Christine Dobby Nov 30, 2011 – 7:06 PM ET
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
Thursday, December 1, 2011
Monday, November 28, 2011
Canada’s slowing economy may need rate cuts: OECD
By Greg Quinn
Bloomberg
Canada’s economy is slowing because of weaker foreign demand and may need new stimulus from the central bank and government if things get worse, the Organization for Economic Cooperation and Development said.
Gross domestic product will grow 1.9% next year, the Paris-based OECD predicted Monday, down from its May forecast for a 2.8% expansion. The outlook for this year was pared to 2.2% from 3% in May, and it estimated 2013 growth of 2.5%.
Finance Minister Jim Flaherty said last week he may offer additional stimulus if required, adding the risks to the global recovery from Europe’s debt crisis are increasing. Bank of Canada Governor Mark Carney has kept his key lending rate at 1% since September 2010 and has said the economy won’t fully recover until well into 2013.
“Output is projected to expand at a slow pace as exports are restrained by sluggish external demand,” the OECD report said. “Domestic spending should sustain growth but at a moderate rate, as high debt and waning sentiment curb consumption growth.”
Consumers may be discouraged from spending by debts that are a record 150% of disposable income and by a weak job market marked by government cutbacks and slow private hiring, the OECD said. Unemployment will be little changed next year at 7.3% from this year’s 7.4% according to the report.
“Risks are skewed to the downside,” the OECD said, and if they materialize “the Bank of Canada should ease monetary policy via further interest rate cuts, which in a downside scenario would be consistent with the inflation target.”
The Bank of Canada has predicted inflation will slow to 1% in the second quarter of next year from 2.7% this quarter. The bank acts to keep inflation in the middle of a 1% to 3% band.
Bloomberg
Canada’s economy is slowing because of weaker foreign demand and may need new stimulus from the central bank and government if things get worse, the Organization for Economic Cooperation and Development said.
Gross domestic product will grow 1.9% next year, the Paris-based OECD predicted Monday, down from its May forecast for a 2.8% expansion. The outlook for this year was pared to 2.2% from 3% in May, and it estimated 2013 growth of 2.5%.
Finance Minister Jim Flaherty said last week he may offer additional stimulus if required, adding the risks to the global recovery from Europe’s debt crisis are increasing. Bank of Canada Governor Mark Carney has kept his key lending rate at 1% since September 2010 and has said the economy won’t fully recover until well into 2013.
“Output is projected to expand at a slow pace as exports are restrained by sluggish external demand,” the OECD report said. “Domestic spending should sustain growth but at a moderate rate, as high debt and waning sentiment curb consumption growth.”
Consumers may be discouraged from spending by debts that are a record 150% of disposable income and by a weak job market marked by government cutbacks and slow private hiring, the OECD said. Unemployment will be little changed next year at 7.3% from this year’s 7.4% according to the report.
“Risks are skewed to the downside,” the OECD said, and if they materialize “the Bank of Canada should ease monetary policy via further interest rate cuts, which in a downside scenario would be consistent with the inflation target.”
The Bank of Canada has predicted inflation will slow to 1% in the second quarter of next year from 2.7% this quarter. The bank acts to keep inflation in the middle of a 1% to 3% band.
Thursday, November 10, 2011
Bank of Canada could slash interest rates in a big way next year
John Shmuel Nov 9, 2011 – 4:10 PM ET | Last Updated: Nov 10, 2011 2:06 AM ET
As the nail biter in Europe continues this week, two economists are predicting the Bank of Canada will move to cut rates in a big way next year.
Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession. Her prediction is the cut will be a whopping 0.75% decrease from the current rate of 1%.
“With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year,” she said.
Ms. King forecasts that the cut would come in two phases, with a 0.50% trim being announced during the bank’s January 17 meeting, while the second and final 0.25% cut coming during the March 8 meeting.
Also predicting a lower interest rate next year was David Madani, Canada economist at Capital Economics. He is forecasting a more mild cut of 50 basis points, however, saying he expects it to occur in April or June.
Either way, Mr. Madani said he expects interest rates in Canada will remain low for some time.
“The Bank might communicate that its policy rate will remain at 0.50% for a lengthy period of time, conditional on its projected outlook for consumer price inflation,” he said, in reference to the Bank of Canada’s target of 2% annual inflation.
“Even if we are wrong, the broader message remains that interest rates will remain unusually low for a very long time.”
Most economists, however, are still predicting that the Bank of Canada will raise interest rates rather than lower them in 2012. In a recent Reuters survey of 40 economists last month, the consensus was that an interest rate increase will occur in the third quarter of next year.
If rates are cut, it will mark a sharp turnaround for the Bank of Canada, which only last year raised interest rates. Canada became one of the first advanced economies to raise its benchmark interest rates following the recession when the Bank of Canada implemented a 25 basis point hike in September of last year. The benchmark rate has since remained unchanged at 1%.
As the nail biter in Europe continues this week, two economists are predicting the Bank of Canada will move to cut rates in a big way next year.
Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession. Her prediction is the cut will be a whopping 0.75% decrease from the current rate of 1%.
“With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year,” she said.
Ms. King forecasts that the cut would come in two phases, with a 0.50% trim being announced during the bank’s January 17 meeting, while the second and final 0.25% cut coming during the March 8 meeting.
Also predicting a lower interest rate next year was David Madani, Canada economist at Capital Economics. He is forecasting a more mild cut of 50 basis points, however, saying he expects it to occur in April or June.
Either way, Mr. Madani said he expects interest rates in Canada will remain low for some time.
“The Bank might communicate that its policy rate will remain at 0.50% for a lengthy period of time, conditional on its projected outlook for consumer price inflation,” he said, in reference to the Bank of Canada’s target of 2% annual inflation.
“Even if we are wrong, the broader message remains that interest rates will remain unusually low for a very long time.”
Most economists, however, are still predicting that the Bank of Canada will raise interest rates rather than lower them in 2012. In a recent Reuters survey of 40 economists last month, the consensus was that an interest rate increase will occur in the third quarter of next year.
If rates are cut, it will mark a sharp turnaround for the Bank of Canada, which only last year raised interest rates. Canada became one of the first advanced economies to raise its benchmark interest rates following the recession when the Bank of Canada implemented a 25 basis point hike in September of last year. The benchmark rate has since remained unchanged at 1%.
Friday, November 4, 2011
Royal LePage Launches New Mobile Site
Wednesday, 02 November 2011 09:12
In an effort to make real estate shopping more accessible, flexible and convenient, Royal LePage Real Estate Services has launched a new mobile site for Android, iPhone and BlackBerry mobile devices.
The site will provide both information about listings and neighbourhood data, as well as feedback and comments from agents and residents that know the neighbourhood inside and out-giving this tool some personal context.
This tool has been nicknamed the “Neighbourhood Navigator”, which Royal LePage describes as the combination of” seller and agent comments ... with neighbourhood "walkability scores" and consumer rankings of nearby businesses to provide valuable insights for users.”
Furthermore, users can take advantage of GPS to position themselves in their targeted neighbourhood, helping them find useful items like open houses and neighbourhood amenities like schools, banks, grocery stores, restaurants and cafes.
“Buying a home is often the largest financial decision Canadians will make in their lifetime," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "To help prospective buyers make informed decisions, our new mobile site allows users to gain extra insights from the seller about their home and comments from the agent about the neighbourhood."
"While it will take some time to get the seller and agent comments populated, we have many advanced features to serve as the backbone for the mobile site," added Soper.
"The future is mobile and we're pleased to offer homebuyers and sellers the ability to access valuable real estate information right from their mobile devices," said Soper.
In an effort to make real estate shopping more accessible, flexible and convenient, Royal LePage Real Estate Services has launched a new mobile site for Android, iPhone and BlackBerry mobile devices.
The site will provide both information about listings and neighbourhood data, as well as feedback and comments from agents and residents that know the neighbourhood inside and out-giving this tool some personal context.
This tool has been nicknamed the “Neighbourhood Navigator”, which Royal LePage describes as the combination of” seller and agent comments ... with neighbourhood "walkability scores" and consumer rankings of nearby businesses to provide valuable insights for users.”
Furthermore, users can take advantage of GPS to position themselves in their targeted neighbourhood, helping them find useful items like open houses and neighbourhood amenities like schools, banks, grocery stores, restaurants and cafes.
“Buying a home is often the largest financial decision Canadians will make in their lifetime," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "To help prospective buyers make informed decisions, our new mobile site allows users to gain extra insights from the seller about their home and comments from the agent about the neighbourhood."
"While it will take some time to get the seller and agent comments populated, we have many advanced features to serve as the backbone for the mobile site," added Soper.
"The future is mobile and we're pleased to offer homebuyers and sellers the ability to access valuable real estate information right from their mobile devices," said Soper.
Wednesday, November 2, 2011
Variable Rate Holders May Face Trouble .
CANADIANS - don't worry too much. In the USA most clients were approved at the LOWER floating rate to the maximum of their buying ability. So naturally a rate change would hurt them - if you have a VIRM in Canada you were probably approved at around 4-5% and Prime is still on 3%. Once in a while it is good not to have "The American Way".
Neil "Mortgage Man" McJannet
Monday, 31 October 2011 10:18 Newsroom . . A new report from Bank of America Merril Lynch warns about the dangers facing some Canadian mortgage holders
The report suggests that there are a vast number of variable rate mortgage holders who will be vulnerable in the event of an interest rate hike. In fact, they suggest that two of every three new mortgages is a variable rate mortgage.
In the past, according to Bank of America Merril Lynch, typically around 25%-30% of mortgages were variable rate, suggesting that the tremendous shift in appetite could spell financial disaster for a big chunk of home owners in the event of a rate hike.
The good news, at least for the moment, is that many economists have put the possibility of a rate hike off the table until around 2013- but the fundamental vulnerability remains.
While it doesn’t mean that a rate hike will spell disaster, the possibility does remain. However, as many Canadian mortgage brokers will tell you, variable rate or not- they typically qualify a client at a higher fixed rate, so as to remove them from the danger zone in the event of a rate hike, simply as a part of due diligence. While the possibility of a US- style collapse exists in theory, the prevailingly stringent attitudes towards lending in Canada suggest that there are stop gaps in place to protect against such vulnerability.
Economists at Bank of America Merril Lynch suggest that, because rates have been so low for such an extended period of time, that mortgage holders are constructing false expectations about the true cost of a mortgage, and as such are taking more risk than they perhaps should be.
They indicate that Canadian mortgage holders must be mindful of the fact that rates will likely rise. According to their research, a rise of 2% will be enough to push those on the fringe into trouble
Neil "Mortgage Man" McJannet
Monday, 31 October 2011 10:18 Newsroom . . A new report from Bank of America Merril Lynch warns about the dangers facing some Canadian mortgage holders
The report suggests that there are a vast number of variable rate mortgage holders who will be vulnerable in the event of an interest rate hike. In fact, they suggest that two of every three new mortgages is a variable rate mortgage.
In the past, according to Bank of America Merril Lynch, typically around 25%-30% of mortgages were variable rate, suggesting that the tremendous shift in appetite could spell financial disaster for a big chunk of home owners in the event of a rate hike.
The good news, at least for the moment, is that many economists have put the possibility of a rate hike off the table until around 2013- but the fundamental vulnerability remains.
While it doesn’t mean that a rate hike will spell disaster, the possibility does remain. However, as many Canadian mortgage brokers will tell you, variable rate or not- they typically qualify a client at a higher fixed rate, so as to remove them from the danger zone in the event of a rate hike, simply as a part of due diligence. While the possibility of a US- style collapse exists in theory, the prevailingly stringent attitudes towards lending in Canada suggest that there are stop gaps in place to protect against such vulnerability.
Economists at Bank of America Merril Lynch suggest that, because rates have been so low for such an extended period of time, that mortgage holders are constructing false expectations about the true cost of a mortgage, and as such are taking more risk than they perhaps should be.
They indicate that Canadian mortgage holders must be mindful of the fact that rates will likely rise. According to their research, a rise of 2% will be enough to push those on the fringe into trouble
Thursday, October 27, 2011
Real estate appraisers decry Zoocasa calculator
Again everyone is running to save their souls. I would not use this service as "Gospel" but it sure sounds like a good idea as part of a personal research before buying a home.
Try It - You May like it!
Neil "Mortgage Man" McJannet
steve ladurantaye — REAL ESTATE REPORTER
Globe and Mail Update
Published Wednesday, Oct. 26, 2011 4:30PM EDT
Last updated Wednesday, Oct. 26, 2011 6:11PM EDT
The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.
Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.
But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.
“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.
Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.
“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”
Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.
Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.
“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”
While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.
“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”
Try It - You May like it!
Neil "Mortgage Man" McJannet
steve ladurantaye — REAL ESTATE REPORTER
Globe and Mail Update
Published Wednesday, Oct. 26, 2011 4:30PM EDT
Last updated Wednesday, Oct. 26, 2011 6:11PM EDT
The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.
Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.
But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.
“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.
Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.
“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”
Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.
Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.
“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”
While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.
“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”
Tuesday, October 25, 2011
With little doubt about interest rate, analysts look to Carney's call on economy
By The Canadian Press
OTTAWA - The Bank of Canada is expected to continue setting the conditions for economic recovery today by passing again on interest rate hikes.
Most economists and markets agree that governor Mark Carney will leave the rate at one per cent until the end of the year and likely well into 2012 or longer.
And, any thought Carney might have had of cutting the rate likely went out the window last week when Statistics Canada reported inflation rose to 3.2 per cent in September, above the bank's one-to-three per cent acceptable range.
TD Bank chief economist Craig Alexander says with uncertainty over Europe's debt issues high, and the U.S. economy still stumbling, the Canadian central bank is in wait and see mode for some time.
He says of greater interest today is what Carney will say about future prospects for the Canadian economy.
A few weeks ago, the bank was expected to dramatically downgrade its official growth projections of 2.8 and 2.6 per cent for this year and next. But with economic data coming in better-than-expected in recent weeks, including last month's surprising 61,000 jobs gain, the bank may not be as glum about prospects going forward.
OTTAWA - The Bank of Canada is expected to continue setting the conditions for economic recovery today by passing again on interest rate hikes.
Most economists and markets agree that governor Mark Carney will leave the rate at one per cent until the end of the year and likely well into 2012 or longer.
And, any thought Carney might have had of cutting the rate likely went out the window last week when Statistics Canada reported inflation rose to 3.2 per cent in September, above the bank's one-to-three per cent acceptable range.
TD Bank chief economist Craig Alexander says with uncertainty over Europe's debt issues high, and the U.S. economy still stumbling, the Canadian central bank is in wait and see mode for some time.
He says of greater interest today is what Carney will say about future prospects for the Canadian economy.
A few weeks ago, the bank was expected to dramatically downgrade its official growth projections of 2.8 and 2.6 per cent for this year and next. But with economic data coming in better-than-expected in recent weeks, including last month's surprising 61,000 jobs gain, the bank may not be as glum about prospects going forward.
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