January 2010
- Thread starter Ally
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Canada`s Resale Home prices see first Annual rise in 10 months
OTTAWA -- Resale prices for Canadian homes rose for a sixth consecutive month in October -- and were up on an annual basis for the first time in nearly a year -- as the country`s real estate market continued to recover from recessionary lows, according to a report released Wednesday.
The Teranet-National Bank resale house price index of major markets increased 1.27% during the month from September. Year-over-year, prices were up 0.57% -- marking the first rise in 10 months.
"Prices have now risen 1% or more for five months in a row," said Marc Pinsonneault, senior economist at National Bank Financial. "In October, however, the monthly rise varied significantly among the six metropolitan markets surveyed."
The biggest monthly price gains were recorded in Toronto (1.6%), Vancouver (1.8%) and Calgary (0.8%), the index showed.
More modest increases were noted in Halifax (0.4%), Ottawa (0.3%) and Montreal (0.3%). "In each of these three cities, the monthly appreciation was the smallest since market bottom -- except for one monthly decline each in Montreal and Halifax," said Mr. Pinsonneault.Read the full article here.
OTTAWA -- Resale prices for Canadian homes rose for a sixth consecutive month in October -- and were up on an annual basis for the first time in nearly a year -- as the country`s real estate market continued to recover from recessionary lows, according to a report released Wednesday.
The Teranet-National Bank resale house price index of major markets increased 1.27% during the month from September. Year-over-year, prices were up 0.57% -- marking the first rise in 10 months.
"Prices have now risen 1% or more for five months in a row," said Marc Pinsonneault, senior economist at National Bank Financial. "In October, however, the monthly rise varied significantly among the six metropolitan markets surveyed."
The biggest monthly price gains were recorded in Toronto (1.6%), Vancouver (1.8%) and Calgary (0.8%), the index showed.
More modest increases were noted in Halifax (0.4%), Ottawa (0.3%) and Montreal (0.3%). "In each of these three cities, the monthly appreciation was the smallest since market bottom -- except for one monthly decline each in Montreal and Halifax," said Mr. Pinsonneault.Read the full article here.
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Canadian Home Resale numbers back above 2008 levels
OTTAWA — Business is booming in the Canadian resale housing market and will continue to do so, according to a report released Friday that shows November sales back above 2008 numbers in all 28 markets surveyed.
The Conference Board of Canada report also showed higher year-over-year prices in 24 of those markets.
While the Canadian real estate market didn`t suffer the same kind of collapse seen in the United States, it did see a correction due to the economic downturn.
Friday`s report suggests that in most parts of the country, however, the market has come roaring back — to the extent that the only region covered that is considered to still be a buyer`s market is Saguenay, Que. Seven others are considered to be sellers` markets and the rest are deemed to be balanced, with neither buyer nor seller having a pricing advantage. The board says this suggests "firm pricing ahead."
Windsor, Ont., a car-manufacturing city that was hit hard by the downturn, is one of those balanced markets, despite home prices there being 10 per cent lower than they were a year ago, before Chrysler and General Motors went into bankruptcy protection, though the number of sales has increased year-over-year.
Read the full article here.
OTTAWA — Business is booming in the Canadian resale housing market and will continue to do so, according to a report released Friday that shows November sales back above 2008 numbers in all 28 markets surveyed.
The Conference Board of Canada report also showed higher year-over-year prices in 24 of those markets.
While the Canadian real estate market didn`t suffer the same kind of collapse seen in the United States, it did see a correction due to the economic downturn.
Friday`s report suggests that in most parts of the country, however, the market has come roaring back — to the extent that the only region covered that is considered to still be a buyer`s market is Saguenay, Que. Seven others are considered to be sellers` markets and the rest are deemed to be balanced, with neither buyer nor seller having a pricing advantage. The board says this suggests "firm pricing ahead."
Windsor, Ont., a car-manufacturing city that was hit hard by the downturn, is one of those balanced markets, despite home prices there being 10 per cent lower than they were a year ago, before Chrysler and General Motors went into bankruptcy protection, though the number of sales has increased year-over-year.
Read the full article here.
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Loonie hits 2 1/2 month high on job data hopes
TORONTO (Reuters) - The Canadian dollar climbed against the U.S. dollar on Thursday, lifted by market expectations that a pair of jobs reports in Canada and U.S. on Friday will bolster recovery hopes.
The unit shot as high as C$1.0291 to the U.S. dollar, or 97.17 U.S. cents, largely driven up by bullish market sentiment, said Steve Butler, director of foreign exchange trading at Scotia Capital.
"For the time being, Canada can do no wrong. We`ve seen dollar/Canada continue to grind lower," he said.
A main factor behind the rosy sentiment is market expectation that jobs reports due on Friday morning could provide further clarity the economic recovery is firmly underway.
"The market is expecting good news out of the jobs data both in the U.S. and Canada tomorrow, and it`s that expectation that is keeping Canada outperforming," said Butler.
At 9:15 a.m., the Canadian dollar was at C$1.0315 to the U.S. dollar, or 96.95 U.S. cents, up from Wednesday`s finish at C$1.0325 to the U.S. dollar, or 96.85 U.S. cents.
Butler added the Canadian dollar continued its ascent even as the usual barometers that drive it higher were in fact weaker, including a sagging price of oil below $83 a barrel and softer gold prices.
Read the full article here.
TORONTO (Reuters) - The Canadian dollar climbed against the U.S. dollar on Thursday, lifted by market expectations that a pair of jobs reports in Canada and U.S. on Friday will bolster recovery hopes.
The unit shot as high as C$1.0291 to the U.S. dollar, or 97.17 U.S. cents, largely driven up by bullish market sentiment, said Steve Butler, director of foreign exchange trading at Scotia Capital.
"For the time being, Canada can do no wrong. We`ve seen dollar/Canada continue to grind lower," he said.
A main factor behind the rosy sentiment is market expectation that jobs reports due on Friday morning could provide further clarity the economic recovery is firmly underway.
"The market is expecting good news out of the jobs data both in the U.S. and Canada tomorrow, and it`s that expectation that is keeping Canada outperforming," said Butler.
At 9:15 a.m., the Canadian dollar was at C$1.0315 to the U.S. dollar, or 96.95 U.S. cents, up from Wednesday`s finish at C$1.0325 to the U.S. dollar, or 96.85 U.S. cents.
Butler added the Canadian dollar continued its ascent even as the usual barometers that drive it higher were in fact weaker, including a sagging price of oil below $83 a barrel and softer gold prices.
Read the full article here.
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Many think Economy will turn around in 2010: Survey
TORONTO — Although more than three-quarters of Canadians still believe we are in recession, more than half believe 2010 will be the year the economy turns around, a huge increase compared to 2009, an Economic Club of Canada/ Pollara Strategic Research poll showed Wednesday.
According to the survey, 54 per cent of respondents said they expect the Canadian economy to improve in 2010, compared to only 20 per cent who said 2009 would bring better times when polled a year ago. Likewise, the percentage of Canadians who feel the economy will worsen dropped to 14 per cent, compared to 57 per cent a year ago.
"While the statistical change is dramatic, remember we saw historically low numbers in confidence last year," Michael Marzolini, chairman of Pollara wrote in the release. "More than three-quarters of Canadians — 78 per cent — still believe we are in recession, but that is a drop from 91 per cent who felt that way one year ago."
Consumer confidence hit a 27-year low in December 2008, with the Conference Board of Canada`s Consumer Confidence Index falling to to 67.7 — the lowest level since the 63 recorded during the 1981-82 recession.
On the employment front, 43 per cent of those surveyed said they believe it will improve, compared to just 12 per cent one year ago. Only 22 per cent said they feel the employment situation will worsen in 2010, compared to 68 per cent in 2009.
Read the full article here.
TORONTO — Although more than three-quarters of Canadians still believe we are in recession, more than half believe 2010 will be the year the economy turns around, a huge increase compared to 2009, an Economic Club of Canada/ Pollara Strategic Research poll showed Wednesday.
According to the survey, 54 per cent of respondents said they expect the Canadian economy to improve in 2010, compared to only 20 per cent who said 2009 would bring better times when polled a year ago. Likewise, the percentage of Canadians who feel the economy will worsen dropped to 14 per cent, compared to 57 per cent a year ago.
"While the statistical change is dramatic, remember we saw historically low numbers in confidence last year," Michael Marzolini, chairman of Pollara wrote in the release. "More than three-quarters of Canadians — 78 per cent — still believe we are in recession, but that is a drop from 91 per cent who felt that way one year ago."
Consumer confidence hit a 27-year low in December 2008, with the Conference Board of Canada`s Consumer Confidence Index falling to to 67.7 — the lowest level since the 63 recorded during the 1981-82 recession.
On the employment front, 43 per cent of those surveyed said they believe it will improve, compared to just 12 per cent one year ago. Only 22 per cent said they feel the employment situation will worsen in 2010, compared to 68 per cent in 2009.
Read the full article here.
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U.S. Dollar rising, but can`t match Loonie
A sea change in currency markets is giving the U.S. dollar a boost in relation to other world currencies, but the shift has not been at the expense of the Canadian dollar. To the contrary, the loonie continues to strengthen against the greenback and looks poised to outperform most major currencies in 2010.
"We are really into a period right now where the currency market is searching for a new formula," says John Curran, senior vice-president of CanadianForex. "Rather than the panic flight to quality and the risk on/risk off trade that has been in vogue since the collapse of Lehman Brothers, people are starting to rely more on fundamentals and are becoming more focused on interest rates moving forward."
Investors are beginning to speculate the U.S. dollar will strengthen against most major currencies, figures show. At the end of December, investors were net long the U.S. dollar for the first time since last April, with the aggregate net long position hitting US$1.6-billion on the Chicago Mercantile Exchange, according to a report yesterday.
The recent strength of the greenback comes at the expense of the Japanese yen, the British pound and most strikingly, the euro, which has fallen 5% since late November against its U.S. counterpart and is now the largest net short position held against the U.S. dollar at US$6.1-billion.
Meanwhile, the Australian, New Zealand and Canadian dollars gained strength against other world currencies, with the loonie now boasting the largest net long position against the U.S. dollar at US$3.8-billion.
"Sentiment has violently shifted against the euro, while it has remained bullish the Canadian dollar and the other commodity currencies," said Camilla Sutton, currency strategist at Scotia Capital Markets, in a note to clients.
Read the full article here.
A sea change in currency markets is giving the U.S. dollar a boost in relation to other world currencies, but the shift has not been at the expense of the Canadian dollar. To the contrary, the loonie continues to strengthen against the greenback and looks poised to outperform most major currencies in 2010.
"We are really into a period right now where the currency market is searching for a new formula," says John Curran, senior vice-president of CanadianForex. "Rather than the panic flight to quality and the risk on/risk off trade that has been in vogue since the collapse of Lehman Brothers, people are starting to rely more on fundamentals and are becoming more focused on interest rates moving forward."
Investors are beginning to speculate the U.S. dollar will strengthen against most major currencies, figures show. At the end of December, investors were net long the U.S. dollar for the first time since last April, with the aggregate net long position hitting US$1.6-billion on the Chicago Mercantile Exchange, according to a report yesterday.
The recent strength of the greenback comes at the expense of the Japanese yen, the British pound and most strikingly, the euro, which has fallen 5% since late November against its U.S. counterpart and is now the largest net short position held against the U.S. dollar at US$6.1-billion.
Meanwhile, the Australian, New Zealand and Canadian dollars gained strength against other world currencies, with the loonie now boasting the largest net long position against the U.S. dollar at US$3.8-billion.
"Sentiment has violently shifted against the euro, while it has remained bullish the Canadian dollar and the other commodity currencies," said Camilla Sutton, currency strategist at Scotia Capital Markets, in a note to clients.
Read the full article here.
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Economy will turn corner in 2010, survey says
TORONTO -- Although more than three-quarters of Canadians still believe we are in recession, more than half believe 2010 will be the year the economy turns around, a huge increase compared to 2009, an Economic Club of Canada/Pollara Strategic Research poll showed Wednesday.
According to the survey, 54% of respondents said they expect the Canadian economy to improve in 2010, compared to only 20% who said 2009 would bring better times when polled a year ago. Likewise, the percentage of Canadians who feel the economy will worsen dropped to 14%, compared to 57% a year ago.
The Economic Club released the poll during its Economic Outlook 2010 presentation on Wednesday morning in Toronto. Senior economists from Canada`s largest banks are presenting their opinions on what to expect during the current economc year.
"While the statistical change is dramatic, remember we saw historically low numbers in confidence last year," Michael Marzolini, chairman of Pollara wrote in the release. "More than three-quarters of Canadians -- 78% -- still believe we are in recession, but that is a drop from 91% who felt that way one year ago."
Consumer confidence hit a 27-year low in December 2008, with the Conference Board of Canada`s Consumer Confidence Index falling to to 67.7, the lowest level since the 63 recorded during the 1981-82 recession.
On the employment front, 43% of those surveyed said they believe it will improve, compared to just 12% one year ago. Only 22% said they feel the employment situation will worsen in 2010, compared to 68% in 2009.
Read the full article here.
TORONTO -- Although more than three-quarters of Canadians still believe we are in recession, more than half believe 2010 will be the year the economy turns around, a huge increase compared to 2009, an Economic Club of Canada/Pollara Strategic Research poll showed Wednesday.
According to the survey, 54% of respondents said they expect the Canadian economy to improve in 2010, compared to only 20% who said 2009 would bring better times when polled a year ago. Likewise, the percentage of Canadians who feel the economy will worsen dropped to 14%, compared to 57% a year ago.
The Economic Club released the poll during its Economic Outlook 2010 presentation on Wednesday morning in Toronto. Senior economists from Canada`s largest banks are presenting their opinions on what to expect during the current economc year.
"While the statistical change is dramatic, remember we saw historically low numbers in confidence last year," Michael Marzolini, chairman of Pollara wrote in the release. "More than three-quarters of Canadians -- 78% -- still believe we are in recession, but that is a drop from 91% who felt that way one year ago."
Consumer confidence hit a 27-year low in December 2008, with the Conference Board of Canada`s Consumer Confidence Index falling to to 67.7, the lowest level since the 63 recorded during the 1981-82 recession.
On the employment front, 43% of those surveyed said they believe it will improve, compared to just 12% one year ago. Only 22% said they feel the employment situation will worsen in 2010, compared to 68% in 2009.
Read the full article here.
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December Employment gains seen in Canada
OTTAWA - Attention turns to employment as the new business year gets underway in the coming week.
Accounts of December`s labour markets in both Canada and the United States are due on Friday, and both will prove to be important benchmarks in gauging how well the economic recovery is going.
Economists estimate there were 20,000 more people employed in Canada during December, keeping the unemployment rate steady at 8.5%. That would follow gains in three of the four previous months.
"Canada is growing again and the labour market is responding accordingly with job creation in a broad range of sectors," Krishen Rangasamy, a CIBC World Markets economist, said in a research note.
Mr. Rangasamy has a brighter forecast than the consensus, expecting job gains of 25,000, citing strength in such sectors as manufacturing and construction, "which had been hit the hardest during the recession."
Read the full article here.
OTTAWA - Attention turns to employment as the new business year gets underway in the coming week.
Accounts of December`s labour markets in both Canada and the United States are due on Friday, and both will prove to be important benchmarks in gauging how well the economic recovery is going.
Economists estimate there were 20,000 more people employed in Canada during December, keeping the unemployment rate steady at 8.5%. That would follow gains in three of the four previous months.
"Canada is growing again and the labour market is responding accordingly with job creation in a broad range of sectors," Krishen Rangasamy, a CIBC World Markets economist, said in a research note.
Mr. Rangasamy has a brighter forecast than the consensus, expecting job gains of 25,000, citing strength in such sectors as manufacturing and construction, "which had been hit the hardest during the recession."
Read the full article here.
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GDP growth hangs on
The Canadian economy strung together back-to-back months of growth for the first time in almost two years, but economists warn that consumers and government stimulus have been "carrying the ball" by fuelling a booming real-estate market that is ultimately unsustainable.
Canada`s economy grew a modest 0.2% in October, the latest figures from Statistics Canada show. That followed a 0.4% increase in September.
Stewart Hall, economist with HSBC Securities Canada, said the country`s real-estate market has been a major factor, fuelling spending in everything from renovations to new furnishings and even new cars to go in new garages.
"Financial, insurance and real estate have continued to be that pillar of strength, consistently showing growth through much of this economic recession," he said. "And we know that is the housing market, a reflection of the remarkable strength in the existing-home sales market."
October figures from Statistics Canada show a 7.2% rise in existing-home sales activity from real-estate agents and brokers. However, construction activity was up only 0.1%.
Meanwhile, after posting a 1% rise in September, the key manufacturing category fell flat in October.
Read the full article here.
The Canadian economy strung together back-to-back months of growth for the first time in almost two years, but economists warn that consumers and government stimulus have been "carrying the ball" by fuelling a booming real-estate market that is ultimately unsustainable.
Canada`s economy grew a modest 0.2% in October, the latest figures from Statistics Canada show. That followed a 0.4% increase in September.
Stewart Hall, economist with HSBC Securities Canada, said the country`s real-estate market has been a major factor, fuelling spending in everything from renovations to new furnishings and even new cars to go in new garages.
"Financial, insurance and real estate have continued to be that pillar of strength, consistently showing growth through much of this economic recession," he said. "And we know that is the housing market, a reflection of the remarkable strength in the existing-home sales market."
October figures from Statistics Canada show a 7.2% rise in existing-home sales activity from real-estate agents and brokers. However, construction activity was up only 0.1%.
Meanwhile, after posting a 1% rise in September, the key manufacturing category fell flat in October.
Read the full article here.
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Bank caution may be overstated
The Bank of Canada threw a caution flag over Canadian housing markets Thursday, warning of increased risks from rising household debt as record low interest rates have drawn many thousands of new buyers into homeownership.
The Bank`s concern is buyers may be lulled into thinking the rates will last longer than they actually will.
"When borrowing funds, especially in the form of mortgages, households need to assess their ability to service these debt obligations over their entire maturity, taking into account likely changes in both income and interest rates and the risks surrounding this outlook," it said.
Gary Seigle, Calgary region manager for mortgage brokerage firm Invis, says it is standard practice in Canada to over qualify mortgage applicants.
"The rate we usually use is the three-year rate for qualifying, so basically people are qualified at a higher rate than what they will pay," he says.
The Bank earlier this week confirmed it will hold its overnight rate at 0.25% until at least the middle of next year, which should influence mortgage rates to stay low (on the announcement, major banks in the country lowered some of their rates) but at some point, rates will rise.
Read the full article here.
The Bank of Canada threw a caution flag over Canadian housing markets Thursday, warning of increased risks from rising household debt as record low interest rates have drawn many thousands of new buyers into homeownership.
The Bank`s concern is buyers may be lulled into thinking the rates will last longer than they actually will.
"When borrowing funds, especially in the form of mortgages, households need to assess their ability to service these debt obligations over their entire maturity, taking into account likely changes in both income and interest rates and the risks surrounding this outlook," it said.
Gary Seigle, Calgary region manager for mortgage brokerage firm Invis, says it is standard practice in Canada to over qualify mortgage applicants.
"The rate we usually use is the three-year rate for qualifying, so basically people are qualified at a higher rate than what they will pay," he says.
The Bank earlier this week confirmed it will hold its overnight rate at 0.25% until at least the middle of next year, which should influence mortgage rates to stay low (on the announcement, major banks in the country lowered some of their rates) but at some point, rates will rise.
Read the full article here.
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Days of cheap energy look numbered
It`s no coincidence that the U.S. Environmental Protection Agency released on Monday its findings that greenhouse gases pose a threat to human health. The EPA findings follow a ruling in April 2007, when the U.S. Supreme Court found that greenhouse gases qualify as air pollutants under the Clean Air Act.
There is no question, in anyone`s mind, that the timing is meant to force the U.S. Congress to move on passing the climate change legislation through the Senate, where it is now stalled. It also gives U.S. President Barack Obama the ability to say that his country is serious about dealing with climate change when he arrives in Copenhagen next week-- either through legislation or regulation.
The questions arising from the decision centre on what happens, what does it mean, which industries are affected and what is expected in terms of timing. From a Canadian perspective, the paramount issue is how the EPA ruling could affect oil produced from the oilsands.
What`s interesting are the differences between the impacts of regulatory action versus changes stemming from legislation.
According to Philip Verleger, the David E. Mitchell/EnCana professor of management at the Haskayne School of Business, the primary difference between the two approaches is that the EPA ruling puts all businesses on a level playing field because it impacts tailpipe emissions as well as those tied to industrial users, including coal-fired power. By contrast, the legislation before the Senate will cause the oil producers to bear the freight because the coal industry--producers and electricity generators--will be granted emissions permits instead of having to buy them at auction. One of the reasons behind the favouritism granted to the coal producers stems from a ban instituted during the Carter years from using natural gas to generate electricity--a decision that was made because at the time the U.S. was thought to have only eight years of natural gas supply at current consumption levels.
Read the full article here.
It`s no coincidence that the U.S. Environmental Protection Agency released on Monday its findings that greenhouse gases pose a threat to human health. The EPA findings follow a ruling in April 2007, when the U.S. Supreme Court found that greenhouse gases qualify as air pollutants under the Clean Air Act.
There is no question, in anyone`s mind, that the timing is meant to force the U.S. Congress to move on passing the climate change legislation through the Senate, where it is now stalled. It also gives U.S. President Barack Obama the ability to say that his country is serious about dealing with climate change when he arrives in Copenhagen next week-- either through legislation or regulation.
The questions arising from the decision centre on what happens, what does it mean, which industries are affected and what is expected in terms of timing. From a Canadian perspective, the paramount issue is how the EPA ruling could affect oil produced from the oilsands.
What`s interesting are the differences between the impacts of regulatory action versus changes stemming from legislation.
According to Philip Verleger, the David E. Mitchell/EnCana professor of management at the Haskayne School of Business, the primary difference between the two approaches is that the EPA ruling puts all businesses on a level playing field because it impacts tailpipe emissions as well as those tied to industrial users, including coal-fired power. By contrast, the legislation before the Senate will cause the oil producers to bear the freight because the coal industry--producers and electricity generators--will be granted emissions permits instead of having to buy them at auction. One of the reasons behind the favouritism granted to the coal producers stems from a ban instituted during the Carter years from using natural gas to generate electricity--a decision that was made because at the time the U.S. was thought to have only eight years of natural gas supply at current consumption levels.
Read the full article here.
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Recovery Bypassing Forest sector
It`s the industry the recovery forgot.
Even as signs point to a slowly rebounding economy, losses are mounting in Canada`s forestry sector as it struggles with continued slack demand and a series of structural problems, many that predate the global recession.
Tembec Inc. is the latest example. The Montreal-based company says it is putting up for sale its newsprint mill in Pine Falls, Man., after it locked out its 250 employees Sept. 1 in a bitter conflict over wage cuts.
The proposed move is just the latest in the continued consolidation and downsizing of the sector. Canadian forest and paper companies posted combined losses of $632-million in the third quarter of 2009, up from $552-million in the year-earlier period, according to the latest figures from PricewaterhouseCoopers.
The numbers are "grim," says Craig Campbell, head of the consulting firm`s performance-improvement practice for the global forest business.
Canadian lumber exports are still suffering from the "tidal wave of foreclosures" in the U.S. housing market. Meanwhile, the steady erosion of North American newsprint demand will continue as newspapers shrink, Mr. Campbell said.
"Canadian producers have to look at other business models, such as bio-energy, and outside traditional products and outside North America" he said. "Canadian companies haven`t invested outside Canada so much. They`re struggling to make a buck in Canada."
Read the full article here.
It`s the industry the recovery forgot.
Even as signs point to a slowly rebounding economy, losses are mounting in Canada`s forestry sector as it struggles with continued slack demand and a series of structural problems, many that predate the global recession.
Tembec Inc. is the latest example. The Montreal-based company says it is putting up for sale its newsprint mill in Pine Falls, Man., after it locked out its 250 employees Sept. 1 in a bitter conflict over wage cuts.
The proposed move is just the latest in the continued consolidation and downsizing of the sector. Canadian forest and paper companies posted combined losses of $632-million in the third quarter of 2009, up from $552-million in the year-earlier period, according to the latest figures from PricewaterhouseCoopers.
The numbers are "grim," says Craig Campbell, head of the consulting firm`s performance-improvement practice for the global forest business.
Canadian lumber exports are still suffering from the "tidal wave of foreclosures" in the U.S. housing market. Meanwhile, the steady erosion of North American newsprint demand will continue as newspapers shrink, Mr. Campbell said.
"Canadian producers have to look at other business models, such as bio-energy, and outside traditional products and outside North America" he said. "Canadian companies haven`t invested outside Canada so much. They`re struggling to make a buck in Canada."
Read the full article here.
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Canada`s Dodge says rates can stay low through 2015
OTTAWA, Nov 27 (Reuters) - The Bank of Canada could keep its benchmark interest rate accommodative through 2015 to offset fiscal restraint by the government, which must hike taxes to balance its budget, former central bank chief David Dodge said on Friday.
In point-form notes for a speech he was delivering at a business forum in Lake Louise, Alberta, Dodge backed the plan by his successor, Governor Mark Carney, to hold interest rates at near zero until mid-2010 but said the bank could back away from "unconventional initiatives".
With a credible fiscal plan, the overnight target rate, now at the lower limit at 0.25 percent, could "remain accommodative through 2015," he said.
The rate could rise to 2 percent in 2010-11 but stay below neutral for the rest of the period, he said, to compensate for the "fiscal drag and continuing (small) output gap," Dodge wrote in his notes.
Dodge, governor until January 2008 and now a senior advisor at Bennett Jones Llp, said any credible plan to eliminate the federal government`s fiscal deficit by 2015 would likely include tax increases.
That conflicts with the Conservative government`s promise to refrain from any politically unpopular tax hikes to balance its books, vowing to rely entirely on economic growth and a lower rate of growth in program spending.
Dodge argued that if the government focused its efforts only on the spending side, spending -- including debt service -- would have to be reduced to zero real growth from 2012 to 2015. This assumes all temporary stimulus spending ends by the end of 2011.
Read the full article here.
OTTAWA, Nov 27 (Reuters) - The Bank of Canada could keep its benchmark interest rate accommodative through 2015 to offset fiscal restraint by the government, which must hike taxes to balance its budget, former central bank chief David Dodge said on Friday.
In point-form notes for a speech he was delivering at a business forum in Lake Louise, Alberta, Dodge backed the plan by his successor, Governor Mark Carney, to hold interest rates at near zero until mid-2010 but said the bank could back away from "unconventional initiatives".
With a credible fiscal plan, the overnight target rate, now at the lower limit at 0.25 percent, could "remain accommodative through 2015," he said.
The rate could rise to 2 percent in 2010-11 but stay below neutral for the rest of the period, he said, to compensate for the "fiscal drag and continuing (small) output gap," Dodge wrote in his notes.
Dodge, governor until January 2008 and now a senior advisor at Bennett Jones Llp, said any credible plan to eliminate the federal government`s fiscal deficit by 2015 would likely include tax increases.
That conflicts with the Conservative government`s promise to refrain from any politically unpopular tax hikes to balance its books, vowing to rely entirely on economic growth and a lower rate of growth in program spending.
Dodge argued that if the government focused its efforts only on the spending side, spending -- including debt service -- would have to be reduced to zero real growth from 2012 to 2015. This assumes all temporary stimulus spending ends by the end of 2011.
Read the full article here.
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Inflation fears loom
Consumerpricenumbers in the coming week are expected to show Canadian inflation growing steadily in comparison with last year`s prices, while U.S. figures should show the first month of annual price gains in nine months.
Statistics Canada is scheduled for Thursday to report consumer-price data from November. The annual inflation rate is anticipated to be 0.8 per cent, up from 0.1 per cent in October, which was the first time in five months that prices were up from a year earlier.
"The brief flirtation with negative inflation in Canada is over and, as the economy recovers, the annual rate of headline consumer price inflation should begin to slowly march higher," TD Securities economics strategist Millan Mulraine wrote in a note.
Canada`s core inflation rate, which strips out volatile items such as energy products and certain food products, is expected to come in at 1.2 per cent, down from 1.8 per cent in October.
Mulraine attributed the expected decline in the core rate to "the weak economic backdrop," and added: "In the months ahead, we expect core inflation to ease further as the weak economic conditions further dampen the inflationary flames."
Krishen Rangasamy, an economist with CIBC World Markets, said relatively low prices for new car models hitting the market and the higher Canadian dollar are keeping the core inflation rate in check. He cited higher gasoline prices as a significant factor in boosting the overall inflation rate.
U.S. inflation numbers are due Wednesday. The overall year-to-year number is anticipated to leap from negative 0.2 per cent in October to plus 1.8 per cent in November, which would be the first time since February that overall consumer prices have been higher than a year before.
Read the full article here.
Consumerpricenumbers in the coming week are expected to show Canadian inflation growing steadily in comparison with last year`s prices, while U.S. figures should show the first month of annual price gains in nine months.
Statistics Canada is scheduled for Thursday to report consumer-price data from November. The annual inflation rate is anticipated to be 0.8 per cent, up from 0.1 per cent in October, which was the first time in five months that prices were up from a year earlier.
"The brief flirtation with negative inflation in Canada is over and, as the economy recovers, the annual rate of headline consumer price inflation should begin to slowly march higher," TD Securities economics strategist Millan Mulraine wrote in a note.
Canada`s core inflation rate, which strips out volatile items such as energy products and certain food products, is expected to come in at 1.2 per cent, down from 1.8 per cent in October.
Mulraine attributed the expected decline in the core rate to "the weak economic backdrop," and added: "In the months ahead, we expect core inflation to ease further as the weak economic conditions further dampen the inflationary flames."
Krishen Rangasamy, an economist with CIBC World Markets, said relatively low prices for new car models hitting the market and the higher Canadian dollar are keeping the core inflation rate in check. He cited higher gasoline prices as a significant factor in boosting the overall inflation rate.
U.S. inflation numbers are due Wednesday. The overall year-to-year number is anticipated to leap from negative 0.2 per cent in October to plus 1.8 per cent in November, which would be the first time since February that overall consumer prices have been higher than a year before.
Read the full article here.
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- Mar 24, 2009
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- 16,743
Economy staging `Tenous` recovery
Canada`s recession-weary economy is learning to crawl before it can walk again, eking out another month of tepid growth that nevertheless signals the worst is behind us, economists say.
The economy took another baby step forward in October -- following its 0.4 per cent advance in September -- with almost all industry sectors posting gains and combining to produce a monthly growth rate of 0.2 per cent, Statistics Canada reported Wednesday
The data suggest "the recession is now well in the rear-view mirror," said CIBC World Markets economist Krishen Rangasamy.
Yet the results were also met with some disappointment, falling below consensus estimates of 0.3 per cent growth.
"This is a classic glass-half-full/ half-empty report," said BMO Capital Markets deputy chief economist Douglas Porter.
"The half-full portion is that the economy has finally managed to churn out back-to-back growth months for the first time since late 2007, and is emerging from the recession. The halfempty portion is that the recovery remains lacklustre, at best, with GDP continuing to offer mostly surprises on the low side."
Read the full article here.
Canada`s recession-weary economy is learning to crawl before it can walk again, eking out another month of tepid growth that nevertheless signals the worst is behind us, economists say.
The economy took another baby step forward in October -- following its 0.4 per cent advance in September -- with almost all industry sectors posting gains and combining to produce a monthly growth rate of 0.2 per cent, Statistics Canada reported Wednesday
The data suggest "the recession is now well in the rear-view mirror," said CIBC World Markets economist Krishen Rangasamy.
Yet the results were also met with some disappointment, falling below consensus estimates of 0.3 per cent growth.
"This is a classic glass-half-full/ half-empty report," said BMO Capital Markets deputy chief economist Douglas Porter.
"The half-full portion is that the economy has finally managed to churn out back-to-back growth months for the first time since late 2007, and is emerging from the recession. The halfempty portion is that the recovery remains lacklustre, at best, with GDP continuing to offer mostly surprises on the low side."
Read the full article here.
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- Mar 24, 2009
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- 16,743
Cure for hot Housing Market carries risk
The housing market
that led Canada out of recession is now so hot that Ottawa is talking about doing something to cool it off, a move economists say carries risks for the economy.
Fuelled by record low interest rates, residential real estate prices have gained 20 per cent this year. And Finance Minister Jim Flaherty is now warning he will step in if prices get too high by tightening the rules for borrowers, by increasing the minimum down payment
and shortening the maximum length of mortgages.
Such a move would have to be done cautiously, economists say, because the real estate market touches all parts of the economy, and anything that caps its growth could also temper the recovery.
Policy makers are concerned homeowners will take on more debt than they`ll be able to afford when interest rates
rise again, possibly leading to a painful correction later.
The Bank of Canada has vowed to keep lending rates low into the middle of next year, limiting its options for taking the pressure off a hot market.
But since the federal government dictates rules around down payments and amortization periods, it can effectively dampen the housing market without increasing borrowing costs for businesses.
Read the full article here.
The housing market
that led Canada out of recession is now so hot that Ottawa is talking about doing something to cool it off, a move economists say carries risks for the economy.Fuelled by record low interest rates, residential real estate prices have gained 20 per cent this year. And Finance Minister Jim Flaherty is now warning he will step in if prices get too high by tightening the rules for borrowers, by increasing the minimum down payment
and shortening the maximum length of mortgages.Such a move would have to be done cautiously, economists say, because the real estate market touches all parts of the economy, and anything that caps its growth could also temper the recovery.
Policy makers are concerned homeowners will take on more debt than they`ll be able to afford when interest rates
rise again, possibly leading to a painful correction later.The Bank of Canada has vowed to keep lending rates low into the middle of next year, limiting its options for taking the pressure off a hot market.
But since the federal government dictates rules around down payments and amortization periods, it can effectively dampen the housing market without increasing borrowing costs for businesses.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
East needs real Oilsands info
Ontario and Quebec need nearly as much education about the economic importance of the oilsands as far-away European countries, says Alberta`s environment minister.
"It`s almost as important to ensure that the message with respect to oilsands and Alberta gets out in Eastern Canada as it is getting that message out in Europe and throughout the rest of the world," Rob Renner said yesterday.
Renner has just returned from Copenhagen, where the world tried to reach a deal on climate change and was treated, on the sidelines, to a dose of Canadian domestic political bickering.
Ontario and Quebec, at a press conference at the climate summit, had urged Ottawa to adopt more aggressive emission-cut targets and said they`d refuse to carry the financial responsibility for relatively big polluters like Alberta and Saskatchewan.
"It doesn`t exactly improve the relationship that we have," Renner said about the comments by Quebec Premier Jean Charest and Ontario`s Environment Minister John Gerretsen. "There`s no excuse for using this as a political platform."
Echoing comments Premier Ed Stelmach made last week, Renner said the oilsands are critical to Canada`s economy. Also, Alberta`s net contribution to Ottawa was $21 billion last year. And while Copenhagen demonstrated how near-impossible it is for the world to agree on a climate-change deal, it also demonstrated the difficulties of getting Canada`s provinces to agree on federal environmental legislation.
Read the full article here.
Ontario and Quebec need nearly as much education about the economic importance of the oilsands as far-away European countries, says Alberta`s environment minister.
"It`s almost as important to ensure that the message with respect to oilsands and Alberta gets out in Eastern Canada as it is getting that message out in Europe and throughout the rest of the world," Rob Renner said yesterday.
Renner has just returned from Copenhagen, where the world tried to reach a deal on climate change and was treated, on the sidelines, to a dose of Canadian domestic political bickering.
Ontario and Quebec, at a press conference at the climate summit, had urged Ottawa to adopt more aggressive emission-cut targets and said they`d refuse to carry the financial responsibility for relatively big polluters like Alberta and Saskatchewan.
"It doesn`t exactly improve the relationship that we have," Renner said about the comments by Quebec Premier Jean Charest and Ontario`s Environment Minister John Gerretsen. "There`s no excuse for using this as a political platform."
Echoing comments Premier Ed Stelmach made last week, Renner said the oilsands are critical to Canada`s economy. Also, Alberta`s net contribution to Ottawa was $21 billion last year. And while Copenhagen demonstrated how near-impossible it is for the world to agree on a climate-change deal, it also demonstrated the difficulties of getting Canada`s provinces to agree on federal environmental legislation.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Shadow inventory threatens U.S. Housing recovery
Through the depths of the great U.S. housing slump, Miami real estate agent Peter Zalewski has made a tidy living taking newly built condos off the hands of anxious banks and selling them to investors.
Or, as he puts, "bringing into the light" the city`s massive "shadow" inventory of homes seized by the banks.
"I`ve been at the heart of it," acknowledged Mr. Zalewski, president of Condo Vultures LLC.
The good news is that after more than two years, Miami`s badly overbuilt market for luxury waterfront condos is finally stabilizing. Prices are firming up and lenders are finding takers more quickly for the properties they seized when the market collapsed.
The bad news is that Florida`s foreclosure problem is now migrating inland, from Miami Beach to the sprawling, middle-class suburbs away from the coast, where workers are still losing their jobs. And there are far fewer takers for these properties, creating a new inventory of unwanted homes.
Even as the U.S. Federal Reserve is pointing to "signs of improvement over recent months" in the housing sector, the so-called shadow inventory threatens to launch a new wave of foreclosures and squelch a recovery in the sector before it gains any real traction.
Read the full article here.
Through the depths of the great U.S. housing slump, Miami real estate agent Peter Zalewski has made a tidy living taking newly built condos off the hands of anxious banks and selling them to investors.
Or, as he puts, "bringing into the light" the city`s massive "shadow" inventory of homes seized by the banks.
"I`ve been at the heart of it," acknowledged Mr. Zalewski, president of Condo Vultures LLC.
The good news is that after more than two years, Miami`s badly overbuilt market for luxury waterfront condos is finally stabilizing. Prices are firming up and lenders are finding takers more quickly for the properties they seized when the market collapsed.
The bad news is that Florida`s foreclosure problem is now migrating inland, from Miami Beach to the sprawling, middle-class suburbs away from the coast, where workers are still losing their jobs. And there are far fewer takers for these properties, creating a new inventory of unwanted homes.
Even as the U.S. Federal Reserve is pointing to "signs of improvement over recent months" in the housing sector, the so-called shadow inventory threatens to launch a new wave of foreclosures and squelch a recovery in the sector before it gains any real traction.
Read the full article here.
- Joined
- Mar 24, 2009
- Messages
- 16,743
Economy set to charge ahead this quarter
The Canadian economy will make up lost ground this quarter with annualized growth that`s expected to surpass the four per cent level, while robust domestic demand will make it "increasingly difficult" for the Bank of Canada to keep its pledge on interest rates, a pair of economic forecasts from two of the big banks said Thursday.
The forecasts, courtesy of Toronto-Dominion Bank and National Bank Financial, project steady growth for the Canadian economy next year and 2011 but not at a pace expected following a recession as deep as the one just passed. Both anticipate the global economy to expand next year at a roughly four per cent pace, with the emerging economies contributing most of the drive. NBF estimates that China and India, combined, would contribute 1.5 percentage points to its projected four per cent global growth.
The Canadian recession ended in the third quarter, when the economy eked out a 0.4 per cent annualized gain for the period, well below expectations.
However, economists at TD indicate fourth-quarter output is going to surprise on the upside, with 4.1 per cent growth. The Bank of Canada has projected 3.3 per cent expansion for the final three months of the year.
"While the start to the Canadian recovery was much more subdued than many were expecting--and significantly slower than in the U.S.--the headline number masked some underlying strength, as almost every sector in the Canadian economy was on the mend in the third quarter," the TD forecast said.
Read the full article here.
The Canadian economy will make up lost ground this quarter with annualized growth that`s expected to surpass the four per cent level, while robust domestic demand will make it "increasingly difficult" for the Bank of Canada to keep its pledge on interest rates, a pair of economic forecasts from two of the big banks said Thursday.
The forecasts, courtesy of Toronto-Dominion Bank and National Bank Financial, project steady growth for the Canadian economy next year and 2011 but not at a pace expected following a recession as deep as the one just passed. Both anticipate the global economy to expand next year at a roughly four per cent pace, with the emerging economies contributing most of the drive. NBF estimates that China and India, combined, would contribute 1.5 percentage points to its projected four per cent global growth.
The Canadian recession ended in the third quarter, when the economy eked out a 0.4 per cent annualized gain for the period, well below expectations.
However, economists at TD indicate fourth-quarter output is going to surprise on the upside, with 4.1 per cent growth. The Bank of Canada has projected 3.3 per cent expansion for the final three months of the year.
"While the start to the Canadian recovery was much more subdued than many were expecting--and significantly slower than in the U.S.--the headline number masked some underlying strength, as almost every sector in the Canadian economy was on the mend in the third quarter," the TD forecast said.
Read the full article here.