March 2012 Canadian Economic Fundamentals

[Ally]

New take on household debt: Families have 'big cushion'



Amid all the fretting over swollen consumer debt comes a different angle from the deputy chief economist at BMO Nesbitt Burns.





Douglas Porter isn't suggesting Canadians load up even more with cheap money, but he does note today that along with household debt, net worth is also climbing.





Just by way of catching up, Canada's debt-to-income ratio is high, and, according to Toronto-Dominion Bank yesterday, set to rise even more to about 160 per cent, the point at which American and British families ran into trouble. As well, Canada's banking regulator is looking at new rules to ensure banks know everything they can about a borrower before approving a mortgage, The Globe and Mail's Tara Perkins and Grant Robertson report.





Read the full article here.

 

[Ally]

Canada's economy poised for another year of solid growth in 2012: RBC Economics







TORONTO - Canada's economy grew at a moderate pace in the final quarter of 2011 and is expected to pick up steam in the year ahead, according to the latest economic forecast from the Royal Bank.






The RBC Economic Outlook issued early today predicts Canada's real gross domestic product to increase by 2.6 per cent in both 2012 and 2013.






Read the full article here.

 

[Ally]

Expect less economic fear and loathing this year




Chatter about the economy over the past several years have been punctuated with what now sounds like a lot of clichÃs. Economic crisis. A rollercoaster market. Financial panic. Heightened level of uncertainty.




Ever since the housing downturn in the United States in 2007, economic news has been abnormally negative.




Now that we`re closing in on the second quarter of 2012, is it finally time to quit speaking in such alarmist tones? Is the economy back to normal? Consider the evidence.




Equity markets around the world have calmed considerably and the erratic volatility that rocked stock valuations between 2008 and 2011 have mostly subsided. Sure, there`s still the occasional day when markets in Toronto or New York are up or down more than triple digits, but those movements are rarer.





Read the full article here.

 

[Ally]

RBC sees Canada's recovery shifting into high gear




The rebounding U.S. economy, low interest rates, strength on corporate balance sheets and higher commodity prices.







RBC Economics said Tuesday these factors suggest continued growth for the Canadian economy, predicting the country`s real gross domestic product will grow by 2.6% both this year and next.







`Canada`s economic growth clocked in at 2.5% in 2011, shaking off a few speed bumps in the middle of the year and ending the fourth quarter with only moderate real GDP growth of 1.8%,` said Craig Wright, chief economist at the bank.





Read the full article here.

 

[Ally]

Skyrocketing house prices bound to come down, BMO head says




Concerns about the sustainability of the high-flying Canadian housing market are `legitimate,` especially in the largest cities, the head of one of the country`s biggest banks said Tuesday as a price war rages across the financial sector over mortgage rates.






Bank of Montreal (BMO-T58.50-0.40-0.68%) chief executive officer Bill Downe told the bank`s annual meeting in Halifax that soaring household debt levels are highlighting the need for a soft landing in the residential real-estate market. As a way of tightening lending, Mr. Downe said he supports a move toward shorter amortizations on mortgages in Canada to reduce consumer exposure to debt.





Read the full article here.

 

[Ally]

Key Canadian economic indicator rises





OTTAWA ` The outlook for Canada's economic performance strengthened for the eight straight month in February, due mainly to a rebound in the stock market, according to Statistics Canada's composite leading index.







The federal agency's forward-looking index on Wednesday showed a rise of 0.6 per cent, following a 0.4 advance in January, with six of the 10 index components increasing during the month.







Last month's reading was in line with economists' forecasts. However, Statistics Canada revised its January increase downward from the previous estimate of a 0.7 per cent advance.






Read the full article here.

 

[Ally]

A pain in the RMUP





This week`s draft guidelines from the Office of the Superintendent of Financial Institutions (OSFI) on banks` mortgage business reads like voluminous instruction to granny on how to suck eggs. Make sure you know to whom you`re lending. Check thoroughly that she can service the debt. Get a realistic valuation of the property to be mortgaged (visiting it is always a good idea). Property repo can be traumatic and costly, so lend carefully, but have a plan in place if your borrower defaults, and don`t forget to keep good documentation! Meanwhile pursue these blindingly obvious `principles` in a `holistic manner.`



The very notion that Canadian bankers, who are universally acknowledged to be the soundest in the world, might need to be told all this raises questions less about their competence than the ludicrousness of minute regulation.




The guidelines imply that the Canadian banks may be in danger from the housing market, but if they are, which in fact seems unlikely, that would be due to government mortgage insurance and artificially low government-mandated interest rates. They are not unaware of such dangers.





Read the full article here.

 

[Ally]

TD predicts better economy in 2012




Good things happening in other parts of the world have prompted TD Economics to predict not-so-bad things for the Canadian economy this year.




The bank added 0.5 per cent to its real GDP growth forecast on March 19, estimating the economy will grow 2.2 per cent in 2012. It's the first time TD has revised its quarterly GDP forecast in a year.




While the Canadian economy is expected to grow, predictions say homeowners will dig themselves into a deeper hole before interest rates start rising some time in 2013.





Read the full article here.

 

[Ally]

Housing market seems calm, but for 'Toronto Tornado'



Home sales in Canada climbed 1.4 per cent in February from a year earlier, winning back some earlier slippage and indicating a fairly balanced market. But for what BMO Nesbitt Burns dubbed the "Toronto tornado."





Overall, the number of new listings rose faster than sales, at 1.9 per cent, the Canadian Real Estate Association said today, while the sales-to-new listings ratio held steady. New listings are now at their highest level since May, 2010.





"A rebound in new listings in Toronto and Montreal, Canada`s two most active markets, offset a retreat in new listings in Vancouver, Canada`s third-largest market," CREA said.





Read the full article here.

 

[Ally]

Housing market strong so far this year: Re/Max





OTTAWA ` The Canadian housing market is off to a strong start this year, with gains in sales and prices in most major markets, according to a report released Thursday from real-estate company Re/Max.







It said sales for January and February were up in 12 of the 15 markets it assessed compared to a year earlier, most by 10 per cent or more. It credited low mortgage rates, strong consumer confidence and even some mild weather, which it said helped usher in an early spring buying season.







"Given the current economic climate, the strength of the country's housing market clearly reflects the value Canadians place on home ownership," Michael Polzler, an executive vice-president with Re/Max, said in a statement.



Read the full article here.

 

[Ally]

Leading indicators rise in February, pointing to modest economic upswing




OTTAWA - Gains on the Toronto Stock Exchange in February helped push Statistics Canada's composite leading index higher last month, pointing toward a likely pickup in the economy over the coming months.




The agency said Wednesday the index, which was up 0.6 per cent, rose for the eighth consecutive month in February. It was up 0.4 per cent in January.




The largest gains in the index came from the financial sectors, including the Toronto Stock Exchange which posted a strong start to the year.




Manufacturing also supported the gains with an increase in new orders and the ratio of inventories to sales rose for the fourth consecutive month.





Read the full article here.

 

[Ally]

Affordable, appropriate housing elusive for new Canadians




Adequate and affordable housing remains one of the most serious concerns amongst the new comers in Canada.




A recent survey of 600 immigrants and refugees using settlement services in three major cities Vancouver, Montreal and Toronto finds that half of those surveyed reported living in crowded dwellings with hazards such as dampness and mould, broken plumbing, insect infestation and inadequate heat.




The study points out that one major issue with new immigrants is affordable housing. Since new comers are not settled in well-paying jobs they spend more than half of their money in rent. `Either we pay the rent and we go hungry, or we live in a chicken coop but we eat,` said a respondent in Montreal who participated in the study done by University of British Columbia. The study pointed most reported spending more than half of their income on housing, with 15 per cent spending 75 per cent or more of their income on housing.





Read the full article here.

 

[Ally]

Banks tighten condo lending amid bubble fears









Canada`s biggest banks are tightening lending standards for condominium builders at the urging of regulators, requesting higher pre-sales and deposits as policy makers warn the Toronto and Vancouver markets are overheating.





Some banks have been asking construction firms to put more equity into new projects in recent weeks, according to developers. Lenders have also been raising the percentage of condo units that must be pre-sold and are demanding higher deposits as conditions for financing, they said.




`Several of the banks have tightened up` after the Office of the Superintendent of Financial Institutions `told the banks to be a little bit more careful on who they are lending to and how they are lending,` said Barry Fenton, chief executive officer of Toronto-based Lanterra Developments, whose condos include WaterParkCity and Ice Condominiums at York Centre.




Policy makers including Finance Minister Jim Flaherty have warned about the risks of record consumer debt and soaring housing prices that some investors say may be inflating a condo bubble in Toronto and Vancouver. Housing prices may drop 15 percent as interest rates rise, crimping economic growth and sending Canadian stocks down 10 percent, said Sadiq Adatia, who manages about $9 billion at Sun Life Global Investments Inc.





Read the full article here.

 

[Ally]

The best place to do business: Canada




Last month, Canada stepped onto the world stage with an uncommon swagger. In a keynote speech at the World Economic Forum in Davos, Switzerland, Prime Minister Stephen Harper scolded his G7 peers for their spendthrift ways and boasted of the benefits we`ve reaped from our fiscal rectitude: the best debt-to-GDP ratio, the lowest tax rate on business investment, the world`s best banking system. Combined with our vast resource wealth and the sorry economic state of much of the developed world, why would capital and talent go anywhere else? `Canada`s choice will be, with clarity and urgency, to seize and to master our future, to be a model of confidence, growth and prosperity in the 21st century,` he announced.





Read the full article here.

 

[Ally]

Why we should lower our expectations for economic growth



Our material well-being is remarkably dependent on a perpetually growing economy. The economic machinery groans in protest against even the slightest bouts of stagnation or decline. Gears strip, chains break, fuses blow. Take the 2009 recession. Never mind that economic output per American enjoyed its sixth best year in history up until that point. The year was also a disaster, plain and simple. Unemployment rates soured, financial markets plummeted and gloom prevailed. They still haven`t fully recovered.





Rightly or wrongly, economic growth is thus of central importance, and the more of it the better. In turn, our belief that future economic growth could remain somewhat slower than usual is disconcerting. Unpleasant consequences arise, including a diminished buffer against recession, stagnant living standards, inadequate government finances and possibly lower investment returns.







Read the full article here.

 

[Ally]

Why corporate Canada's heart now beats in the west




In 1962, hip, affluent Canadians, eager to catch the fresh new sounds of the Fab Four from Liverpool, were buying hi-fi systems with turntables tucked into old English-style furniture.




One stereo maker, a brash young Hungarian immigrant named Peter Munk, placed an ad in the first issue of The Globe and Mail`s Report on Business, showing components fitting neatly into `an Elizabethan refectory table.`





Read the full article here.

 

[Ally]

Expansion in the works for Ferndale Drive development in Barrie




A developer wants to add 30 residential units and a food store to a Ferndale Drive development plan.




A public meeting was held Monday on Previn Court Homes` plan for 12 single-family homes, 60 townhouses, 112 apartments and about 40,000 square feet of retail and commercial service use on nearly 19 acres of land at 180 Ferndale Dr., located south of Edgehill Drive and north of Lennox Drive.




The 184 residential units are 30 more than in a plan approved by the Ontario Municipal Board in 2003. That plan had 80 single, detached homes and 74 street townhouses.





Read the full article here.

 

[Ally]

TD bank upgrades outlook for Canadian economic growth for 2012



TD said that it expects the economy to grow 2.2 percent in 2012, up from a December forecast of 1.7 percent.





The improved outlook comes as efforts to contain the European financial crisis appear to be moving ahead with the Greek bailout and restructuring of that country's debt.





"With some of the dark clouds overhanging the global economy starting to dissipate, and commodity prices strong, Canada's export-oriented businesses are expected to lead the way," the bank said in its report.





"The Canadian business sector, which has been paying down debt and hoarding cash in recent years, is likely to take advantage of the nation's much-improved business tax climate to retool and raise productivity levels."





Read the full article here.

 

[Ally]

Re/Max expects 'heated' sales this spring



MISSISSAUGA, Ont. ` Major Canadian housing markets have continued to show "exceptional resiliency" so far this year, setting the stage for a busy spring, according to a major Canadian real estate organization.





In its market trends reports, Re/Max said its survey has found that 12 of 15 Canadian centres, or 80 per cent, reported sales activity in January and February that was ahead of last year's levels.





More than half of the cities reported double-digit increases, "with the strong demand and diminished supply setting the stage for a heated spring 2012."







Read the full article here.

 

[Ally]

North America has the potential to be energy world's next Middle East, report argues





Deepwater drilling in the Gulf of Mexico, tapping shale deposits for gas and oil and Canada's oil sands are among the ingredients that could see North America's production of oil and natural gas liquids almost double to 26.6m barrels a day by 2020, according to a report by analysts at Citigroup.






"The energy sector in the next few decades could drive an extraordinary and timely revitalisation and reindustralisation of the US economy," the 80-page report said.






The vexed question of America's future energy needs and how to meet them has dominated the battle for The White House in recent weeks, as the Republican challengers blame President Barack Obama for the recent rise in petrol prices.






Read the full article here.