Canadian Outlook Economic Forecast: Summer 2014

The Conference Board of Canada, 88 pages, August 13, 2014
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This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.

Document Highlights

  • Economic growth got off to a slow start for 2014, due largely to the effects of an unusually cold winter, weak investment intentions, and sluggish job growth.
  • Prospects in the United States are solid, with industrial production and hiring leading the way. This should help bolster trade and investment in Canada over the near term.
  • A significant uptick in inflation has dismissed any discussion about the potential for lower interest rates in Canada. Still, rate hikes are not expected until the middle of 2015.
  • The economic situation in much of the developed world is improving, but geopolitical risks, continued financial market uncertainty, and soft commodity prices could take a toll on global growth.

Table of Contents

Executive Summary—Investment, Jobs Off to a Slow Start

  • U.S. Set to Rebound
  • Developed Economies to Help Prop Up Global Growth
  • Federal Government on Track to Balance Its Books
  • Rate Hikes Not Expected Until Next Year
  • Deflation Fears Dissipate
  • Business Investment on Hold Until 2015
  • Job Growth Lagging but Household Spending Holds Steady
  • Real Estate Markets Holding Steady
  • Change of Fortunes for Trade Sector

Résumé—Lente reprise de l'investissement et de l'embauche

  • États-Unis : bientôt une poussée de croissance
  • Les économies développées donneront un coup de pouce à la croissance mondiale
  • Le gouvernement fédéral sur le chemin de l'équilibre budgétaire
  • Aucune hausse des taux d'intérêt avant l'an prochain
  • La crainte d'une déflation s'estompe
  • Peu d'investissements de la part des entreprises avant 2015
  • La création d'emplois stagne mais les ménages continuent de dépenser
  • Les marchés de l'immobilier tiennent bon
  • Le vent tourne pour le secteur des exportations

Consumer Expenditures—Consumers Continue to Spend at a Steady Pace

  • Employment, Income, and Consumer Debt
  • Spending on Durable Goods Will Slow as the Housing Market Goes for the Soft Landing
  • Consumer Sentiment Improves From a Year Ago
  • Steady Growth in Consumer Spending

Housing—The National Housing Market to Soften Overthe Medium Term

  • Warnings and Tightening of Mortgage Regulations—Attempts to Limit Home Demand and Indebtedness
  • Interest Rates and Home Affordability
  • Home Prices Subject to Different Local Conditions
  • Housing Starts Stable This Year but to Weaken Over the Medium Term
  • Residential Investment Expected to Decline

Government—Government Austerity No Help for Subdued Economy

  • Federal Fiscal Outlook
  • Provincial Governments

Business Investment—Lagging Business Investment Set to Rebound in 2015

  • Machinery and Equipment Investment
  • Investment in Engineering
  • Building Construction
  • IP Investment
  • Investment Drivers

International Trade—Full Speed Ahead

  • Trade Outlook
  • Stronger U.S. Activity Fuels Merchandise Exports
  • Domestic Demand Drives Merchandise Imports
  • Non-merchandise Trade Deficit Continues to Worsen
  • Current Account Deficit Shrinks

Energy—Energy Sector's Bright Future Always at Risk

  • Natural Gas Prices Stabilize After Weather-Related Spike
  • Political Instability Spurs Crude Oil Prices Higher
  • Investment Landscape Continues to Be Dominated by Megaprojects
  • Investment Profile Bolsters Trade Outlook

Employment—Employment Growth Modest This Year, but to Gradually Get Back on Track

  • Exports and Business Investment to Drive Growth Over the Medium Term
  • Subdued Job Gains in the Manufacturing Sector
  • The Resource Sector Faces Uncertainty
  • Construction Employment Weak This Year but to Pick Up Over the Medium Term
  • Employment in the Business Services Sector to Slow this Year but Accelerate Next Year
  • Labour Force Participation Rate Keeps Falling

Costs and Prices—Inflation Awakens

  • Near-Term Outlook
  • Economic Growth to Pick Up Speed in 2015
  • Solid Wage Gains
  • Commodity Prices Firming Up
  • Inflation Expectations Remain Stable
  • Monetary Tightening Is Not That Far Off

Financial Markets—Inflation Dictating Central Bank Thinking

  • Europe Introduces Negative Interest Rates
  • U.S. Tapering Continues as Inflation Rises
  • Inflation Rises Back Into Bank of Canada's Comfort Zone
  • Loonie Gains Traction

Forecast Tables

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