October 2011 Canadian Economic Fundamentals

[Ally]

No rate hikes until 2013: BMO




BMO Capital Markets pushed its rate hikes forecast back to 2013 on Tuesday, citing continued serious economic risks both home and abroad.





The new forecast pushes the expected time frame for the Bank of Canada to raise its benchmark interest rates back from previous expectations of the second half of 2012.





As recently as this spring, economists had been speculating about a rate hike before the end of 2011, but the market turmoil of the past few months sparked by the eurozone debt crisis has changed all that.





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[Ally]

No evidence of housing bubble: Flaherty




NEW YORK ` The Vancouver housing market is attracting unusually strong demand but Canada as a whole does not face a housing bubble that requires government action, Finance Minister Jim Flaherty said on Wednesday.




Mr. Flaherty and Bank of Canada Governor Mark Carney have paid close attention to Vancouver housing prices, and they have warned Canadians not to take on so much debt that they will not be able to service it when interest rates rise.




Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: `It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.`





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[Ally]

Canadians' household debt raises eyebrows at IMF




The International Monetary Fund isn`t totally convinced that Canadian authorities have a handle on the risks building up in the housing market.




`Developments on the housing front require increased vigilance, and consideration may need to be given to additional prudential measures to prevent a further buildup in household debt,` the Washington-based IMF says in its latest economic outlook for the Western Hemisphere.





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[Ally]

Vancouver home prices lead nation, survey finds





Big sale prices on homes in Vancouver`s most expensive neighbourhoods pushed the city`s average prices up steeply on realty firm Royal LePage`s third-quarter survey of Canadian home values.




Royal LePage said Wednesday the average price for a detached bungalow in Vancouver rose 17 per cent to $1.02 million in the third quarter compared with the same period a year ago, which the firm noted is nearly three times the national average of $349,974 for that type of property.




For the purposes of the survey, Royal LePage said Vancouver is defined as including Vancouver`s west side and east side, West Vancouver and North Vancouver.




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[Ally]

Canadian home prices rose in quarter, slowdown seen




TORONTO, Oct 5 (Reuters) - Canadian house prices rose in the third quarter as very low interest rates supported consumer confidence even as signs of softening in some regions point to a broader slowdown in the months ahead.





The country's leading real estate broker said on Wednesday the average price of a home in Canada increased between 5.7 percent and 7.8 percent from July through September compared with the same period the previous year, a deceptively big gain because the third quarter of 2010 had been weak.





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[Ally]

Massive floods devastate large swaths of Asia's rice crops





Massive floods have ravaged vast swaths of Asia's rice bowl, threatening to further drive up food prices and adding to the burden of farmers who are among the region's poorest, experts say.




About 1.5 million hectares of paddy fields in Thailand, Vietnam, Cambodia and Laos have been damaged or are at risk from the worst floods to hit the region in years, officials say.




In Thailand, the world's biggest rice exporter, where 237 people have died in the floods, about one million hectares of paddy - roughly 10 per cent of the total - have been damaged, they say.






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[Ally]

Canada's job growth surges past forecasts




OTTAWA ` Canada`s employment growth in September was about four times more than what the experts were predicting.




There were 60,900 more people employed last month, Statistics Canada said Friday. Economists had expected a gain of just 15,000.




The September unemployment rate fell to 7.1% from 7.3% in August. That`s the lowest the jobless rate has been since December 2008. Economists expected this number not to change last month.





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[Ally]

Time to rethink modern economics




Economic orthodoxy is a hard habit to break.




But with the global economy at risk of a second recession in three years, the euro zone on the verge of foundering and the United States staring at a jobless decade, maybe the same-old policy ideas are getting a little tired.




This isn`t the recovery most experts expected. And yet it just may be the recovery we deserve, given how the world`s rich countries are managing their economies.





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[Ally]

Canada adds 61,000 jobs in September




The Canadian economy added a surprising 61,000 jobs in September, virtually all in full-time employment and half of them in B.C., Statistics Canada reported Friday.




The job growth helped push the country's unemployment rate down to 7.1 per cent, the lowest since December 2008.




Economists had been expecting 15,000 jobs to be added, and for the unemployment rate to remain steady at 7.3 per cent.





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[Ally]

Canada not set for U.S. housing crash, Royal LePage says




Canada`s housing market will cool off in coming months, but a U.S.-style housing crash won`t happen, one of the country`s biggest real estate firms said.




Housing prices jumped between 5.7% and 7.8% in the third quarter of the year compared with the same period in 2010, Royal LePage said. Buyers were tempted by low interest rates and the relative stability of the Canadian economy despite global gloom, it said.




"The third quarter saw a return to a normal seasonal business cycle as price appreciation slowed in many areas - with some average values even falling slightly - after the busy spring trading season,` said Phil Soper, Royal LePage president and chief executive. `A broader slowdown is expected in the months ahead but fears of a U.S.-style correction are completely unfounded."





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[Ally]

Canada's job market makes gains in September




Canada`s jobs market is still holding up in the face of global turmoil, though there are signs that fading confidence and seesawing markets are making companies cautious.




The economy churned out 60,900 jobs in September, far more than expected, pushing the unemployment rate down to 7.1 per cent, the lowest since December, 2008. But much of the increase in the number of jobs came from a seasonal bounce in the education sector, while private sector employment fell for the second-consecutive month and self-employment rose. Manufacturers and financial firms also shed jobs.





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[Ally]

Housing starts gain momentum in September




The pace of home construction picked up last month, widely surpassing expectations, on strength in the Atlantic region, Quebec and British Columbia, Canada Mortgage and Housing Corp. says




Housing starts rose to a seasonally adjusted annual rate of 205,900 units.




Economists on average had expected the rate to come in at about 190,000 units for September.





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[Ally]

Interest rates likely to stay lower for longer





The third quarter saw a stunning collapse in government bond yields as markets digested weak U.S. economic data and an increasingly serious debt crisis in the Euro zone. The yield on five-year Government of Canada debt fell an incredible 150 basis points from its peak in the first quarter to 1.28 per cent, the lowest level on record.




The current level of bond yields would normally prompt a dramatic fall in mortgage rates. However, there are a number of factors complicating the normal arithmetic. First, some lenders are offering deeper discounts for the most creditworthy borrowers. This allows banks to provide competitive rates while also filtering out higher-risk borrowers. Second, the emerging potential of credit crisis in Europe has raised the short-term cost of funding for financial institutions worldwide, thereby squeezing profitability. Moreover, the increasing popularity of variable rate mortgages due to very low rates may be putting further strain on the profitability of mortgage portfolios. Nearly a third of mortgages in 2011 are variable rate compared with 25 per cent five years ago and just ten per cent a decade ago. Since variable rate mortgages tend to carry lower profit margins, the shift in consumer preferences to variable rate mortgages is likely cutting into profits. Shrinking profit margins have even prompted some banks to increase their offered variable rates in absence of a change in the reference prime rate.






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[Ally]

Oil sands Canadian job creator; U.S., domestic processing needed





Canada`s oil sands and pipelines to move oil closer to consumer markets are job creators that enhance North America`s energy security and economy through substantial employment and government revenue, according to the Canadian Association of Petroleum Producers, which represents 90 per cent of Canada`s oil and gas production.







`Canada`s oil sands provides and continues to create significant long-term, well-paid, skilled jobs in Canada and the United States,` said Dave Collyer, CAPP`s president. `One of our industry`s most pressing issues is in fact a lack of skilled people to fill the jobs we have today and foresee in the future.







`Project cost inflation and competitiveness are serious issues for the oil sands industry,` Collyer said. `Canada must compete for these large scale refining and upgrading projects. Today more than 60 per cent of upgrading occurs in Alberta, with more upgraders planned. Like other domestic industries, increasing exports allows our industry to grow for the benefit of all Canadians.







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[Ally]

Jobless rate down to 7.1% in September




The Canadian economy cranked out a surprisingly strong 61,000 new jobs last month, Statistics Canada reported Friday, pushing down the unemployment rate. But the good news did not extend to sectors such as finance, which saw heavy job losses.




The agency said there was also a 35,600 job increase for professional and scientific services. Other job gains were seen in the accommodation and food services industry, natural resources, and public administration industries.




That pushed the unemployment rate down 0.2 of a point to 7.1 per cent, the lowest level since December 2008.



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[Ally]

Canada Immigration: New rules, but same risks





Canada hopes to cut down on fraudulent immigration by citizenship representatives who charge fees but prey upon unsuspecting immigration applicants. This legislation governs agents based in Canada but it fails to protect immigrants who hire agents not in Canada. However, every immigrant coming to Canada and any Canadian couple already in Canada faces the same 1-in-4 odds of life success (or 3-in-4 odds of failure).




Immigrants have looked to Canada as a safe haven for adequate employment, peace of mind and personal freedom. As of June 30, 2011, Consultants or Agents based in Canada hired to help immigrants applying to enter Canada are under strict new rules. This new law does not directly affect consultants in other countries.






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[Ally]

Job spike exceeds expectations




OTTAWA -- Economists and others wiped egg from their faces Friday after job gains nearly quadrupled expectations in September.




Job crunchers at Statistics Canada reported growth of 61,000 last month -- almost all full-time -- a spike that lowered the national unemployment rate to 7.1% from 7.3% and helped ease fears Canada is being sucked into the economic mess facing the U.S. and Europe -- at least for now.




After weeks of Opposition howling that Prime Minister Stephen Harper's Conservatives have no plan to create work to stave off an economic crisis, the government was cautiously guarded.





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[Ally]

Recession fears dip for now, as both Canada and U.S. report job gains



OTTAWA - The Canadian and U.S. economies appear to be weathering the economic storm after both countries reported positive ` if not breathtaking ` employment gains in September, despite fears that another recession may be near at hand.





In Canada, the economy churned out an impressive 61,000 new jobs, all public sector or in self-employment, taking the unemployment rate to the lowest level since December 2008 at 7.1 per cent. The seasonal return of teachers to school added nearly 40,000 jobs.





The news was even better south of the border ` in light of the low expectations. The Labour Department said 103,000 jobs were added last month, and significantly, that there were 100,000 more jobs created in the previous two months than had been reported.



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[Ally]

Home building booms again




The Canadian housing market continues to defy the odds in the face of a world economic slowdown, as new statistics from Canada Mortgage and Housing Corp. show new home construction soaring again.




The latest numbers put September starts at 205,900 on an annualized basis, a pace in line with the best period of this housing boom when starts checked in at over 200,000 each year from 2002-2008. This time out it appears the condo sector is driving the market, a trend seen across the country.




That construction is expected to be a key economic driver. The Royal Bank of Canada is forecasting 2.4% growth in Gross Domestic Product in the third quarter on an annualized basis with the housing sector responsible for 50 basis points of that growth.





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[Ally]

China buying while we talk




While we sort out where we stand, Chinese money keeps buying up Canadian oil and gas reserves.




Sinopec`s $2.2-billion acquisition this week of shale gas producer Daylight Energy Ltd. is sure to be followed by more. Athabasca Oil Sands Corp.` two major oil sands projects are in play because of put/call options with PetroChina that could increase the Chinese company`s ownership to 100% from 60%. Birchcliff Energy Ltd., another unconventional gas producer, put itself on the block last week following unsolicited expressions of interest. Market speculation is bubbling about which company the Chinese will snap up next ` from senior Talisman Energy Inc. to junior Celtic Exploration Ltd.





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