Mann at Work

Dec 10 2007 12:28PM | Permalink | Email this | Comments (2) |

In the wake of the subprime mortgage crisis, many are calling the U.S. economy a house of cards on the verge of toppling. In a conversation with CanaData economist Alex Carrick, however, I was reminded that every economy risks collapse, but in general, because everyone has a vested interest in keeping the cards upright, a crash is unlikely.

Worry over the subprime crisis and the possibility of recession prompted the White House to announce a plan last week to help struggling subprime mortgage borrowers keep their homes in the wake of escalating mortgage rates.

While the plan calls for a five-year interest rate freeze, there are two catches. The plan is voluntary for mortgage lenders and only those homeowners not currently in arrears are eligible to participate. Borrowers who were coaxed into borrowing against the equity in their homes by “teaser” rate...Read More

Dec 4 2007 11:29AM | Permalink | Email this | Comments (0) |

The Conference Board’s Consumer Confidence Index was release last week and the news is pretty much what market-watchers expected. Worried about their jobs and incomes, consumers reported the lowest levels of confidence in two years.

A slight decline in the Present Situation Index showed consumers have mixed feelings on the current conditions, while the larger drop in the Expectations Index revealed that consumers hold diminished expectations for the next six months.

Meanwhile, the Conference Board of Canada released its Consumer Confidence Index for November and the opinions of consumers north of the border vary greatly from their southern counterparts.

The Present Situation and Expectation Indices both rose, along with the amount of money each household expects to spend this Christmas season. Good news for retailers, who have been aggressively promo...Read More

Nov 28 2007 10:27AM | Permalink | Email this | Comments (0) |

Canadian consumers continue to be optimistic on the whole, despite a slight dip in retail sales in September (after a healthy rise in August). This optimism should bode well for Canadian retailers during these last weeks before the holidays; however, Canadian consumers are also frustrated by the slow response by retailers to the stronger Canadian dollar.

Many Canadian shoppers are delaying their holiday shopping, in hope that the retailers still have more price reductions to come. If the retailers fail to meet consumer price expectations, the season should still be a healthy one, thanks to a booming Canadian economy, but it may not be the banner year it could have been.

(For more details about this week’s retail sales and consumer price index announcements please see the summaries below.)

Of course, retail sales and consumer confidence are closely t...Read More

Nov 21 2007 7:02AM | Permalink | Email this | Comments (0) |

Recent statistics show Canadian and U.S. consumers continue to spend, so retailers such as Wal-Mart anticipate a happy, healthy holiday season.

However, the Conference Board’s October 30 report shows that U.S. consumer confidence has waned slightly. This means that the retailers’ optimism may a little premature, since there’s no guarantee that the subprime crisis doesn’t have some pain still to inflict on U.S. retail sales.

Chief economist Alex Carrick discusses three other factors besides consumer confidence that can have an effect on retail sales: the “wealth effect,” the “housing market effect” and the “Lower-valued U.S. dollar effect.”

U.S. ret...Read More

Nov 15 2007 12:12PM | Permalink | Email this | Comments (0) |

Both Canada and the U.S. released their international trade numbers on Friday, November 9. The headline news in Canada was the drop in the trade balance to its lowest level since December 1998. In the U.S., rising exports and lower imports resulted in a decrease in the goods and services deficit, when compared to the levels recorded in September 2006.

To understand the implications of international trade on the construction industry, check out this article from our archives by CanaData chief economist Alex Carrick — U.S. trade deficit stuck at $60 million per month — for more insights.

Canada’s trade balance with the world drops in September
With imports rising and exports declining, ...Read More

Nov 8 2007 4:54AM | Permalink | Email this | Comments (0) |

As expected, news of the 3.9% increase in U.S. GDP in third-quarter 2007 did nothing to forestall the Fed’s move to cut the target federal funds rate by another quarter point. From this week’s action, it is apparent that Fed’s primary focus is on preventing the problems in the housing market from spilling over into the larger U.S. economy.

In Canada, the story is quite different. Consulting economist John Clinkard writes that Canada’s headline inflation rate jumped from 1.7% to 2.5% in September 2007. If core inflation continues to creep higher, Clinkard predicts that the Bank of Canada “will be forced to adopt a more restrictive policy stance and raise interest rates in ...Read More

Sep 24 2007 6:44AM | Permalink | Email this | Comments (0) |

I attended the CanaData Construction Industry Forecasts Conference on September 20, and I have to say the mood among the economists and delegates was definitely upbeat and positive.

Here’s a summary of some of the highlights of the conference.

Canadian-United States Dollar Parity
About half way through the day, in a feat of fortuitous timing, RCD Canada’s managing director Mark Casaletto announced to those assembled at lunch that the Canadian dollar had just reached parity with the U.S. dollar. With so many representatives of Canada’s leading building products manufacturers in the room, it is probably safe to say that the news was met with guarded enthusiasm by a few and stony silence by many.

The Canadian Economy Takes a Different Path
Although the words “subprime,” “credi...Read More

Sep 12 2007 5:51AM | Permalink | Email this | Comments (0) |

The Canada Mortgage and Housing Corporation (CMHC) announced on September 11 that Canadian housing starts were up again in August, mostly due to a modest recovery in the multiple-unit sector, particularly in the Atlantic region, British Columbia and the Prairies. As for the outlook, the Canadian Mortgage and Housing Corporation says that “the pace of housing starts remains consistent with our view that residential construction will decrease gradually between now and the end of 2008.”

In the U.S., the July housing starts figures from the U.S. Census Bureau were gloomy, to say the least, and the sky is expected to get darker when August’s results are released on September 19. Contrary to the Canadian picture, U.S. starts aren’t dropping gradually, but rather continue to fall precipitously. With July’s results marking a 10-year low, many observ...Read More

Aug 2 2007 5:38AM | Permalink | Email this | Comments (0) |

The Bureau of Economic Analysis (BEA) reported today that economic growth in the United States had a strong second quarter, increasing at an annual rate of 3.4%.

Meanwhile, north of the border, Statistics Canada reported that the Canadian economy grew 0.3% in May from the previous month.

The Canadian figure was a little lower than many watchers expected in May, since retail sales had surged 2.8% in the same month (their biggest monthly gain in nearly 10 years). As a result, most analysts expected Gross Domestic Product (GDP) to grow at a slightly faster pace.

In general though, the economic outlook for Canada is positive and that can be directly attributed to the Canadian consumer, who is still shopping with gusto. The soaring rise in retail sales is proof of this, and has prompted economists to raise their forecasts for Canada’s economic growth for ...Read More

Jul 11 2007 6:41AM | Permalink | Email this | Comments (0) |

Very few rate-watchers were surprised Tuesday when the Bank of Canada raised its target for the overnight rate by one-quarter of one percentage point to 4.5%. The corresponding Bank Rate is now 4.75%. As for the future, the Bank said that “some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.”

Meanwhile, contrary to expectations, Canadian housing starts are still quite strong. While the seasonally adjusted annual rate of housing starts was 225,500 units in June, down from 235,200 units in May, the fact that CMHC estimated May’s starts at 229,700 units, then revised the figure upward to to 23...Read More

Jul 9 2007 2:10PM | Permalink | Email this | Comments (0) |

On Tuesday, watch for the Bank of Canada’s overnight rate announcement on their website. Many experts, including Reed Construction Data consulting economist John Clinkard, won’t be surprised to see a quarter-point rise.

For more about what to expect, check out Clinkard’s article “Canada’s First-Quarter Growth Exceeds Expectations”, then feel free to add your opinion to those of the experts by clicking on the “Comments” link above.

Meanwhile in the U.S., the federal funds rate and construction spending figures remained steady. While the news from the FOMC was good — the ...Read More

Jun 1 2007 1:48PM | Permalink | Email this | Comments (0) |

Both Canada and the U.S. released their first-quarter 2007 real GDP figures today.

U.S. GDP slowed to a 0.6% seasonally adjusted annual rate, its worst quarter in over four years and half the level anticipated in the advanced estimates released last month.

Meanwhile, the annualized rate of real GDP growth in Canada was a strong 3.7%, versus 1.5% in fourth-quarter 2006 and 2.8% for all of 2006. This latest figure seems to confirm widespread opinion that the Bank of Canada will announce an increase in its overnight rate in July.

One note of caution for Canadian construction-industry watchers: the rate of non-residential business investment dropped to +5.3%, down from rates of in excess of 10% recorded over the past two years.

More details on today’s announcements can be found below. As always, please feel free to add your comments on the day...Read More

May 30 2007 1:22PM | Permalink | Email this | Comments (0) |

Many Bank of Canada watchers got what they expected today — no change in the bank’s overnight rate, but a warning that the bank is prepared to raise the rate at its next scheduled announcement in July. Meanwhile, the U.S. Consumer Confidence outlook for the next six months can best be described as “cautious.” The board’s director, Lynn Franco, says that the confidence levels “suggest growth…at a slow pace.”

You’ll find more details on today’s announcements below. As always, please feel free to add your comments on the day’s news by clicking on the “Comments” link above.

Elsewhere on BuildingTeamForecast, Jim Haughey says that th...Read More

May 17 2007 8:10AM | Permalink | Email this | Comments (0) |

While the low April numbers for U.S. housing starts and permits were no surprise, the fact that U.S. industrial production and capacity utilization increased in the month is good news. As expected, the U.S. consumer price index for April also rose this week. In Canada, new motor vehicles sales edged up slightly.

Elsewhere on BuildingTeamForecast, Jim Haughey writes that the market for non-residential construction is as good right now as it is ever going to get. In fact, all economic factors for the non-residential building market are currently positive, except those for manufacturing plants.

U.S. housing permits plunge downward in April; starts rise slightly
The U.S. Census Bureau and U.S. Department of Housing ...Read More

May 11 2007 12:16PM | Permalink | Email this | Comments (1) |

It’s been a busy week for construction-related market statistics and economic news. Here’s a quick summary.

• U.S. advance retail sales declined slightly;
• The Canadian unemployment rate remained steady;
• Canadian housing starts dropped;
• The Fed held the benchmark interest rate steady;
• Prices of new homes in Canada rose slightly in March; and
• Canada and the U.S. reported their international trade numbers for March;

Elsewhere on BuildingTeamForecast, Jim Haughey writes that the year-to-date value of construction starts through April 2007, excluding residential contracts, totaled $97.355 billion, 21.7% higher than in 2006.

Advance retail sales figures decline in April
The U...Read More