Economic Indicators
10/31/2007 9:34:00 AM - Much of the strength of the Canadian economy currently reflects world commodity prices. There are two categories of commodity prices — those determined by essentially domestic factors and those determined internationally. Domestic means North American and, more specifically, U.S. and Canada. Internationally-set commodity prices are increasingly being driven by demand in China. The Chinese government is likely to keep pumping up its economy until the Summer Olympics in Beijing next year.
10/31/2007 9:17:00 AM - Since the recent release of the Bank of Canada's Inflation and Monetary Policy Outlook report, energy prices have escalated sharply and this increase will likely put additional upward pressure on Canada's headline inflation rate. Given that labour markets are very tight in most regions, there is an increased probability that the escalation in prices will lead to a further increase in wage rates.
10/23/2007 6:00:00 AM - The overall inflation rate is expected to ease over the next year in spite of recent jumps in prices for energy, food, labor, and imports. The Producer Price Index will rise 2.5%, about half of the 5% rise in the last two years. The Consumer Price Index will also rise about 2.5%, down from over 3% in the last two years.
10/22/2007 6:14:00 AM - The construction equipment market remains stalled, with shipments off 30% from the 2005 to 2006 peak and pricing struggling to keep up with higher steel, labor and import costs. Export sales are up 36% in the last year, boosted by a weaker U.S. dollar and booming construction markets overseas. No significant change in market conditions is expected into the winter. Then, a gradual rise in shipments and slightly stronger pricing is expected for the rest of 2008 and 2009.
10/19/2007 11:59:00 AM - For those concerned about the state of the U.S. economy, the September retail sales figures offered some reassurance. In the latest month, total U.S. retail sales increased +5.0% on a year-over-year basis. This is exactly in line with the desirable long-term growth rate. However, beyond consumer confidence, there are three other effects that will impact on retail sales in the months ahead. These relate to the lower-valued U.S. dollar, housing markets and wealth assessment.
10/17/2007 6:04:00 AM - The construction economic environment improved markedly over the past month. The financial turmoil from the collapse of the subprime mortgage market eased quickly with credit rates and availability returning to near pre-crisis levels. Also, the fear of a period of falling employment disappeared with the correction of the erroneous report of 4,000 jobs lost in August. Finally, business confidence rebounded after plunging during the financial turmoil, an indicator that augurs well for future activity levels.
10/12/2007 12:12:00 PM - Economic growth in New England was almost twice as fast as the national average in the three months ended in August 2007. This small region grew two-thirds faster than the South. Midwestern economic growth slipped to less than one-third of the national average due to declines in motor vehicle manufacturing. Weak housing markets held growth in the South barely above the national average after many years of above-average growth and dropped growth in the Pacific to well below the national average.
10/4/2007 8:58:00 AM - While the attainment of Canadian dollar parity with the U.S. dollar is a big and interesting story, it is not the only tale in world currency markets. In fact, the increase in Canada’s dollar versus the U.S. dollar (nearly +60% over the past five years) has meant significant changes versus some of the world's other major currencies as well.
10/2/2007 5:55:00 AM - The most likely sequence of events for the U.S. economy over the next one to two years is as follows: 1) the current interest rate cuts, with possibly more to come later this fall; 2) a further drop in the value of the U.S. dollar; 3) a climb in inflation; 4) a return to higher interest rates longer term. The final result, higher interest rates longer term, may well have more than one cause.
9/24/2007 8:51:00 AM - The 0.5% cut in interest rates by the Federal Reserve Board on September 18th produced an instant drop in the price of long-term Treasury Bills and a corresponding instant rise in long-term interest rates. This rise reflects the changed expectations for inflation in financial markets. Inflation is now expected to be several tenths of a percent higher over the coming years than it was before September 18th, paralleling the increase in the yield from 4.5% to 4.7% for the 10-Year Treasury Bill.