May 2011 Canadian Economic Fundamentals

[Ally]

Rule changes make mortgages a moving target




Ottawa`s ongoing tweaks to the rules for buying a home during the last two years have made it harder for many Canadians to get a mortgage.




Ottawa has repeatedly tightened the rules that determine who is eligible for an insured mortgage, fearing that low interest rates, coupled with a long period of climbing property values, have caused buyers to take on more debt than they should. Policy makers worry that some of those debtors won`t be able to afford their mortgage payments if interest rates rise substantially.





Read the full article here.

 

[Ally]

North America bucks climate-change trend, journal reports




One of the world`s top science journals says climate hasn`t changed in most of North America, resisting the global trend.




Elsewhere, according to Science, warming has already affected agriculture significantly, reducing yields and causing food inflation. But scientists from Stanford and Columbia Universities said that while Canadian and U.S. temperatures since 1980 have changed, they are still within the range of `natural variability` in weather. So in North America, the effects of climate change are practically invisible.




`A notable exception to the [world`s] warming pattern is the United States,` they write in a study published Friday.





Read the full article here.

 

[Ally]

Are falling oil prices good or bad?




Are falling oil prices good or bad? The answer depends on your perspective and the factors causing oil to fall.




For Canadians with an index-like portfolio allocation, falling oil prices are bad, as the Energy sector represents a little less than one-third of the benchmark S&P/TSX Index.




While lower oil prices are clearly negative for oil exporting nations and energy-geared stock markets like Canada`s, there is also a positive side to the story.




The recent spike in oil prices was threatening the global economic recovery, as higher oil prices act like a tax on consumers and business.





Read the full article here.

 

[Ally]

Real estate: Long flip versus quick flip





Cindy Wennerstrom is a bit of a hoarder. But the 39-year-old Toronto MBA grad doesn`t collect shoes or keep old magazines. Houses are her thing.




`I wanted to take control of my future. And what I really loved to do was renovate, have tenants and make great homes for people,` she says. `As soon as I set that course, within a year it was happening.`





Read the full article here.

 

[Ally]

Global warming already crimping crop production, pushing prices higher



The warming of the Earth has cooled the yields of corn and wheat in much of the world, a new study finds.





Although agricultural advances have pushed global production of staple crops skyward, hotter temperatures in Russia, China, Mexico and elsewhere have stunted that growth and contributed to the long-term rise in food prices, says the analysis published Thursday in the journal Science.





`This is tens of billions of dollars a year in lost [agricultural] productivity because of warming,` said David Lobell, an Earth scientist at Stanford University and an author on the report.





Three decades of global warming crimped worldwide yields of corn by about 5.5`percent and wheat by about 3.8`percent compared with what would have been produced had world temperatures remained stable, the report says.





Read the full article here.

 

[Ally]

100,000 more immigrants a year could help Canada: Report





VANCOUVER - Give three economists credit for trying to kick-start a real debate over immigration in Canada. They do so by imagining a `shock` scenario.




What would happen, they ask, if Canada brought in 100,000 more immigrants per year?




Canada already takes more immigrants per capita than any other nation.




But these analysts want Canadians to think about welcoming 350,000 newcomers a year, instead of the current 250,000.



Read the full article here.

 

[Ally]

Stocks of principal field crops




As of March 31, total stocks of canola and barley fell significantly compared with the same date in 2010. Meanwhile, total stocks of corn for grain rose slightly above March 2010 levels, the result of increased production in 2010.




Total stocks of canola stood at 4.9 million metric tonnes as of March 31, down 22.8% or 1.4 million tonnes from the same date in 2010. Overall, total stocks at March 31 were approaching 2007 and 2008 levels, after having increased substantially in 2009 and 2010. Prairie on-farm stocks fell 34.9% to 3.4 million tonnes, with large declines reported in Manitoba and Saskatchewan. Commercial stocks of canola rose 38.4% to 1.4 million tonnes. Prairie production of canola fell in 2010 as a result of a lower yield.




Total stocks of barley fell to 3.5 million tonnes as of March 31, down 31.0% from 5.1 million tonnes reported in March 2010. Barley production fell significantly in 2010, the result of a large decline in harvested area. This was the second annual decrease since 2009. On-farm barley stocks fell 33.4% to 3.0 million tonnes, and declines were noted in all three Prairie provinces. Commercial stocks of barley declined 12.4% to 510 000 tonnes.





Read the full article here.

 

[Ally]

Canada's top 11 cities for economic growth - or lack thereof




The latest Conference Board report puts four western Canadian cities in the leader board for economic growth this spring. Take a look to find where your city landed.


Read the full article here.

 

[Ally]

Canadian unemployment rate edges downward in April





OTTAWA ` Canada added 58,000 jobs to its workforce in April, bringing the unemployment rate down 0.1 percentage points to 7.6 per cent, Statistics Canada reported Friday.







British Columbia added 9,000 jobs and saw its unemployment rate fall to 7.9 per cent from 8.1 per cent.







Across Canada, the lion's share of the new jobs ` 41,000 ` were part-time, the agency said, though it noted that since April 2010, full-time employment has outpaced part-time, growing by 1.9 per cent versus 0.8 per cent for part-time.





Read the full article here.

 

[Ally]

Canada's job gains beat forecast




OTTAWA ` Canada added 58,000 jobs to its workforce in April, and reinforcing economists views the Bank of Canada will begin raising interest rates in the second half of the year, despite the recent turmoil in commodity markets.




The surge in employment brought the unemployment rate down 0.1 percentage point to 7.6%, Statistics Canada reported Friday.







The lion`s share of the new jobs ` 41,000 ` were part-time, the agency said, though it noted that since April 2010, full-time employment has outpaced part-time, growing by 1.9% versus 0.8% for part-time.




`With April`s slight gain, full-time employment has returned to the level of October 2008 for the first time,` Statistics Canada said. `The total number of hours worked, however, remained 0.6% below its October 2008 level.`





Read the full article here.

 

[Ally]

What kind of house can you get for $600,000 in Canada?




A two-level home with a four-car garage and an oceanfront view, or a 1,070-square-foot loft? Either British Columbia residence can be bought for $600,000, proving the adage that when it comes to real estate it`s all about location, location, location.




The house that $600,000 will buy from coast to coast is as variable as the weather. House prices depend not only on the property and residence, but on conditions in the local market and, obviously, location.







Read the full article here.

 

[Ally]

Loonie takes flight after strong job growth




OTTAWA`Canada`s employment recovery is now almost complete after a strong April added 58,300 new jobs ` almost all in Ontario ` and enough good jobs to finally lift full-time work back to pre-recession peaks.




The encouraging signals helped stop the recent slide in the Canadian dollar. The loonie rose by almost a cent in early morning trading to 104.25 cents U.S., although it gave back half the gains by early afternoon.




In a quirk of the report, almost all the jobs came in Ontario, whereas in the rest of the country employment was mostly flat.




There were a few flies in the ointment to Friday`s surprisingly strong employment report, but the strengths overpowered the weaknesses. The headline number was almost three times what economists had expected after March`s weak performance.





Read the full article here.

 

[Ally]

Not only more jobs, better jobs in Canada




Led by an increase in high-paying, full-time jobs, the quality of employment in Canada is roughly back to pre-recession levels, according to a report from CIBC Economics released Monday.




The study found that along with the 283,000 jobs created over the 12 months ending April 2011, the bank`s employment quality index also enjoyed a 2.7% lift.







A key factor in this improvement ` according to CIBC World Markets deputy chief economist Benjamin Tal, the report`s author ` was growth in full-time jobs, which increased by close to 2%, more than double the growth in part-time employment. Furthermore, of those full-time jobs, the number of high-paying positions increased almost three times faster than low-paying employment.




The quality of employment indicator is significant, according to the report, because it suggests on average that every job now created generates more buying power than a year ago. This boosts spending power and gives the Bank of Canada something to consider in making a decision on interest rates.







Read the full article here.

 

[Ally]

Strong housing forecasts for Canada: Report




Another day of data Monday brought further proof of the resiliency of the Canadian housing market and the current frailty of its U.S. counterpart.




The latest bad news for American housing was a report from real estate company Zillow showing the market might have a ways to go before it bottoms out.







Zillow said existing home prices in the United States fell 3% in the first quarter of 2011 ` a pace not seen since 2008, which was the worst point of the housing recession. U.S. prices have dropped 29.5% from their peak in June 2006, the company said.




Negative equity is now a reality for 28.4% of American homeowners whose mortgages are under water. Foreclosures also began to rise again in the first quarter after falling in late 2010.




In Canada, things got a little better, according to the Canadian Real Estate Association, which was forced to adjust its forecast upward after the sale of some multi-million homes in the Vancouver area started pushing prices up.







Read the full article here.

 

[Ally]

Canadian banks are world's strongest: Moody, Bloomberg





Ever since they emerged mostly unscathed from the financial crisis, Canada`s banks have been widely recognized as the strongest in the industry.




Today Bloomberg Markets magazine announced that five of the Big Six have made it into its list of the world`s 20 best capitalized banks, with National Bank of Canada earning the best score of its Canadian peers, ending up at the number three spot. (Read the story here.)




National is followed by Canadian Imperial Bank of Commerce in fourth spot and Toronto-Dominion Bank at 12. Next comes Royal Bank of Canada (17) with Bank of Montreal trailing at (19).







Topping the list at number one is Oversea-Chinese Banking of Singapore followed by Svenska Handelsbanken of Sweden.





Read the full article here.

 

[Ally]

China trade surplus smashes forecast




BEIJING ` China stormed back to post a hefty trade surplus in April as exports hit a record while imports eased more than expected, weighed down by sustained monetary tightening and high commodity prices.




The surplus of US$11.4 billion, nearly four times greater than expected, comes as China holds high-level economic and strategic talks in Washington and could fuel U.S. criticism that Beijing limits the yuan`s appreciation to support its exports industry.




The trade account swung from a small, rare trade deficit in the first quarter, pushed by a stronger-than-anticipated 29.9% rise in exports over a year earlier to a record US$155.7 billion.




Imports climbed 21.8%, well short of estimates and analysts were at loggerheads whether this should be read as a sign of surprising weakness in the world`s fastest-growing economy or simply deferred purchases because of soaring commodity bills.





Read the full article here.

 

[Ally]

Honest oil is hard to find





Oil prices slid dramatically last week, losing $16.75/B or 15%. Most of the loss was a haircut to the $25.00 uncertainty premium that had built up as a consequence of the `Arab spring.`







Lukewarm economic data was unsupportive to price. But strangely, markets were feeling more secure about future oil supplies with Osama bin Laden no longer around to incite violence against western interests and big oil-producing countries like Saudi Arabia. It`s a false sense of security though, because the threat of isolated terrorism is far less of an issue to stable oil exports than pervasive corruption that flows with over 40% of the barrels that trade globally. Much of the world`s oil supply is still vulnerable to unforeseen instability, which means prices will remain volatile and susceptible to spikes.







One way to gauge the amount of insecurity in a barrel of globally-traded oil is to look at corruption at the wellhead. To do so, we have married export volume data with the authoritative Corruption Perceptions Index (CPI) published by Transparency International(http://www.transparency.org/policy_research/surveys_indices/cpi). Measured on a scale of 1 to 10, 178 countries in the world are each ascribed a score by the global monitoring agency. The lower the score, the more corrupt a country`s public sector and vice versa. Not surprisingly, Somalia, the lawless land governed by pirates that sail the Indian Ocean, ranks at the bottom of the corruption list with a score of 1.1. Scandinavians occupy many of the top slots, with Denmark earning the lead score of 9.3. Canada is sixth on the list, tallying 8.9.







Read the full article here.

 

[Ally]

No new mortgage rule changes: Flaherty





There has already been "some softening" in the Canadian real-estate market so there is no need for further tightening of mortgage rules, Finance Minister Jim Flaherty said Tuesday.







In his first public comments since the election, Flaherty said the country continues to weather the ongoing upheaval in the global economy. He said his first priority is to deal with the budget ` which will likely be presented in June ` in order to continue to implement his government's economic action plan.





Read the full article here.

 

[Ally]

Higher loonie hasn't 'registered'




How would you like to save a couple of per cent on most of your purchases every day with no foreseeable deadline to the discount?




Maybe it's time to stop buying American and start paying in American. Our dollar is above par yet for some reason Canadian retailers still seem more than willing to take the U.S. greenback on even terms.




"This is a classic case of arbitrage, if you wish, at the retail level," says Benjamin Tal, deputy chief economist at CIBC World Markets. "That's what arbitrage is, when the market is not functioning perfectly."




There's some talk in retail circles about starting to charge customers for taking U.S. dollars, with low-margin industries leading the call, because the gap on the exchange rate is eating into their profit. A convenience store owner selling a lottery ticket to a customer who pays in U.S. dollars makes virtually no money on the deal.





Read the full article here.

 

[Ally]

Canadian trade surplus rebounds in March as exports outgain imports





Canada's trade surplus made a small rebound in March after two months of decline, as broad gains in exports outstripped higher imports, Statistics Canada said on Wednesday.







The surplus rose to C$627 million from an originally reported C$33 million, which was revised up on Wednesday to C$356 million. Exports rose 3.5 per cent to C$37.37 billion and imports climbed 2.8 per cent to C$36.75 billion. Both categories had fallen in February.







The improved trade balance was roughly in line with a prediction of a C$500 million surplus in Reuters survey of analysts. Export volumes rose by 2.5 per cent and import volumes by 3.2 per cent.



Read the full article here.