30 Dec

Consumer Confidence Ended 2009 on a Stronger Footing

General

Posted by: Rabinder Dhillon

National consumer confidence ended 2009 on a stronger footing compared to pre-recession levels, despite having edged down slightly the fourth quarter compared to the third quarter.
 
According to the Conference Board of Canada’s index of consumer confidence, confidence eased slightly in the fourth quarter for the first time in three quarterly periods. The decrease in confidence reflects weakening sentiment about making major purchases.
 
The balance of sentiment about making major purchases, such as a home or a car, dipped slightly into negative territory in the fourth quarter. It had turned positive in the third quarter for the first time since the first quarter of 2008.
 
A negative balance of sentiment means more survey respondents said it was a bad time to buy a big-ticket item, such as a home or car, than said it was a good time to do so. This indicator is an important factor underlying the housing market.
 
The balance of sentiment about job growth prospects continued improving in the fourth quarter of 2009, staying positive for the second consecutive quarter. More survey respondents expect employment to pick up over the next six months, and fewer expect more layoffs.
 
Click here to read the full CREA release.

23 Dec

CTV says Ottawa is considering changes to lending policies

General

Posted by: Rabinder Dhillon

CTV says Ottawa is considering raising the minimum down payment for homebuyers as well as reducing the amortization period in order to stop some consumers from taking on too much debt.
 
In an interview with CTV Question Period, to be aired next week, Finance Minister Jim Flaherty says the measures will be taken if there’s evidence of excessive demand in the housing market.
 
Flaherty says the new measures would target consumers “who are taking on obligations that they will not be able to handle in the future when the interest rates do rise.”
 
He says the likely measures the government will take are to increase the size of the down payment from 5% “to a higher figure” and to reduce the amortization period “from a maximum of 35 years to something less.”
 
Click here to read the full Globe and Mail article.

16 Dec

National Home Sales Increased by 73% in November

General

Posted by: Rabinder Dhillon

National home sales increased by 73% in November from the trough seen a year ago, with Ontario and Quebec hitting new monthly records as buyers took advantage of record low interest rates to secure mortgages.
 
The national average price gained 19% compared to November 2008, at $337,231, CREA said. Since the beginning of the year, prices have gained 4.4% compared to the same time last year.
 
“The year-over-year increase in November continues to reflect the high degree to which the average was skewed downward last year by plummeting activity in Canada’s priciest markets, and then upward by rebounding activity,” the association said.
 
CREA tracked 36,383 deals on its Multiple Listing Service in November. Crediting the housing market for leading “the overall Canadian economy out of the recession,” association President Dale Ripplinger said the numbers were a sign of an entrenched recovery. “National home sales activity last month shows how strongly the housing market has rebounded since the beginning of the year.”
 
Click here to view the full CREA release.

8 Dec

Bank of Canada announces no change to overnight rate

General

Posted by: Rabinder Dhillon

“Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

While significant fragilities remain, global economic developments have been slightly more positive and the global outlook has improved modestly relative to the Bank’s projection in its October Monetary Policy Report (MPR).

In Canada, as expected, the composition of aggregate demand is shifting towards final domestic demand and away from net exports. In the third quarter, the balance of these shifts resulted in weaker-than-projected GDP growth. Core inflation in recent months has been slightly higher than the Bank had projected, although total CPI inflation remains close to projections.

The main drivers and the profile of the projected recovery in Canada remain consistent with the Bank’s views in the October MPR. The Bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2 per cent target in the second half of 2011.

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. In its conduct of monetary policy at low interest rates, the Bank retains considerable flexibility, consistent with the framework outlined in the April MPR.”

Click here for full press release from the Bank of Canada

3 Dec

Canada’s economic recession officially ended in the third quarter of this year, but with a weaker-than-expected increase.

General

Posted by: Rabinder Dhillon

Statistics Canada said Monday gross domestic product grew by an annualized 0.4% in the quarter, following a revised 3.1% contraction in the previous three-month period, which had been the third quarterly decline in a row.
 
Most economists had forecast annualized growth of 1% for the July-through-September period. The number was also well below the Bank of Canada’s forecast of 1% annualized growth. On a monthly basis, GDP was up 0.1% in the third quarter.
 
“Final domestic demand was bolstered by a second consecutive quarterly gain in personal expenditures and the first expansion in business capital expenditure since the fourth quarter of 2007,” the federal agency said. “Export and import volumes both increased after many quarters of decline.”
 
Separately, the agency released the September GDP figure, which showed an increase of 0.4%. Many economists had expected an advance of around 0.3% to 0.4% for the month.
 
“This sets the table for a much better fourth quarter, where we are looking for an advance of just over a 3% annual rate,” said Douglas Porter, Deputy Chief Economist at BMO Capital Markets. “While the quarterly gain for Q3 was a bit of a damp squib, this doesn’t alter the bigger picture that the Canadian economy is erratically grinding out of recession, led by broad-based gains in domestic spending,”

Click here to view the full Financial Post article