March 2012 Canadian Economic Fundamentals

[Ally]

BMO cuts 10-year mortgage to record low




The Bank of Montreal has again cut its 5-year fixed rate mortgage rate to 2.99 per cent, the second time it has done so this year.




It has also cut the rate of its 10-year mortgage to 3.99 per cent, the lowest any of Canada's big banks has ever offered on a 10-year mortgage.




This latest rate is available until March 28 and applies to mortgages with a 25-year amortization period.





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[Ally]

The slow fall of Canada's mortgage lending rates, 1990-2011





The chart below shows the conventional five-year mortgage rate from 1990 through 2011. Hover over the points on the chart to bring up the average monthly lending rate.







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[Ally]

Economists: Higher interest rates coming




OTTAWA ` Bank of Canada governor Mark Carney has long warned interest rates must rise eventually ` now some economists say the day may come sooner than previously thought.




It`s commonly assumed there is absolutely no chance Carney will raise the trendsetting policy rate today from the one-per-cent perch it has been nailed to since September 2010. Nor will hikes come in April or May.




But with economic conditions slowly showing signs of improvement, Carney may not be on hold until late 2013 as many had assumed.





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[Ally]

Housing shows strength as prices, starts rise



The Canadian housing market continued to show signs of strength on Thursday as data revealed new home prices rose for the 10th straight month in January and housing starts climbed in February despite expectations the sector will slow this year.





Prices of new homes edged up 0.1% in January from December, the 10th consecutive monthly increase, mainly on strength in Calgary and Vancouver, Statistics Canada said on Thursday.





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[Ally]

Loonie up as Bank of Canada leaves rates unchanged, sees improvement in economy



TORONTO - The Canadian dollar closed higher after the Bank of Canada said it was keeping its key interest rate unchanged at one per cent while noting that economic conditions have improved over the past few weeks.





The loonie was up 0.72 of a cent to 100.9 cents US as the bank cited "tentative signs of stabilization in European bank funding and sovereign debt markets."





It also noted that conditions in global financial markets are better while risk aversion has decreased. But the bank cautioned that "the global economy is still expected to grow below its trend rate as the deleveraging process in advanced economies proceeds."







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[Ally]

Choosing the right new Canadian





Last week, Immigration and Citizenship Minister Jason Kenney laid out a plan to help Canada find the right immigrants for the right jobs. These changes have the potential to accelerate the rate at which new immigrants can get on their feet and the rate at which Canada can benefit from their contributions.







Job opportunities in the trades abound, so choose immigrants who can work in skilled trades. Canada has an aging population and predicted labour shortages, so choose those who are young and will have a long career in this country. Employment and economic outcomes are better for those who speak one of Canada`s official languages, so choose immigrants who already have the fluency required to work in their occupation.







Read the full article here.

 

[Ally]

Canada loses 2,800 jobs in February





OTTAWA ` Canada's economy lost a surprising 2,800 jobs in February, while the unemployment rate declined to 7.4 per cent as fewer people were looking for work, Statistics Canada said Friday.







Economists had expected 15,000 new positions to be created during the month and a jobless rate steady at 7.6 per cent. In January, there were just 2,300 jobs created and the unemployment rose to 7.6 per cent from 7.5 per cent the previous month.







"Just as the U.S. labour market finally appears to be turning the corner, Canada's job market finds itself in a funk," said Douglas Porter, deputy chief economist at BMO Capital Markets, with Friday's report "extending a five-month string of disappointing jobs data in the country."






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[Ally]

Exxon to spend $150 billion over 5 years to find oil, gas






Exxon Mobil Corp. (XOM-N84.61-0.22-0.26%) said Thursday that it will spend about $150-billion over the next five years to find more oil and natural gas to meet an expected increase in global energy demand.




In a statement issued ahead of a presentation at the New York Stock Exchange, CEO Rex Tillerson said huge investments are needed to expand the supply of traditional fuels like oil and gas while also advancing new energy sources. Exxon, the world`s largest publicly traded energy company, expects global energy demand to increase 30 per cent by 2040, compared with 2010 levels.





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[Ally]

Ottawa targets 'high-value' entrepreneurs with new immigration program




Ottawa plans to replace the immigrant entrepreneur program it shelved last year with a new system aimed at identifying and speeding the path for `high value innovators,` Citizenship and Immigration Minister Jason Kenney says.




The previous program, in place for a decade, `was administratively very burdensome and underwhelming in terms of the results.` When it was suspended last July, it had a backlog of nearly 10,000 applicants, and with an average of about 1,000 to 1,500 approvals a year it would have taken nearly eight years to clear, even without new applications. What will happen to the older files when the new program is launched remains unclear, Mr. Kenney said in an interview.





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[Ally]

Canadian productivity outpaces U.S. in 2011




OTTAWA ` Productivity growth in Canada outpaced that of the United States last year for the first time since 2006, Statistics Canada reported Friday.




Business output grew while hours worked declined in the fourth quarter of 2011, creating productivity growth of 0.7%, following growth of 0.6% in the third quarter.




`The fourth-quarter increase in productivity occurred in a context where business output continued to grow, albeit at a slower pace than in the previous quarter, while hours worked declined for the first time in five quarters,` the agency said.





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[Ally]

Refinancing the new mortgage battleground




Consumers refinancing their mortgages are becoming a serious battleground between banks and mortgage brokers, says the head of one of Canada`s largest real estate companies.




`The real prize that the mortgage brokerage companies are going after is the refinance market,` says Phil Soper, chief executive of Royal LePage Real Estate Services Inc. `There is a huge profit in refinancing and most Canadians do refinance with whoever they had.`









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[Ally]

MLS new Home Price Index




Developed using data from the Multiple Listing Service[sup]Â, the MLS[sup]Â Home Price Index (or MLS[sup]Â[/sup] HPI for short) allows you to see trends in home prices for a specific type of house in a given neighbourhood.




Combined with the knowledge, experience and skills of your REALTORÂ[/sup], the MLSÂ[/sup] HPI allows you to better understand these trends ` and how they can affect the market value of your home.





Read the full article here.

 

[Ally]

Spending on homes has been a prudent investment





One of the dirty little secrets of financial analysis is that you can "prove" that the very same asset is either expensive or cheap, simply by choosing different yardsticks to measure it.




In the debate over Canada's supposed housing bubble, you can make housing look expensive by looking at how home prices compare with annual incomes or with rents. In both cases, these ratios are now above their long-term aver-ages, suggesting housing is expensive.






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[Ally]

Harper promises new 'measures' as job creation stalls




OTTAWA ` Unemployed Canadians continued to struggle finding work last month as the slow-moving economy again laid an egg in February, unexpectedly shedding 2,800 jobs.




The national unemployment rate dropped to 7.4 per cent, but that was because close to a net 38,000 frustrated job seekers simply gave up the search.




The news was particularly grim for young Canadians. Employment among the 15-24 age cohort fell another 26,800 in February and now is down almost 300,000 jobs since the beginning of the recession in 2008.





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[Ally]

New home prices rise slightly




OTTAWA ` The price of new homes in Canada edged up in January, thanks to price gains in Calgary and Vancouver, Statistics Canada reported Thursday.




New home prices rose 0.1% in January, a repetition of December`s increase, and the year-over-year price hikes were also largely in step, with a 2.4% gain in January over January 2011, nearly matching the 2.5% advance posted between December 2010 and December 2011.





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[Ally]

The Bank of Canada's household debt conundrum: Rate hikes or regulation?




Economists are pretty much in agreement that the Bank of Canada, while still maintaining its interest rates at a stimulus-level 1.00%, also adopted a more hawkish tone in its latest comments.




Mark Carney, governor of the central bank, highlighted an improving global economic outlook while also noting that household debt burdens have become the biggest domestic risk. Enough grist for the mill, certainly, for economists to begin speculating about Mr. Carney accelerating his plan to eventually raise rates again. At some point in the future. Possibly. (You know how it is).





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[Ally]

Looking beyond the BRICs: Jim O'Neill's 'next 11'




The rise of the BRICs is not over. That is one thing that Jim O`Neill, chairman of Goldman Sachs Asset Management, wants to get straight. A decade after conjuring them into collective existence, O`Neill is as optimistic as ever about the now-famous four emerging markets ` Brazil, Russia, India, and China.




But they are not the only game on the planet anymore. In his book, The Growth Map, O`Neill attempts to look beyond the original concept and expand on it. Hence his `Next 11`: Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey, and Vietnam. However, O`Neill is quick to point out that not all of these countries are equally primed for investment.





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[Ally]

Home sales now expected to outpace 2011





The number of Canadian homes sold this year will outpace 2011 while prices will hold steady in most parts of the country, the country's largest real estate association said Monday in a rosy revision to its 2012 outlook.







The Canadian Real Estate Association said the number of home sales will grow by 0.3 per cent this year to 458,800 from 457,305 units in 2011, largely due to the continuation of low borrowing rates.







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[Ally]

Home construction expected to slow as demand drops off, Conference Board says




TORONTO - New home construction is expected to drop slightly in the near-term as the number of unsold units as well as waning consumer confidence overshadow low mortgage rates, the Conference Board of Canada said Tuesday.




The Ottawa-based economic forecaster predicts housing starts will moderate over the next two years with no uptick in housing starts until late next year or early 2014.




The expected slowdown would be good news to those economists watching the recent frenzied pace of activity for signs of overbuilding ` especially in the condo markets of Toronto and Vancouver.





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[Ally]

Canadian hiring outlook warmest in the west




Canadian employers see a steady hiring climate in the coming quarter, led by upbeat expectations in the mining and energy sectors.




A fifth, or 21 per cent of employers surveyed, plan to boost payrolls in the April-to-June quarter while 5 per cent anticipate cutbacks. About 72 per cent of employers expect to keep current staffing levels and 2 per cent are unsure, shows Manpower`s employment outlook survey, to be released Tuesday.





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