirds (65.3%) of Canada`s total production in October 2007 went to the export market.

Domestic sales of natural gas reached 5.5 billion cubic metres in October, a 4.2% decrease from the same month in 2006. This drop was a result of a decrease in residential and commercial gas sales.

Marketable natural gas production in October declined 7.6% from October 2006. Natural gas exports, which made up 64.5% of marketable natural gas, increased 1.7% from same month a year earlier.

13.8 million m[sup]3[/sup] = 86.8 million barrels of oil per month = 2.87 million barrels per day

 

[BMironov]

FInancial Post:Hot housing market should slow after peak 2007 (Jan 8, 2008)
http://www.financialpost.com/story.html?id=223853

QUOTE The fourth quarter of 2007 capped off a year of record activity in the Canadian housing market but don`t expect it to continue this year, says a leading real estate company.

"As we move into the new year, activity levels are expected to wane from the frantic pace that many regions of the country experienced," said Phil Soper, chief executive of Royal LePage Real Estate Services. "Average prices are expected to continue to rise, albeit at a much more moderate pace. Canadian buyers and sellers can expect healthy, balanced conditions in 2008 - the best environment for a strong and sustainable real estate market."
...
"The strength of the market was apparent throughout the country, largely due to positive economic fundamentals. The value and export-demand for our natural resources has underpinned high employment rates, providing Canadians with confidence in the future stability of their jobs and their local residential real estate markets," said LePage`s Mr. Soper.

Royal LePage report:
http://www.royallepage.ca/CMSTemplates/Abo...te.aspx?id=1748

 

[BMironov]

Toronto Star:40-year mortgages have arrived (Jan 9, 2008)
http://www.thestar.com/Business/article/292254

QUOTE Several changes introduced last year make it easier for buyers with a good credit record to move into their dream homes more quickly.
...
You can now pay off your mortgage over 30 to 40 years, instead of up to 25 years as before.
...
"A surprising number of existing homeowners are looking at this as an opportunity to purchase `more house` while leaving their monthly payments unchanged," says mortgage broker Elisseos Iriotakis, a principal with Safebridge Financial Group.

Extending the mortgage amortization to 30 to 40 years doesn`t mean locking in an interest rate for that long. You can get a fixed rate for up to 10 years – though most borrowers opt for five – after which you must renew the mortgage. This means negotiating with your current lender or switching to a new one.

You can now get a conventional mortgage by putting down 20 per cent of the purchase price.

Until last year, you needed a 25 per cent down payment to avoid a "high-ratio mortgage," one that was insured against default by the Canada Mortgage and Housing Corp. or Genworth Financial Canada.

Mortgage default insurance protects the lender from losses in case the loan is not repaid.
...
Mortgage insurance is no longer dominated by two players, CMHC and Genworth.

AIG United Guaranty, a subsidiary of New York-based American International Group Inc., made a splash when it came into Canada`s mortgage insurance market last year. AIG offers new options, such as a product for buyers who can put down only 3 per cent of the purchase price. The payments can be spread over 30 to 40 years.

Cash-strapped borrowers once needed a 5 per cent down payment to get the same flexibility.

Though insured "no money down" mortgages are also available, they require a higher credit score and higher fees.

AIG`s 3-per-cent-down mortgage insurance product is attractive to people buying in Toronto, says mortgage broker Ann Pope-Todd of Assured Mortgage Services.
...
You can now qualify for a low-down-payment mortgage if you`re self-employed or work on commissions. CMHC has introduced self-employed simplified insurance, which allows you to buy a home with as little as 5 per cent down. And you don`t have to hand over your tax returns for the last few years to qualify.
...
Self-employed simplified insurance is available for mortgages with a payback period of up to 40 years.

You can now qualify for a mortgage if your total debt load is more than 40 per cent.

When looking at whether you can afford to buy a house, lenders look at the gross debt service (GDS) ratio. Monthly housing costs, including mortgage, property taxes and heating, shouldn`t exceed 32 per cent of gross household income.

They also look at the total debt service (TDS) ratio, which takes into account debts such as bank loans, car loans and credit card balances.

If your total debt load exceeded 40 per cent of your monthly gross income, you used to be turned down when applying for a conventional mortgage.

Today, many lenders will give you one if your total debt load is 42 per cent of household income. Some go up to 44 per cent.
...
Will Dunning, a housing economist in Toronto, believes Canadians "borrow conservatively, especially for homes," and there`s no danger yet of Canada heading down the same road as the U.S.

"The mortgage arrears rate is remarkably low," he says. "It`s the lowest in a decade."

It is easy to say that this article is "Mortgage 101".

 

[BMironov]

Globe and Mail:Canadian interest rates to tumble: Merrill (Jan 9, 2008)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE The Canadian economy is poised for a sharp slowdown as U.S. demand weakens and that, combined with cooling inflation, spell much lower interest rates in the coming year, Merrill Lynch Canada predicts.

Economist David Wolf sees a 125 basis-point cut in interest rates this year, which would bring the Bank of Canada`s key lending rate to just 3 per cent.
...
“Canada is destined to play a primary role in global economic rebalancing away from American demand, given its proximity to the U.S., its openness to trade and its strong currency,” Mr. Wolf said in Merrill`s economic outlook.

That means a swing to current account deficit as exports buckle, lower inflation and overall weaker GDP growth “as Canada`s economy is thrown off-balance in 2008,” he predicted.

He expects the Canadian economy will grow 1.7 per cent this year, much slower than 2.6 per cent last year, while core inflation could fall to 1.5 per cent from 2.2 per cent. Canada`s benchmark stock index will likely slide about 4 per cent this year as earnings deteriorate, he expects.

Goldman, meantime, expects the Federal Reserve will slash its key lending rate to 2.5 per cent by the third quarter from 4.25 per cent currently.

It doesn`t, however, see a prolonged, deep contraction.

“The recession is likely to last two to three quarters and should be relatively mild by historical standards,” its report said, as interest-rate cuts, tax cuts and exports stay strong.

 

[BMironov]

TD Economics:HOUSING STARTS SLOW SHARPLY IN DECEMBER (Jan 9, 2008)
http://www.td.com/economics/comment/rs010908.pdf

QUOTE Despite the weakness in total housing starts in December, 2007 definitely stands out as a banner year, as the annual average number of starts stands at an extremely robust 229,600 units. This marks the second strongest year for new home construction in the past 20 years (behind only 2004). Despite earlier concerns about the potential impact of the financial market storm on Canadian housing demand, it does not appear that the recent tightening in credit conditions has created an undo burden on developers and consumers and home building clearly remains a pillar of strength in the Canadian economy. But home affordability is eroding across the nation, especially in the western provinces where it has become common to see huge annual price gains. This largely explains why construction activity on the higher priced single-detached side – which many view as a better indicator of underlying demand – is down 5.5% for 2007 as a whole. In contrast, the more volatile and affordable multiples market rose by 1.8% from the average of 2006. Looking ahead, with economic and employment growth expected to slow in 2008, we expect home building activity in Canada to continue to cool towards a more sustainable level of about 210,000 units this year. Regionally, look for almost every province to see softer housing market activity in 2008 with the sole exception of Saskatchewan, which is benefiting from a burgeoning resource sector. Alberta is expected to represent the largest dampening source, as its economy comes down from the stratosphere.

 

[BMironov]

Statistics Canada:Building permits (Nov 2007) (Jan 10, 2008)
http://www.statcan.ca/Daily/English/080110/d080110a.htm

QUOTE On a year-to-date basis, the total value of building permits issued by municipalities from January to November hit $68.1 billion, up 12.4% from the total for the first 11 months of 2006. This total was also 2.8% higher than the previous annual record of $66.3 billion set in 2006. The strong results came from gains in both residential and non-residential sectors.

On a year-to-date basis, 22 out of the 34 census metropolitan areas showed gains. The largest by far (in dollars) occurred in Toronto, where $12.0 billion worth of construction projects have been approved since the beginning of 2007, nearly $2.0 billion more than the value from January to November in 2006. Construction projects for office buildings and new single-family dwellings were the largest contributors to the strong showing.

Calgary, Montréal, Edmonton and Québec distantly followed, each of them showing gains in both the residential and non-residential sectors. In contrast, Windsor, Barrie and Oshawa posted the largest retreats.

Do not just read comparison between October and November. Compare Nov 2006 to Nov 2007! Check tables by the end of the article.

 

[BMironov]

Statistics Canada:New Housing Price Index (Nov 2007) (Jan 10, 2008)
http://www.statcan.ca/Daily/English/080110/d080110c.htm

QUOTE Contractors` selling prices were up 6.1% between November 2006 and November 2007, unchanged from the year-over-year increase in October.
...
Saskatoon continues its dominance in year-over-year inflation, leading the country with a price increase of 47.9%...
For Calgary, prices were 5.0% higher than in November 2006...
Edmonton saw prices that were 21.7% higher than in November 2006...
On the West Coast, the 12-month increase for Vancouver was 6.4%...
In Victoria, contractors` selling prices rose 1.2% from November 2006...
Elsewhere in Ontario, Toronto recorded a moderate increase as new housing prices rose 0.9% from October and 3.4% from November 2006. Hamilton and London also recorded yearly increases of 3.0% and 3.9% respectively.

 

[BMironov]

Globe and Mail:Economists join rate-cut chorus (Jan 10, 2008)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE Several economists are revising their interest-rate outlook for Canada this year, saying weak U.S. demand will result in deeper cuts than they`d anticipated.

Royal Bank of Canada, the country`s largest bank, said Thursday it now see three 25 basis-point reductions in the first half of this year compared with its original call of just a single cut.
...
RBC isn`t the only one pencilling in a new forecast. Goldman Sachs yesterday cut its outlook for Canadian growth and interest rates this year.

The brokerage lowered its growth forecast by about half a percentage point this year and said it now expects Canada`s key lending rate to hit 3.25 per cent by the middle of the year.
...
“The primary rationale is our view that the U.S. economy is entering a recession,” said Andrew Tilton, Goldman`s Canada and U.S. economist. “Weaker U.S. consumer and business spending should result in further drag on the Canadian external [trade] balance, slowing growth to a near-stall by midyear.”

Merrill Lynch sees even deeper cuts, to 3 per cent this year.

The Bank of Canada`s overnight lending rate now stands at 4.25 per cent and the central bank`s next decision comes Jan. 22.

 

[BMironov]

Globe and Mail:Ford fires warning shot at CAW (Jan 9, 2008)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE North American car buyers don`t care where vehicles are built, so the Canadian operations of Ford Motor Co. must become more competitive if the company is going to continue manufacturing in Canada, senior company executives warn.
...
"It`s the competitiveness of Ford, it`s the competitiveness of operating in Canada."

The new contracts Ford and its Detroit rivals have signed with the United Auto Workers union have substantially reduced the three companies` U.S. labour costs. Those reductions, combined with the surge in the value of the Canadian dollar against the U.S. currency, have changed the competitive landscape and turned Canada into what is believed to be the highest cost jurisdiction in the world to manufacture vehicles.
...
The biggest question mark at Ford Canada is the future of the St. Thomas Assembly Plant near London, Ont., which makes full-sized sedans that are sold mainly to taxi operators and police forces. The plant`s work force was reduced to one shift last year.

Mr. Hinrichs was asked at the dinner on Tuesday what Ford`s plans are for the cars and whether the auto maker plans to announce any more assembly plant closings in Canada or the United States between now and the year 2010.

He did not directly answer either question.

 

[BMironov]

Toronto Star:Auto execs predict bright future: report (Jan 10, 2008)
http://www.thestar.com/Business/article/292613

QUOTE The report suggests that the industry is leaving the first phase of its restructuring, deep cost-cutting and a shift of manufacturing to low-income countries. It is now entering a new phase, which includes "a renewed focus on sustainability and the environment, an increase in growth-orientated investment, rising popularity of passenger cars and fuel-efficient vehicles, and higher projected sales of hybrids."

General Motors Corp., Ford Motor Co. and Chrysler LLC have cut tens of thousands of jobs in the United States and thousands in Canada in moves to cut capacity to reflect a slump in market share lost to Japanese car makers, especially Toyota Motor Corp. and Honda Motor Co.

The cuts to Canadian auto jobs have been a particular blow to the manufacturing sector centred in Ontario and Quebec.

Fifty-eight per cent of the 113 executives polled by KPMG said the difficulties that have engulfed North American automakers in recent years will ultimately lead to a positive outcome, making them more efficient and competitive."

Although 37 per cent of respondents expect volatility over the next five years, 26 per cent predict rising profits – up 10 percentage points from previous years.

New markets, new plants, low-cost suppliers and cheaper vehicles all are seen arising from the vitality of Asia, where 80 per cent of respondents expect sales in China to top 12 million by 2011, compared with 16.1 million in the United States last year.

 

[BMironov]

CIBC World Markets:Delays Will Tighten Global Oil Markets (Jan 10, 2008)
http://research.cibcwm.com/economic_public...d/occrept65.pdf

QUOTE Despite healthy scheduled increases in world oil production, widespread project delays and soaring oil consumption in many oilproducing countries point to a widening demand-supply gap that will require further price rationing in world crude markets. </FONT>From Kazakhstan to Nigeria’s Delta region, protracted delays in some of the world’s largest energy mega-projects will have huge impacts on actual supply growth over the next five years.
...
The delays will subtract over 5 million barrels per day from global production growth over the 2008-2012 period. Coupled with accelerating depletion at existing fields, where output is dropping at an annual rate close to 4 million barrels per day, actual supply is likely to come in as much as 8 million barrels per day below International Energy Agency (IEA) and US Department of Energy estimates, with production apparently peaking at just over 88 million barrels per day in 2011.
...
In short, total global production gains will hugely overstate actual supply conditions because few of those precious new barrels will ever see the light of world export markets. Excluding the fast-rising and generally highly subsidized consumption of major oil-producing countries themselves, world oil supplies will be effectively flat. That comes amidst the seemingly insatiable energy needs of rapidly industrializing economies led by China, whose demand appears to be much more income- than price-levered. As such, these countries are likely to outbid more price-sensitive markets for increasingly scarce new oil supply. That leaves the burden of adjustment to that part of the world oil market that is the most price sensitive—the OECD.

On the surface, 2008 looks like a big year for oil supply. So does, for that matter, the next half-decade. According to the IEA, global production will climb to as much as 96 million barrels per day by 2012. But those projections ignore two fundamental forces that have, in recent years, brought global production to a virtual standstill.
...
The second fundamental force blowing up supply forecasts are the huge project delays and massive cost overruns associated with many of the world’s largest new oil mega-projects. Heavy reliance on increasingly high cost and technically challenging fields like the Kashagan project in Kazakhstan, Sakhalin II and Canadian and Venezuelan oil sands have left world supply growth vulnerable to a seemingly never-ending series of project delays. In many cases, soaring development costs have resulted in complex and often tense re-negotiations of royalty agreements with host countries. Some have even led to either a temporary or indefinite suspension of operating licenses.
...
A more realistic assessment of new supply shows a very different picture than the “official production estimates” (Chart 5). Net of depletion from existing fields, supply will grow by only about 0.7% per year to just over 88 million barrels per day by 2011, some 8 million barrels short of the IEA estimates that take start-up and future production dates at “face value”.
...
With global inventories already low, demand growth must broadly equal supply growth over a five-year horizon. While that must obviously hold at the aggregate level, demand is likely to be highly skewed towards certain regions due to the segmentation of global oil markets into three distinct types, each with very different market dynamics.
...
With virtually no growth in world exports, still-surging crude demand from developing countries will have to come at the expense of OECD consumption. Since crude demand in countries like China and India is far more income-elastic than price-elastic, these countries are likely to outbid OECD markets for increasingly scarce global supply.

Furthermore, many of those energy-thirsty developing countries will need to depend more and more on world markets. For example, China, the world’s second largest oil-consuming country with consumption already totalling 7 million barrels per day is likely to need to import as much as 70% of its oil needs by 2012 compared to about 50% today.

 

[BMironov]

TD Economics:Provincial Economic Outlook (Nov 10, 2008)
http://www.td.com/economics/qef/prov0108.pdf

QUOTE HIGHLIGHTS

• Deteriorating export picture setting the stage for slow growth across the provinces in 2008
• Real GDP growth this year to limp along at about 1.5% in N&L, Ontario, Quebec and P.E.I.
• Nova Scotia and New Brunswick poised to expand at a slightly faster 2% rate While the west will continue to outperform, the region will not be immune to U.S. softness Saskatchewan only province to record 3%+ growth in 2008 Provincial prospects somewhat brighter in 2009

 

[BMironov]

TD Economics:DISAPPOINTING DATA RAISES LIKELIHOOD OF MORE RATE CUTS (Jan 10, 2008)
http://www.td.com/economics/global/gm0108.pdf

QUOTE Given that the economic data has been worse than expected over the course of the last month, we have tweaked our expectations for the Fed. Two data releases are particularly relevant on that front. Most notably, the ISM Manufacturing index dipped below the all-important 50 mark, and the U.S. payrolls report saw just 18,000 new jobs created in December. Neither of these numbers are outright recessionary — the ISM Manufacturing traditionally needs to slip below 42 (versus 48 now) to properly signal a recession, and the economy can sustain trend GDP growth of 1.5%-2.0% in a stagnant job market. But to the extent that these numbers might presage a further deterioration, we look for slightly more rate cutting than even a month ago. As such, we have added one more 25bps rate cut to the two we had already pencilled in for 2008. This will leave the federal funds rate at 3.5%. This forecast is still not as aggressive as the five to six rate cuts that the market is currently pricing in.
...
Bank of Canada Has More Cuts in the Pipeline
The impact of the massive rally in the Canadian dollar remains one of the key issues for the Canadian economy going forward. The domestic economy remains fundamentally resilient, with consumption posting solid gains and the housing market showing only modest signs of slowing, notwithstanding the weather related drop in December housing starts. But because the Canadian economy remains so intimately tied to the U.S., the strength of the Canadian dollar has not only pushed inflation well below the Bank of Canada’s target, but introduced some downside risks to growth resulting from slower U.S. growth. We are now looking for Canadian GDP to post 1.9% growth in 2008.

The December 4 rate cut and statement certainly opened the door for the Bank of Canada to do more. Moreover, the Bank of Canada has a single mandate—to keep inflation at 2% over a horizon of six to eight quarters. Thus, the fact that core inflation is just 1.6% Y/Y and much softer on longer term annualized trends, suggests that the impact of the strong loonie cannot be ignored. With inflation so low, the Bank of Canada can buy an insurance policy for the Canadian economy by cutting now and asking questions later. As such, we are now looking for two 25bps rate cuts from the Bank, bringing the overnight rate down to 3.75% in March.

 

[BMironov]

Edmonton Journal:Realtors predict slight hike in house prices (Jan 10, 2007)
http://www.canada.com/edmontonjournal/news...3c9&k=77993

QUOTE Edmonton-area home prices will rise four per cent over the next 12 months, predicts the president of the Realtors` Association of Edmonton.

"If my forecast is accurate, then single-family detached homes will sell for $397,303 next year, and condos will be priced at $263,400," Marc Perras said Wednesday at the REA annual forecast seminar. Almost 500 realtors attended the sold-out event at the Westin Hotel.

Increases will be restrained by a large supply of listed homes and steep price hikes over the past 18 months -- offsetting the positive effects of a strong economy, positive in-migration, nearly full employment and low interest rates, he said.

Ian Glassford, chief financial officer of Servus Credit Union, also expects small gains. "Maybe one or two per cent," he said. "Not five or 10 per cent."
...
Lindsay Kendall, a market analyst with Canada Mortgage and Housing Corporation, predicted that Edmonton prices for all forms of resale housing will rise 6.5 per cent this year, to $360,000.
...
Perras predicted a slight drop in residential unit sales. "I expect that 19,100 residential properties will sell through the MLS in 2008, as compared to 20,544 sales in 2007."

 

[BMironov]

Statistics Canada:Labour Force Survey (Dec 2007) (Jan 11, 2008)
http://www.statcan.ca/Daily/English/080111/d080111a.htm

QUOTE Following seven consecutive months of increases, employment edged down in December (-19,000). Over the year, however, employment was up an estimated 2.2% (+370,000), similar to the growth rate of 2006 (+2.1%) and the fifteenth consecutive year of employment growth. The unemployment rate held steady at 5.9% in December.

For the second straight year, Alberta charted the highest employment growth rate of all provinces, although at a slower clip than in 2006. Employment gains were also strong in New Brunswick, British Columbia and Quebec in 2007.

Alberta posted the only significant employment gain in December (+21,000). This, however, was offset by declines in six provinces.

Manufacturing experienced another drop in December (-33,000). Following a decline of 2.4% in 2006, employment in this industry was further reduced by an estimated 6.2% in 2007.
...
Wages continued to rise in December, increasing to 4.9% from December 2006, exceeding the most recent increase in the Consumer Price Index of 2.5%. At $23.50, Alberta`s average hourly wage stood well above that of other provinces, up 8.8% or close to two dollars from 12 months earlier, and far above that province`s Consumer Price Index change of 4.7%.

Other highlights:

• Canada`s employment gains surpassed that of the United States
• Goods-producing sector employment hindered by manufacturing
• Lion`s share of growth in the service-producing sector in 2007
• Public sector and self-employment fuelled employment growth over the yearThe two westernmost provinces continued to thrive in 2007Quebec`s employment situation improved in 2007Great year for New BrunswickEmployment robust for older workers in 2007

Interactive Unemployment map of Canada:
http://www.reportonbusiness.com/v5/content...s_20080111.html

 

[BMironov]

Statistics Canada:Canadian international merchandise trade (Nov 2007) (Jan 11, 2008)
http://www.statcan.ca/Daily/English/080111/d080111b.htm

QUOTE Canadian merchandise exports increased in November for only the third time in 2007, halting a three-month decline. At the same time, imports increased but at a slower pace. As a result, the nation`s trade surplus with the world expanded for the second month in a row.

Canadian companies exported $37.9 billion worth of merchandise, a 3.1% increase, while imports rose 1.7% to $34.2 billion. The gain in imports partially reversed a decline in October.

Canada`s trade surplus with the world expanded to $3.7 billion, up from a revised $3.1 billion in October. While exports have grown since early 2006, the share of Canada`s exports to the United States has fallen. In November, exports to the United States accounted for 75% of the total compared with 82% in January 2006.

On a year-to-date basis, both exports and imports stood at higher levels in the first 11 months of the year compared with the same period in 2006.

Volume dominated November`s increase in trade. In constant dollar terms, a method used to isolate the change in volume, both exports and imports rose again in November. While both prices increased by 0.6%, volumes for exports and imports were up 2.5% and 1.0% respectively.

Other highlights:

• Exports increase for the first time since July Imports fuelled by rising energy products