Production Jul -0.1 -1.2 Manufacturing - RBC
Overview and highlights
Real GDP
% change, month-over-month 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 -1.2 -1.4 -1.6
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Statistics Canada
CURRENT TRENDS UPDATE -- CANADA
Update - March 31, 2020
January GDP: when two months seem like ages
Latest available: January Release date: March 31, 2020
January GDP rose 0.1%, just shy of consensus, and likely to be the near-term peak in economic activity. Activity was up on 12 of 20 industries in January. Manufacturing output grew for the first time in five months as decent gains in a number of subsectors were more than enough to offset a 12% pullback in motor vehicle output due to the permanent closure of GM's Oshawa plant. Air transportation posted its largest monthly decline in a decade with coronavirusrelated travel advisories reportedly adding to bad weather and system glitches. Overall, goods producing industries were up 0.2% and services output rose 0.1%. March's GDP is likely to show a record decline--one that will stand until we get the April figures. We're not debating the next BoC move because the central bank already cut its policy rate by 150 basis points in a single month and announced a new QE program.
Economy grew for a third straight month
The unemployment rate ticked up to a stilllow 5.6%
Retail sales increased 0.4% in January
Housing starts hit a four-month high of 213,000 annualized units in January
Imports were little changed in December but down sharply in Q4 as a whole
February CPI broadly as-expected, +2.2% year-over-year
Economy at a glance
% change from Latest month Previous month Year ago
Real GDP Industrial production Employment Unemployment rate* Manufacturing
Production Employment Shipments New orders Inventories Retail sales Car sales Housing starts (000s)* Exports Imports Trade balance ($billlions)* Consumer prices
Jan
0.1
Jan
0.2
Feb
0.2
Feb
5.6
Jan
0.8
Feb
0.9
Jan
-0.2
Jan
0.8
Jan
0.4
Jan
0.4
Jan
4.4
Feb
210.1
Jan
-2.0
Jan
-0.5
Jan
-1.5
Feb
0.4
* Levels are shown for the latest period and the same period a year earlier.
1.8 -0.8 1.3 5.8
-1.1 0.0 -1.2 1.8 2.2 3.4 0.4 165.7 -0.5 -4.9 -3.8 2.2
Employment
Change in thousands, month-over-month
110
90
70
50
30
10
-10 -30 -50 -70 -90
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: Statistics Canada
Unemployment rate
% of labour force 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Statistics Canada
Retail sales
% change, month-over-month 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Statistics Canada
Housing starts
Thousands 300 280 260 240 220 200 180 160 140 120 100
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Canadian Mortgage and Housing Corporation
Virus concerns overshadow strong Canadian labour market data
Latest available: February Release date: March 6, 2020 Canadian labour market numbers remained broadly solid in February, but that will likely matter little for markets or policymakers given increasingly intense concerns about the spread of the new coronavirus outside of China's borders. Employment increased 30k in February, and the unemployment rate ticked up to a still-low 5.6%. Wage growth held above 4% on a year-over-year basis. That labour markets held up in February is not really a surprise. In February, most of the disruptions from the coronavirus were concentrated in China. But the impact on China's domestic economy from the outbreak has been significantly more pronounced, and the fear is that spreading of the virus abroad will prompt similar, if still ultimately transitory, impacts on a broader set of economies. That would intensify supply chain risks and hit the much larger domestic service sector. It also means that positive, but ultimately backward looking, economic data will continue to take a backseat to go-forward concerns.
Canada retail sales about to get a lot worse
Latest available: January Release date: March 20, 2020 January numbers themselves were not particularly suggesting that soft trends in retail last year persisted early in 2020. February sales will likely be impacted to a degree with much larger declines to follow. One exception will be food stores. Grocery stores have never been busier and, despite what looks like panic-buying at times, there have been no suggestions that supply of essential products is actually limited. Online sales also, presumably, could see a boost. But a large chunk of those (sales by non-Canadian online retailers) will not be counted in the monthly retail sales data anyway.
Canadian housing starts pick up as supply dearly needed
Latest available: January Release date: February 10, 2020
With recent data pointing to further tightening in demand-supply conditions in many resale markets, a solid pace of home building to start the year will be welcomed. Quebec and Ontario led the increase in January, which is not surprising as those provinces are home to some of the country's tightest markets. BC's pullback from earlier record highs continued, though with the province's resale market heating up again it's hard to see that trend being sustained. We think the pace of starts will remain close to the current six-month trend rate, and while that's stronger than the underlying pace of household formation, if anything there's upside risk with markets thirsty for supply.
RBC ECONOMICS | RESEARCH 2
Narrower December Canadian trade deficit but details still not encouraging
Latest available: January Release date: February 5, 2020
The December trade deficit narrowed to $0.4 billion from $1.2 billion in November. The bulk of the 1.9% increase in exports in December came from a bounce-back in energy shipments after disruptions to a major pipeline reduced exports in November. Imports were little changed in December, but down about 3% at an annualized rate in Q4 as a whole. All in, the December trade numbers shouldn't do much to allay concerns at the Bank of Canada that domestic growth trends are slowing.
Merchandise trade
C$ billions, annualized 650
600 Exports
550
500
450
400 Imports
350
300 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Statistics Canada
Virus impact still to come for Canadian CPI
Latest available: February Release date: March 18, 2020
In the latest backward looking economic data, Canadian CPI was broadly asexpected in February rising 0.4% month-over-month and 2.2% from a year ago. Those growth rates will clearly soften going forward as the dramatically downward impact of the coronavirus outbreak (and the Saudi-Russia oil price spat) on commodity prices, and what will ultimately be a dramatic fall in demand for a large swath of retail and services products flows through beginning more significantly in March. Lower inflation means the central bank won't feel conflicted about adding stimulus, but supporting the economy through this shock would have been its top priority anyways.
Consumer price index
% change, year-over-year 5 4 3 2 1 0 -1 -2
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Statistics Canada
The material contained in this report is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without express authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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