· TSX + 16.02The Canadian Press Higher energy and financial stocks extended the winning
streak on the Toronto stock market to four sessions, a strong runup that’s sent the TSX to
its best level in 5 months.
· Dow + 1.22
· Dollar moved down 1.07c to $ $98.79US reversing a 1.7-c gain Wed - after Stats Can
reported year-over-year consumer price inflation slowed to 1.4% in Mar, its lowest level
since Jan 07. It was the 4th straight month in which inflation abated, leaving ample room
for the Bank of Canada to cut interest rates next week. Lower rates tend to stimulate the
economy but make the currency less attractive
· Oil -$.07 remained around Wed record close of $114.86US per barrel
· Gold -$5.30US to $939.50US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Housing boom 'officially over'
LORI MCLEOD Globe and Mail Update
April 17, 2008
It's time for Canadians to bid the housing boom farewell as data for the first quarter of the year, released Thursday by the Canadian Real Estate Association (CREA), showed a 13 per cent tumble in existing home sales year-to-date.
“Canada's six-year housing market boom is officially over. Aside from a few choice Prairie locales, sales are melting faster than this year's snow pack,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.
Double-digit declines in sales activity in “more markets than you can shake a stick at,” suggest the weakness has spread across Canada rather than being centred in any specific market, Mr. Porter said in an interview.
Home sales waned and new listings surged in the first quarter of 2008 as activity in Toronto cooled and a glut of sellers hit the markets in Western Canada, according to CREA's data.
In the first three months of the year 75,467 housing units changed hands in Canada, a 13 per cent drop from the first quarter of 2007, according to CREA. Sales tumbled by 18.7 per cent in March compared with the same month a year ago.
While the drop likely had something to do with this year's nasty winter weather, the cross-country weakness in sales suggests a deeper trend, Mr. Porter said.
While he's willing to declare an end to the housing boom now that a full quarter's worth of data are available, it will be important to watch the traditionally strong spring months to get a better handle on where the market will end up in 2008, he added.
By contrast with the weakening sales figures, new listings soared to their highest recorded level at 154,217 units in the first quarter, led by Calgary, Edmonton and Vancouver. Seasonally adjusted new listings climbed by 4.8 per cent quarter-over-quarter, despite a drop in newly listed properties in Toronto, the country's largest resale market.
In March, sales fell by 22 per cent year-over-year in Toronto, which accounts for one-quarter of existing home sales across the country. Last month, CREA attributed 53 per cent of the 5.6 per cent month-over-month drop in resale home sales to the softer Toronto market.
“Sales activity in a number of major markets trended lower while listings swelled in the first quarter. Many major markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability,” Gregory Klump, chief economist at CREA, said in a statement.
Year over year basis, sales volumes fell in 16 of the 18 major markets for which data were available, led by a 35.9 per cent drop in Calgary and a 29.8 per cent decline in Edmonton.
In its statement, CREA also said seasonally adjusted sales activity hit new quarterly records in Regina and Saskatoon, but data for those cities were listed as not available in the tables included with the release.
The only two markets where sale activity rose, year over year, in the first quarter according to available data were Newfoundland and Labrador, and Thunder Bay, which showed increases of 14.3 per cent and 9.5 per cent, respectively.
The average price of a resale home rose by 5.5 per cent year-over-year in the first quarter to $327,620, the smallest such increase since the fourth quarter of 2001 and just half of last year's 11 per cent rise.
In March, the average existing-home price rose by 4 per cent year-over-year to $329,383, with new records set in markets including Saskatoon, Winnipeg, Hamilton-Burlington, Ottawa and Halifax.
None of the markets in the study showed a decline in home prices, and like many other economists, Mr. Porter expects moderate price gains this year.
“The residential average price continues to increase, unlike conditions in many U.S. markets,” said CREA president Cal Lindberg in a statement.
“The size of the increase is returning to what we consider more normal levels for most markets in Canada, reflecting a sound but cooling market for existing homes.”
In its release, CREA said the Canada's resale housing market was more balanced in the first quarter of 2008 than it has been compared with any other quarter over the past nine years.
This statement from CREA is enough to suggest that things are “calming down quickly,” Mr. Porter said.
Friday, April 18, 2008
Thursday, April 17, 2008
Financial Update
TSX hits highest level in 4 months-Markets take flight on signs of hope
Low Inflation Sets Up Cut In Bank Rate
· TSX + 248.53 to close over 14,099-the first time in 4 months
· Dow + 256.80
· Dollar continued upwards +.1.73c to almost par $ $99.86US
· Oil hit a new record for the 3rd day in a row and is already at $115US per barrel this
morning
· Gold +16.40US to $945.10US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Financial Post Gas, mortgages, food provide biggest push to 2.2% annual rate
The chance of a half-percentage-point cut in the bank rate next month has increased, and most of the market is now expecting a steeper cut after the weakest annual inflation reading since August last year.
Inflation fell 0.2% last month, pulling the 12-month rise in consumer prices down to 2.2% from 2.4% in December, Statistics Canada figures showed yesterday.
Dawn Desjardins, senior economist at RBC Financial Group, said overall inflation fell because of lower car prices and the 1% goods and services tax cut on Jan. 1 -- estimated to have shaved 0.6% off the pace of inflation.
But lingering inflationary pressures remained, with gasoline and mortgage rate costs continuing to rise, Ms. Desjardins said.
Gas prices jumped almost 21% from a year earlier and were up almost 15% from December, while mortgage costs increased by 7.6% from January, 2007.
Food prices also increased notably in the month, up 0.6% for an annual increase of 1.4%.
The core consumer price index, which excludes volatile items such as gasoline and food, inched up 0.1% in the month for an annual pace of 1.4%. The core result was the lowest reading since July, 2005, and sat well below the central bank's inflation target of 2%.
The decline in inflation supports the case for a more aggressive easing in monetary policy, with the market also looking for more rate cuts as insurance against credit market risk and a U.S. economic slowdown.
The new Bank of Canada governor Mark Carney said on Monday more rate cuts were on the way following the quarter-point cut in January.
"We expect that the overnight rate will be cut 50 basis points at the March 4 policy meeting with an additional 50 basis points in rate cuts to come at subsequent meetings to bring the rate to 3% by mid-year," Ms. Desjardins said.
Overnight indexed swaps show investors have now priced in a 60% expectation that the Bank of Canada will cut the overnight cash rate by 50 basis points to 3.50% at its next meeting on March 4. The swaps indicate a 25% expectation of a 25-basis-point cut, Eric Lascelles, chief economist and rates strategist at TDSecurities said.
Mr. Lascelles said the GST cuts masked the strong upward pressure on inflation from food, gas and mortgage cost prices, but he still expects a 50-point cut in March.
"We know the Bank of Canada likes to move relatively slowly, but I think the case is strong enough right now to make a bigger move," he said. "But it's pretty clear, one way or the other, the Bank of Canada is going to cut and the inflation story simply gives them room to do so."
He said the Bank of Canada looks through tax adjustments when deciding policy.
With tax cuts removed from the calculations, core inflation rose by 0.2% on the month and headline inflation was up 0.6%, Mr. Lascellessaid.
Nevertheless, Mr. Lascelles does not expect inflation to pose a problem in the near-term, with the strong Canadian dollar likely to continue to drive consumer prices lower.
Douglas Porter, deputy chief economist at BMO Capital Markets, said the Canadian dollar was the dominant factor behind the lower inflation figures, with the loonie appreciating about 40% since July, when core inflation peaked at 2.5%.
Mr. Porter expects a 25-point cut in March, and an overnight target rate of 3% by the end of the year.
The prospect of lower interest rates caused a sell-off in the Canadian dollar, which dropped almost a cent to close at US98.32¢ yesterday.
amcmullen@nationalpost.com
Low Inflation Sets Up Cut In Bank Rate
· TSX + 248.53 to close over 14,099-the first time in 4 months
· Dow + 256.80
· Dollar continued upwards +.1.73c to almost par $ $99.86US
· Oil hit a new record for the 3rd day in a row and is already at $115US per barrel this
morning
· Gold +16.40US to $945.10US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Financial Post Gas, mortgages, food provide biggest push to 2.2% annual rate
The chance of a half-percentage-point cut in the bank rate next month has increased, and most of the market is now expecting a steeper cut after the weakest annual inflation reading since August last year.
Inflation fell 0.2% last month, pulling the 12-month rise in consumer prices down to 2.2% from 2.4% in December, Statistics Canada figures showed yesterday.
Dawn Desjardins, senior economist at RBC Financial Group, said overall inflation fell because of lower car prices and the 1% goods and services tax cut on Jan. 1 -- estimated to have shaved 0.6% off the pace of inflation.
But lingering inflationary pressures remained, with gasoline and mortgage rate costs continuing to rise, Ms. Desjardins said.
Gas prices jumped almost 21% from a year earlier and were up almost 15% from December, while mortgage costs increased by 7.6% from January, 2007.
Food prices also increased notably in the month, up 0.6% for an annual increase of 1.4%.
The core consumer price index, which excludes volatile items such as gasoline and food, inched up 0.1% in the month for an annual pace of 1.4%. The core result was the lowest reading since July, 2005, and sat well below the central bank's inflation target of 2%.
The decline in inflation supports the case for a more aggressive easing in monetary policy, with the market also looking for more rate cuts as insurance against credit market risk and a U.S. economic slowdown.
The new Bank of Canada governor Mark Carney said on Monday more rate cuts were on the way following the quarter-point cut in January.
"We expect that the overnight rate will be cut 50 basis points at the March 4 policy meeting with an additional 50 basis points in rate cuts to come at subsequent meetings to bring the rate to 3% by mid-year," Ms. Desjardins said.
Overnight indexed swaps show investors have now priced in a 60% expectation that the Bank of Canada will cut the overnight cash rate by 50 basis points to 3.50% at its next meeting on March 4. The swaps indicate a 25% expectation of a 25-basis-point cut, Eric Lascelles, chief economist and rates strategist at TDSecurities said.
Mr. Lascelles said the GST cuts masked the strong upward pressure on inflation from food, gas and mortgage cost prices, but he still expects a 50-point cut in March.
"We know the Bank of Canada likes to move relatively slowly, but I think the case is strong enough right now to make a bigger move," he said. "But it's pretty clear, one way or the other, the Bank of Canada is going to cut and the inflation story simply gives them room to do so."
He said the Bank of Canada looks through tax adjustments when deciding policy.
With tax cuts removed from the calculations, core inflation rose by 0.2% on the month and headline inflation was up 0.6%, Mr. Lascellessaid.
Nevertheless, Mr. Lascelles does not expect inflation to pose a problem in the near-term, with the strong Canadian dollar likely to continue to drive consumer prices lower.
Douglas Porter, deputy chief economist at BMO Capital Markets, said the Canadian dollar was the dominant factor behind the lower inflation figures, with the loonie appreciating about 40% since July, when core inflation peaked at 2.5%.
Mr. Porter expects a 25-point cut in March, and an overnight target rate of 3% by the end of the year.
The prospect of lower interest rates caused a sell-off in the Canadian dollar, which dropped almost a cent to close at US98.32¢ yesterday.
amcmullen@nationalpost.com
Wednesday, April 16, 2008
Financial Update
RECORD OIL PRICES FOR 2ND DAY
· TSX + 112.35-(Reuters) - A record high for oil prices drove the Toronto Stock Exchange's main index higher
· Dow + 60.41 New York markets were also boosted by oil prices and some positive earnings reports.
· Dollar stayed strong +.05c to $ $98.13US
· Oil +2.03 to $113.79 US per barrel hitting a record price for the 2nd day in a row
· Gold +3.30US to $932US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
Canada losing high-quality, high-productivity manufacturing jobs: report
By Julian Beltrame, The Canadian Press
OTTAWA - Canada is losing tens of thousands of its best and most productive workers in the manufacturing slump caused by stiff foreign competition, the high dollar and the U.S. recession, says a new bank report.
The Toronto-Dominion Bank estimates Canada lost 130,000 factory jobs in 2007 and will likely lose more this year as conditions worsen for manufacturers, particularly in Ontario and Quebec.
"In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries," writes Beata Caranci, the bank's director of forecasting.
Prime Minister Stephen Harper and Finance Minister Jim Flaherty have often noted that Canada's strong job market has fortunately been able to replace those lost manufacturing jobs by strength in other areas of the economy.
But TD's nine-page report disputes the notion that these jobs are of the lower-end variety that would be lost to cheap-labour economies like China and India in any case, or that laid-off workers find comparable jobs elsewhere.
While many have found new jobs in the growing services sector, TD's report says on average the displaced workers wind up making about 25 per cent, or about $10,000 a year, less than what they were earning before.
The report found that 55 per cent of the 212,000 jobs lost in the sector in the past five years have been unionized, which tend to be higher paying and more productive.
"It's been an unfortunate set of circumstances. The auto sector for instance is facing a lot of global competitive pressure and slowing U.S. demand and that's been made worse by the fact we have a high Canadian dollar," said Caranci in an interview.
"Those conditions are worsening, so it's going to get worse as the year goes on," she added.
Canadian Auto Workers economist Jim Stanford said the report confirms what the union and others have been saying for years.
Stanford added that the findings should send government alarms ringing because the manufacturing slump will eventually be felt in other sectors of the economy.
"We've lost 400,000 jobs since the peak in 2002, and we'll see another 400,000 losses in the next few years if the U.S. has a recession and the dollar stays high," he said, noting that his estimate of job losses is higher than the TD Bank's.
"The reason we've had more jobs created than lost is consumer spending and construction has continued growing while the export side has been contracting, and that dichotomy can't last forever," Stanford said.
"Sooner or later as we export less, our domestic economy will slow down."
The bank report titled "Is Canada's Job Machine Unstoppable?" presents a generally positive view of Canada's labour market.
It says the economy created a whopping 379,700 net jobs in 2007, pushing the unemployment rate to a 33-year low, and the employment rate to a new record high at 63.5 per cent of the adult population.
And though the situation is reversing this year in the face of the economic slowdown, Canada is unlikely to experience the job losses occurring in the United States, it said.
Instead, Canada is expected to add between 3,000 and 5,000 new jobs a month this year, a far cry from last year's 32,000 monthly average, but still a measure of growth.
"It's not going to be 2007 again, but are we expecting job losses? No," said Caranci.
But the report noted some troubling trends.
The tight labour market last year triggered the fastest average wage growth in a decade at 3.5 per cent, but that bounty went disproportionately to employees earning above $100,000 and to those in the hot economies in western Canada.
As well, employment growth has outstripped output growth, meaning that more Canadians are working to produce proportionately less.
Canadian labour productivity actually fell a steep three per cent in the fourth quarter, limiting growth for the year to 0.5 per cent, well below the quarter-century trend of 1.4 per cent annual growth.
Caranci said the numbers may overestimate the problem. She explains that several factors could have kept productivity down, including a growth in self-employed workers whose productivity is hard to gauge, strong labour growth in the relatively less productive younger and older age groups, and the fact that many workers have been hired in oil sands mega-projects that won't start producing oil for years.
· TSX + 112.35-(Reuters) - A record high for oil prices drove the Toronto Stock Exchange's main index higher
· Dow + 60.41 New York markets were also boosted by oil prices and some positive earnings reports.
· Dollar stayed strong +.05c to $ $98.13US
· Oil +2.03 to $113.79 US per barrel hitting a record price for the 2nd day in a row
· Gold +3.30US to $932US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
Canada losing high-quality, high-productivity manufacturing jobs: report
By Julian Beltrame, The Canadian Press
OTTAWA - Canada is losing tens of thousands of its best and most productive workers in the manufacturing slump caused by stiff foreign competition, the high dollar and the U.S. recession, says a new bank report.
The Toronto-Dominion Bank estimates Canada lost 130,000 factory jobs in 2007 and will likely lose more this year as conditions worsen for manufacturers, particularly in Ontario and Quebec.
"In short, we are losing many of the high-quality, high-productivity jobs in manufacturing, not just the jobs in low-productivity industries," writes Beata Caranci, the bank's director of forecasting.
Prime Minister Stephen Harper and Finance Minister Jim Flaherty have often noted that Canada's strong job market has fortunately been able to replace those lost manufacturing jobs by strength in other areas of the economy.
But TD's nine-page report disputes the notion that these jobs are of the lower-end variety that would be lost to cheap-labour economies like China and India in any case, or that laid-off workers find comparable jobs elsewhere.
While many have found new jobs in the growing services sector, TD's report says on average the displaced workers wind up making about 25 per cent, or about $10,000 a year, less than what they were earning before.
The report found that 55 per cent of the 212,000 jobs lost in the sector in the past five years have been unionized, which tend to be higher paying and more productive.
"It's been an unfortunate set of circumstances. The auto sector for instance is facing a lot of global competitive pressure and slowing U.S. demand and that's been made worse by the fact we have a high Canadian dollar," said Caranci in an interview.
"Those conditions are worsening, so it's going to get worse as the year goes on," she added.
Canadian Auto Workers economist Jim Stanford said the report confirms what the union and others have been saying for years.
Stanford added that the findings should send government alarms ringing because the manufacturing slump will eventually be felt in other sectors of the economy.
"We've lost 400,000 jobs since the peak in 2002, and we'll see another 400,000 losses in the next few years if the U.S. has a recession and the dollar stays high," he said, noting that his estimate of job losses is higher than the TD Bank's.
"The reason we've had more jobs created than lost is consumer spending and construction has continued growing while the export side has been contracting, and that dichotomy can't last forever," Stanford said.
"Sooner or later as we export less, our domestic economy will slow down."
The bank report titled "Is Canada's Job Machine Unstoppable?" presents a generally positive view of Canada's labour market.
It says the economy created a whopping 379,700 net jobs in 2007, pushing the unemployment rate to a 33-year low, and the employment rate to a new record high at 63.5 per cent of the adult population.
And though the situation is reversing this year in the face of the economic slowdown, Canada is unlikely to experience the job losses occurring in the United States, it said.
Instead, Canada is expected to add between 3,000 and 5,000 new jobs a month this year, a far cry from last year's 32,000 monthly average, but still a measure of growth.
"It's not going to be 2007 again, but are we expecting job losses? No," said Caranci.
But the report noted some troubling trends.
The tight labour market last year triggered the fastest average wage growth in a decade at 3.5 per cent, but that bounty went disproportionately to employees earning above $100,000 and to those in the hot economies in western Canada.
As well, employment growth has outstripped output growth, meaning that more Canadians are working to produce proportionately less.
Canadian labour productivity actually fell a steep three per cent in the fourth quarter, limiting growth for the year to 0.5 per cent, well below the quarter-century trend of 1.4 per cent annual growth.
Caranci said the numbers may overestimate the problem. She explains that several factors could have kept productivity down, including a growth in self-employed workers whose productivity is hard to gauge, strong labour growth in the relatively less productive younger and older age groups, and the fact that many workers have been hired in oil sands mega-projects that won't start producing oil for years.
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