April 2011 Canadian Economic Fundamentals
- Thread starter Ally
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Economy started year off with a bang
OTTAWA ` Canada's economy began the year as strongly as it ended 2010, posting a robust 0.5 per cent expansion in January that sets the stage for a strong first quarter of growth.
The performance was in line with market projections, but still was a mild surprise because many economists had worried of a possible payback after December's equally strong 0.5 per cent gain in gross domestic product. As well, retail sales were already known to have declined 0.3 per cent during the month.
But the auto sector, which had largely underperformed in December, came to the rescue with a 2.8 per cent pickup.
Scotiabank economist Derek Holt noted that while the overall advance was impressive, it is not likely to be repeated in February. In particular, the auto boost was exaggerated by shutdowns the previous month for retooling.
"It's a total head fake. It's reflecting the unusually timed production factor in the auto and feeder industries like fabricated metals," he explained. "It's not sustainable."
Read the full article here.
OTTAWA ` Canada's economy began the year as strongly as it ended 2010, posting a robust 0.5 per cent expansion in January that sets the stage for a strong first quarter of growth.
The performance was in line with market projections, but still was a mild surprise because many economists had worried of a possible payback after December's equally strong 0.5 per cent gain in gross domestic product. As well, retail sales were already known to have declined 0.3 per cent during the month.
But the auto sector, which had largely underperformed in December, came to the rescue with a 2.8 per cent pickup.
Scotiabank economist Derek Holt noted that while the overall advance was impressive, it is not likely to be repeated in February. In particular, the auto boost was exaggerated by shutdowns the previous month for retooling.
"It's a total head fake. It's reflecting the unusually timed production factor in the auto and feeder industries like fabricated metals," he explained. "It's not sustainable."
Read the full article here.
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Canada's GDP expands 0.5% in January
OTTAWA ` Canada's economy continued its strong pace of growth at the start of the year, led by the manufacturing sector, and matching economists' forecasts.
Statistics Canada said Thursday the country's gross domestic product `_the broadest measure of economic performance `_grew 0.5 per cent in January.
"Growth was driven by manufacturing and, to a lesser extent, by transportation and wholesale trade," the federal agency said. "The finance and insurance sector, construction and real estate also increased. Mining and oil and gas extraction as well as retail trade decreased."
Read the full article here.
OTTAWA ` Canada's economy continued its strong pace of growth at the start of the year, led by the manufacturing sector, and matching economists' forecasts.
Statistics Canada said Thursday the country's gross domestic product `_the broadest measure of economic performance `_grew 0.5 per cent in January.
"Growth was driven by manufacturing and, to a lesser extent, by transportation and wholesale trade," the federal agency said. "The finance and insurance sector, construction and real estate also increased. Mining and oil and gas extraction as well as retail trade decreased."
Read the full article here.
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Get a lock on mortgage rates
Even though there was a drop in some of this week`s fixed-rate mortgage products, some rates are expected to go up this year. Why the inconsistency between fixed and open rates? Fixed-rate mortgages follow bond yields, which have fallen recently. Variable rate mortgages reflect changes in the Bank of Canada`s prime rate, which is expected to rise.
There are ways to cushion the blow of rate hikes and make sure mortgage hikes are not a shock to your financial system.
`If the client is in a variable rate, which has the most fluctuation potential in the short term, I suggest they base their payments on a 4% fixed rate rather than making the lower payments based on today`s 2.25% variable rate,` says Gerri Vaughan, mortgage broker with Invis in Edmonton. `That way, they`re paying more towards the principal and they won`t have a payment shock when rates do start climbing.`
Read the full article here.
Even though there was a drop in some of this week`s fixed-rate mortgage products, some rates are expected to go up this year. Why the inconsistency between fixed and open rates? Fixed-rate mortgages follow bond yields, which have fallen recently. Variable rate mortgages reflect changes in the Bank of Canada`s prime rate, which is expected to rise.
There are ways to cushion the blow of rate hikes and make sure mortgage hikes are not a shock to your financial system.
`If the client is in a variable rate, which has the most fluctuation potential in the short term, I suggest they base their payments on a 4% fixed rate rather than making the lower payments based on today`s 2.25% variable rate,` says Gerri Vaughan, mortgage broker with Invis in Edmonton. `That way, they`re paying more towards the principal and they won`t have a payment shock when rates do start climbing.`
Read the full article here.
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Election or not, we face austerity for a long time
With federal opposition parties having quickly rejected the latest Conservative budget, you might assume that all the ink spilled on budget analysis was wasted. Not so.
Even though we are in election mode, the budget challenges implicit in Finance Minister Jim Flaherty's document won't change much no matter who winds up running the government.
The basic facts are immutable. On the plus side, Canada's economy is in much better shape than those of other big industrial nations, which helps us return to financial health. But on the minus side, Canadians will still face an unprecedented period of federal austerity to wipe out this year's $40.5-billion budget deficit.
Read the full article here.
With federal opposition parties having quickly rejected the latest Conservative budget, you might assume that all the ink spilled on budget analysis was wasted. Not so.
Even though we are in election mode, the budget challenges implicit in Finance Minister Jim Flaherty's document won't change much no matter who winds up running the government.
The basic facts are immutable. On the plus side, Canada's economy is in much better shape than those of other big industrial nations, which helps us return to financial health. But on the minus side, Canadians will still face an unprecedented period of federal austerity to wipe out this year's $40.5-billion budget deficit.
Read the full article here.
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Canada's demographic time bomb
Lost in the political drama over the 2011 federal budget was a spending line item that starkly illustrates the fiscal squeeze posed by the aging population ` an issue yet to be addressed during the 41st election campaign.
As laid out in the budget, government spending on elderly benefits is set to surge 30% from 2010-11 levels to 2015-16, with annual increases of between 4.9% and 5.8%, well above projected rates of Canadian economic growth.
Dig a bit deeper and the fiscal noose around Ottawa gets tighter. During the next five years it is expected the federal government, of whichever political stripe, will need to find an extra $2-billion each year either through program cuts or tax increases to finance payments through the Old Age Security and Guaranteed Income Supplement schemes. From 2015 to 2020, that figure climbs to $3-billion each and every year.
Read the full article here.
Lost in the political drama over the 2011 federal budget was a spending line item that starkly illustrates the fiscal squeeze posed by the aging population ` an issue yet to be addressed during the 41st election campaign.
As laid out in the budget, government spending on elderly benefits is set to surge 30% from 2010-11 levels to 2015-16, with annual increases of between 4.9% and 5.8%, well above projected rates of Canadian economic growth.
Dig a bit deeper and the fiscal noose around Ottawa gets tighter. During the next five years it is expected the federal government, of whichever political stripe, will need to find an extra $2-billion each year either through program cuts or tax increases to finance payments through the Old Age Security and Guaranteed Income Supplement schemes. From 2015 to 2020, that figure climbs to $3-billion each and every year.
Read the full article here.
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The suite life of secondary dwelling units
Before I begin discussing the lovely, useful guide to creating secondary living spaces in your home that is habitual rehabber Michael Litchfield's "In-laws, Outlaws, and Granny Flats: Your Guide for Turning One House into Two Homes" (The Taunton Press, 2011), I'd like to make a small advisory note to my parents: This is not an invite.
With that said, because the realm of real estate consumers who are seriously in the market to add a mother-in-law apartment is likely smaller than that of people who have some interest in the real estate recession, "In-laws" will likely receive short shrift on the bookstore shelves. But if you ask me, this book might be one of the timeliest real estate how-to's that has hit the market in recent times.
"In-laws" is about putting extra space in a home you already own to optimal use, whether by converting an attic, basement or "granny flat," or by building an entirely new living unit on your existing home's lot.
Read the full article here.
Before I begin discussing the lovely, useful guide to creating secondary living spaces in your home that is habitual rehabber Michael Litchfield's "In-laws, Outlaws, and Granny Flats: Your Guide for Turning One House into Two Homes" (The Taunton Press, 2011), I'd like to make a small advisory note to my parents: This is not an invite.
With that said, because the realm of real estate consumers who are seriously in the market to add a mother-in-law apartment is likely smaller than that of people who have some interest in the real estate recession, "In-laws" will likely receive short shrift on the bookstore shelves. But if you ask me, this book might be one of the timeliest real estate how-to's that has hit the market in recent times.
"In-laws" is about putting extra space in a home you already own to optimal use, whether by converting an attic, basement or "granny flat," or by building an entirely new living unit on your existing home's lot.
Read the full article here.
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Get ready to be 'swamped' by food inflation
Coffee, sugar and cocoa prices will rise five- to 10-fold by 2014 because of shortages that will mean consumers getting `swamped` by food inflation, according to Superfund Financial.
A lack of farmland and rising costs means growers will fail to keep up with demand, said Aaron Smith, managing director of Superfund Financial (Hong Kong) Ltd. and Superfund USA Inc. Commodities account for about 40% of Superfund`s US$1.25 billion assets under management. Smith correctly predicted record copper prices in November and a month later rightly anticipated that silver would outperform gold.
A United Nations index of world food prices jumped to a record last month, contributing to riots across northern Africa and the Middle East that already toppled leaders in Egypt and Tunisia. Global food security is threatened by `excessive price volatility and speculation,` farm ministers from 48 countries said in a joint statement after meeting in Berlin in January.
Read the full article here.
Coffee, sugar and cocoa prices will rise five- to 10-fold by 2014 because of shortages that will mean consumers getting `swamped` by food inflation, according to Superfund Financial.
A lack of farmland and rising costs means growers will fail to keep up with demand, said Aaron Smith, managing director of Superfund Financial (Hong Kong) Ltd. and Superfund USA Inc. Commodities account for about 40% of Superfund`s US$1.25 billion assets under management. Smith correctly predicted record copper prices in November and a month later rightly anticipated that silver would outperform gold.
A United Nations index of world food prices jumped to a record last month, contributing to riots across northern Africa and the Middle East that already toppled leaders in Egypt and Tunisia. Global food security is threatened by `excessive price volatility and speculation,` farm ministers from 48 countries said in a joint statement after meeting in Berlin in January.
Read the full article here.
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Oil may run out by 2060: HSBC
HSBC does not mean to scare you in its latest report, but it does point out that we are facing a massive energy crunch. That`s because the bank is just not optimistic there is much oil left in the world ` in fact a mere 49 years of the black gold on current consumption levels.
That`s almost as apocalyptic as U.S. President Barrack Obama`s energy strategy speech Wednesday: `The United States of America can not afford to bet our long-term prosperity and security on a resource that will eventually run out. Not any more. Not when the cost to our economy, our country and our planet are so high.`
While oil`s days may be numbered, HSBC says gas is less of an issue but has logistical and transportation challenges; coal is abundant but the worst carbon culprit. Other energy sources become viable only if oil prices remain high and that potentially means that in a convoluted way, the world has to suffer high oil prices for long periods in order to wean itself off it.
Read the full article here.
HSBC does not mean to scare you in its latest report, but it does point out that we are facing a massive energy crunch. That`s because the bank is just not optimistic there is much oil left in the world ` in fact a mere 49 years of the black gold on current consumption levels.
That`s almost as apocalyptic as U.S. President Barrack Obama`s energy strategy speech Wednesday: `The United States of America can not afford to bet our long-term prosperity and security on a resource that will eventually run out. Not any more. Not when the cost to our economy, our country and our planet are so high.`
While oil`s days may be numbered, HSBC says gas is less of an issue but has logistical and transportation challenges; coal is abundant but the worst carbon culprit. Other energy sources become viable only if oil prices remain high and that potentially means that in a convoluted way, the world has to suffer high oil prices for long periods in order to wean itself off it.
Read the full article here.
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Dubai leads list of world's worst housing markets
Dubai has been the world's weakest housing market in the past six months, eclipsing the embattled and tortured real estates markets of Greece, Spain and Portugal, according to a survey from U.K.-based real estate consultancy Knight Frank.
At a time when global housing prices have risen by 2.8 per cent, Dubai's housing prices have fallen 10.1 per cent in the past six months, and 6.1 per cent in the year.
The 10.1 per cent decline is slightly below the 12 per cent fall estimated by Jones Lang La Salle, and shows the pain the emirate's real estate market continues to go through.
The decline is in sharp contrast to other emerging markets, where 'hot money' created by U.S. Federal Reserve has allowed investors to pump funds into real estate. In addition, petrodollars have flown into the Gulf region, but have failed to lift prices in the Dubai real estate market.
Read the full article here.
Dubai has been the world's weakest housing market in the past six months, eclipsing the embattled and tortured real estates markets of Greece, Spain and Portugal, according to a survey from U.K.-based real estate consultancy Knight Frank.
At a time when global housing prices have risen by 2.8 per cent, Dubai's housing prices have fallen 10.1 per cent in the past six months, and 6.1 per cent in the year.
The 10.1 per cent decline is slightly below the 12 per cent fall estimated by Jones Lang La Salle, and shows the pain the emirate's real estate market continues to go through.
The decline is in sharp contrast to other emerging markets, where 'hot money' created by U.S. Federal Reserve has allowed investors to pump funds into real estate. In addition, petrodollars have flown into the Gulf region, but have failed to lift prices in the Dubai real estate market.
Read the full article here.
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Toyota says it will shut down North American plants
LOUISVILLE, Kentucky -- A Toyota Motor Corp. spokesman says it's inevitable that the company will have to shut down its North American factories due to shortages of parts from Japan.
Spokesman Mike Goss says the shutdowns are likely to take place later this month, affecting about 25,000 workers. But he says no layoffs are expected.
He says the length of the shutdowns is unknown and depends on how fast earthquake-damaged Japanese parts factories get back in operation.
Read the full article here.
LOUISVILLE, Kentucky -- A Toyota Motor Corp. spokesman says it's inevitable that the company will have to shut down its North American factories due to shortages of parts from Japan.
Spokesman Mike Goss says the shutdowns are likely to take place later this month, affecting about 25,000 workers. But he says no layoffs are expected.
He says the length of the shutdowns is unknown and depends on how fast earthquake-damaged Japanese parts factories get back in operation.
Read the full article here.
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Inflation expectations on the rise in corporate Canada
A growing number of Canadian companies are bracing for hotter inflation as energy and food costs increase.
The portion of executives who think the inflation rate will rise to 3 per cent or more in the next two years jumped to 15 per cent in the Bank of Canada`s latest quarterly business survey, released Monday. That reading, the highest share since 2008, was up from 3 per cent in the previous quarter, and represents `a significant shift in inflation expectations,` said Stewart Hall, economist at HSBC Securities (Canada) Inc.
Read the full article here.
A growing number of Canadian companies are bracing for hotter inflation as energy and food costs increase.
The portion of executives who think the inflation rate will rise to 3 per cent or more in the next two years jumped to 15 per cent in the Bank of Canada`s latest quarterly business survey, released Monday. That reading, the highest share since 2008, was up from 3 per cent in the previous quarter, and represents `a significant shift in inflation expectations,` said Stewart Hall, economist at HSBC Securities (Canada) Inc.
Read the full article here.
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A buyer agreement with a realtor can be risky
Jim Southgate, a first-time home buyer, worked with a real estate agent for six months before putting in an offer on an income property that met his needs.
`While signing the paperwork, I signed a buyer representation agreement without its being fully explained,` he says.
He didn`t get the property because of multiple offers. Then, his relationship with the agent soured.
Read the full article here.
Jim Southgate, a first-time home buyer, worked with a real estate agent for six months before putting in an offer on an income property that met his needs.
`While signing the paperwork, I signed a buyer representation agreement without its being fully explained,` he says.
He didn`t get the property because of multiple offers. Then, his relationship with the agent soured.
Read the full article here.
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Companies see inflation on the rise
OTTAWA ` Inflation expectations among Canadian companies have surged to their highest level since mid-2008, a survey showed Monday, a development that may prompt the Bank of Canada to start laying the groundwork next week for higher interest rates.
Roughly three-quarters, or 73%, of companies in the Bank of Canada survey indicated they expect inflation to be above 2% over the coming 24 months ` the highest such reading for the survey since mid-2008, when a barrel of oil reached US$150. That`s also an increase from the 47% level recorded in the central bank`s last survey.
`The Canadian economy is looking decent and inflationary pressure is picking up,` said Eric Lascelles, chief economist at RBC Global Asset Management. `It is very easy to justify rates higher than where they are now.`
Read the full article here.
OTTAWA ` Inflation expectations among Canadian companies have surged to their highest level since mid-2008, a survey showed Monday, a development that may prompt the Bank of Canada to start laying the groundwork next week for higher interest rates.
Roughly three-quarters, or 73%, of companies in the Bank of Canada survey indicated they expect inflation to be above 2% over the coming 24 months ` the highest such reading for the survey since mid-2008, when a barrel of oil reached US$150. That`s also an increase from the 47% level recorded in the central bank`s last survey.
`The Canadian economy is looking decent and inflationary pressure is picking up,` said Eric Lascelles, chief economist at RBC Global Asset Management. `It is very easy to justify rates higher than where they are now.`
Read the full article here.
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Real estate market braces for TMX-LSE merger
The potential merger of the TMX Group, operator of the Toronto Stock Exchange, and the London Stock Exchange Group has sparked hot debate throughout the Canadian business community.
The move would create the world's biggest stock exchange, with more than 6,000 companies traded. The resulting company would be worth $6-billion and be jointly based in London and Toronto.
As Ottawa decides the deal`s fate (any merger or takeover of a Canadian company worth more than $299-million can be subject to government approval under the Investment Canada Act), experts in commercial real estate are weighing in. And while some see a favourable outcome, others are warning of negative side effects.
Read the full article here.
The potential merger of the TMX Group, operator of the Toronto Stock Exchange, and the London Stock Exchange Group has sparked hot debate throughout the Canadian business community.
The move would create the world's biggest stock exchange, with more than 6,000 companies traded. The resulting company would be worth $6-billion and be jointly based in London and Toronto.
As Ottawa decides the deal`s fate (any merger or takeover of a Canadian company worth more than $299-million can be subject to government approval under the Investment Canada Act), experts in commercial real estate are weighing in. And while some see a favourable outcome, others are warning of negative side effects.
Read the full article here.
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Re/Max: First-time homebuyers driving up prices in MetroVancouver
VANCOUVER - First-time homebuyers looking to avoid higher interest rates down the road are helping drive up the real-estate market in a number of Canadian regions, especially in Metro Vancouver, says a report issued Tuesday.
`Robust demand for residential real estate in Greater Vancouver in 2011 has pushed housing sales and values well ahead of 2010 levels, real estate services firm Re/Max said in its First Time Buyers Report 2011. `Both first-time and move-up buyers are leading the charge, especially in areas like Richmond and Vancouver Westside, where sales have been particularly brisk.`
Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.
Read the full article here.
VANCOUVER - First-time homebuyers looking to avoid higher interest rates down the road are helping drive up the real-estate market in a number of Canadian regions, especially in Metro Vancouver, says a report issued Tuesday.
`Robust demand for residential real estate in Greater Vancouver in 2011 has pushed housing sales and values well ahead of 2010 levels, real estate services firm Re/Max said in its First Time Buyers Report 2011. `Both first-time and move-up buyers are leading the charge, especially in areas like Richmond and Vancouver Westside, where sales have been particularly brisk.`
Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.
Read the full article here.
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Canada needs a break from U.S. reliance on oil
If there was ever a flashing red light that Canada needs to start looking further afield for customers to buy our oil, it came on the editorial page of the New York Times this weekend.
The paper of record for much of the free world, officially went on record as being opposed to the Keystone XL pipeline to the Gulf of Mexico. The NYT opined that the U.S. government should just say "No to a New Tar Sands Pipeline" on the grounds that the environmental risks outweigh the benefits of increased energy security and access to the second largest oil reserve on Earth.
The usually balanced and thoughtful newspaper showed it was anything but by adopting the provocative language of the environmental extremists with words like "tar sands oil" and "toxic holding ponds" to describe operations in Fort McMurray. In short, fighting words -- not the voice of reason.
Read the full article here.
If there was ever a flashing red light that Canada needs to start looking further afield for customers to buy our oil, it came on the editorial page of the New York Times this weekend.
The paper of record for much of the free world, officially went on record as being opposed to the Keystone XL pipeline to the Gulf of Mexico. The NYT opined that the U.S. government should just say "No to a New Tar Sands Pipeline" on the grounds that the environmental risks outweigh the benefits of increased energy security and access to the second largest oil reserve on Earth.
The usually balanced and thoughtful newspaper showed it was anything but by adopting the provocative language of the environmental extremists with words like "tar sands oil" and "toxic holding ponds" to describe operations in Fort McMurray. In short, fighting words -- not the voice of reason.
Read the full article here.
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Don't shed 'too many tears' over jobless rate? Seriously?
Should we not cry as much over jobless rate?
At last count, almost 1.45 million Canadians were unemployed. And I`ll bet not one of them can find a silver lining in the fact that they can`t find work. And I`ll bet they are shedding many, many tears.
I was troubled Friday when I read a research note by one of Canada`s leading economists, pointing ahead to this week`s jobs report and suggesting that we `don`t cry too many tears` if it takes `a bit longer` for the jobless rate to drop markedly from its uncomfortably high level of 7.8 per cent. To be fair, he was being provocative, and in no way was suggesting he wants to see unemployment remain elevated.
Here`s what Avery Shenfeld of CIBC World Markets wrote:
`Canada`s job figures will be out this coming Friday, and in one interesting twist, there would be reason to not be too disappointed if the unemployment rate fails to fall from its current 7.8-per-cent perch. Of course, we all want the country to see strong economic growth that puts more Canadians to work. But the recent stickiness of the jobless rate, despite what looks to have been an impressive 4-per-cent pace to economic growth in the first quarter, carries a silver lining.`
Read the full article here.
Should we not cry as much over jobless rate?
At last count, almost 1.45 million Canadians were unemployed. And I`ll bet not one of them can find a silver lining in the fact that they can`t find work. And I`ll bet they are shedding many, many tears.
I was troubled Friday when I read a research note by one of Canada`s leading economists, pointing ahead to this week`s jobs report and suggesting that we `don`t cry too many tears` if it takes `a bit longer` for the jobless rate to drop markedly from its uncomfortably high level of 7.8 per cent. To be fair, he was being provocative, and in no way was suggesting he wants to see unemployment remain elevated.
Here`s what Avery Shenfeld of CIBC World Markets wrote:
`Canada`s job figures will be out this coming Friday, and in one interesting twist, there would be reason to not be too disappointed if the unemployment rate fails to fall from its current 7.8-per-cent perch. Of course, we all want the country to see strong economic growth that puts more Canadians to work. But the recent stickiness of the jobless rate, despite what looks to have been an impressive 4-per-cent pace to economic growth in the first quarter, carries a silver lining.`
Read the full article here.
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World economy facing numerous 'black swans,' IMF chief warns
The global economy is facing a flock of "black swans", the head of the International Monetary Fund has warned.
Dominique Strauss-Kahn told students in Washington on Monday night that "great uncertainty still prevails. Indeed, numerous black swans are now swimming in the global economic lake."
Strauss-Kahn was referring to the theory outlined by writer and investor Nassim Nicholas Taleb, who has argued that investors take too little account of unpredictable high-impact events. Black swans can be either positive or negative.
Strauss-Kahn's reference to black swans is cryptic, since by definition a black swan event is so unpredictable it should be invisible to forecasters, and make a mockery of their forecasts when it breaks cover.
Read the full article here.
The global economy is facing a flock of "black swans", the head of the International Monetary Fund has warned.
Dominique Strauss-Kahn told students in Washington on Monday night that "great uncertainty still prevails. Indeed, numerous black swans are now swimming in the global economic lake."
Strauss-Kahn was referring to the theory outlined by writer and investor Nassim Nicholas Taleb, who has argued that investors take too little account of unpredictable high-impact events. Black swans can be either positive or negative.
Strauss-Kahn's reference to black swans is cryptic, since by definition a black swan event is so unpredictable it should be invisible to forecasters, and make a mockery of their forecasts when it breaks cover.
Read the full article here.
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Why we might see a rate hike sooner rather than later
OTTAWA ` Stronger economic growth, propelled by a commodity boom and an improving U.S. job market, will prompt the Bank of Canada to begin rate hikes in July to a 2% level by the end of the year and 3.5% in late 2012, economists at BMO Capital Markets said Wednesday in releasing its updated outlook.
The investment bank`s economics team project first-quarter annualized growth of 4.4%, helping to power the Canadian economy to a 3% advance in 2011 -- an improvement from the 2.7% gain BMO Capital Markets had forecast back in January. By year`s end, the country`s unemployment rate should drop to 7.4% from its present 7.8% level.
`The combination of low interests and high commodity prices are fuelling the domestic economy,` said Sal Guatieri, senior economist at BMO Capital Markets.
Read the full article here.
OTTAWA ` Stronger economic growth, propelled by a commodity boom and an improving U.S. job market, will prompt the Bank of Canada to begin rate hikes in July to a 2% level by the end of the year and 3.5% in late 2012, economists at BMO Capital Markets said Wednesday in releasing its updated outlook.
The investment bank`s economics team project first-quarter annualized growth of 4.4%, helping to power the Canadian economy to a 3% advance in 2011 -- an improvement from the 2.7% gain BMO Capital Markets had forecast back in January. By year`s end, the country`s unemployment rate should drop to 7.4% from its present 7.8% level.
`The combination of low interests and high commodity prices are fuelling the domestic economy,` said Sal Guatieri, senior economist at BMO Capital Markets.
Read the full article here.