Canadian Economics

The last time the index experienced five consecutive declines was during the 2007–08 financial crisis. Our latest survey indicates that firms continue to have concerns about the coming six months regarding the rising cost of labour and capital, a shortage of qualified staff, interest rate hikes, and, more recently, weak market demand.

Online experience  |  8-min read
November 10, 2022

The world economy will continue to grow, but the odds of a global recession have jumped markedly. The downturn in momentum for the global economy will be broad-based, with U.S. real GDP declining from a gain of 5.7 per cent last year to only 1.7 per cent this year.

Online experience  |  8-min read
November 9, 2022

The main forces shaping Canada’s economic outlook have changed little over the past several months, but they have evidently become more intense. The result will be a virtual stoppage of economic growth in this country. Whether the economy steers past a recession will depend on the robustness of its shock absorbers.

Online experience  |  8-min read
November 9, 2022

The U.S. economy contracted slightly in the first two quarters of this year, mainly because of volatility in inventories and rising imports. At the same time, labour markets have remained strong. This suggests that, despite the two consecutive quarters of negative growth, the economy isn’t currently in a recession.

Online experience  |  8-min read
November 8, 2022

The downward trend culminated in a large drop in 2020, when pandemic-related income supports, like the Canada Emergency Response Benefit, were created. Though these support payments are now over, other programs that have contributed to falling income inequality—like the Canada Child Benefit, Old Age Security, and the Guaranteed Income Supplement—persist.

Quick take  |  2-min read
November 4, 2022

Inequality is easy to identify—we see it across neighbourhoods in our cities, across different cohorts and marginalized groups, and across regions and provinces. The issues of income inequality and inclusive growth have permeated headlines, especially during the pandemic, when most of us have relied so heavily on the services provided by those in lower-wage occupations, such as delivery and grocery store workers.

Issue briefing  |  8-min read
November 4, 2022

This month recorded increases in both the short-term (one-year) and long-term (three-year) inflation expectations. This worrying finding indicates that consumers are less confident that inflation will be tamed in the long run and remain concerned about the immediate future, particularly with rising food prices. Inflation expectations are crucial in determining where wages and prices are headed.

Online experience  |  8-min read
October 28, 2022

There are six CMAs in the Up-Up quadrant this month, the same number as last month. Most of the Quebec CMAs remain in the Down-Down quadrant, with negative expectations for the short and long terms.

Online experience  |  8-min read
October 28, 2022

Consumer spending growth remained relatively unchanged in September. After reaching 95.7 points in the final week of August, the Index of Consumer Spending (ICS) fell in the week of September 11. However, toward the end of the month, the index recovered.

Online experience  |  8-min read
October 21, 2022

While ongoing supply chain issues and other challenges sparked by the pandemic are still headaches, COVID-19 is no longer the biggest risk to the economies of most major cities across Canada. The main concern in the near term is the impact of stubbornly high inflation and rising interest rates.

Online experience  |  8-min read
October 21, 2022

National existing home sales continued to drop in September, with the 3.9 per cent decline representing the seventh straight monthly drop. High interest rates and softening economic prospects are making buyers cautious. The decline puts transactions 32 per cent below September 2021 and 19 per cent below the 10-year average of seasonally adjusted monthly sales.

Online experience  |  8-min read
October 20, 2022

This period of elevated inflation won’t be over ‘til it’s over. Headline inflation is falling, and energy prices are owed much of the credit for knocking the cap off. Supply chain pressures are also easing. The global picture is improving, but domestic factors are holding up the modest pace of inflation’s descent.

Quick take  |  3-min read
October 19, 2022

The Index of Business Confidence falls for the fifth-consecutive quarter, something not seen in fourteen years. During the 2007-08 financial crisis, the Index declined for six-consecutive quarters before reversing course from the first quarter of 2009. Currently, the index has been trending lower consistently since the third quarter of 2021, reflecting the persistent worry Canadian executives have had over the state of the economy.

Quick take  |  3-min read
October 19, 2022

Investor sentiment has declined in Canada. The most recent data show that the yield curve inverted in August and declined further in September. This signals that the market outlook is negative. Historically, yield curve inversions have preceded recessionary periods. However, this does not necessarily indicate that a recession is on the cards.

Quick take  |  3-min read
October 18, 2022

Rapid interest rate hikes may finally be catching up. With the Bank of Canada’s overnight rate higher than it has been for over 14 years, it was only a matter of time before a slowdown came. The decline in manufacturing volumes in August may signal that that time has come.

Quick take  |  3-min read
October 14, 2022

To help prepare Canadians for the future of work, our researchers and data scientists proudly developed the MOST on behalf of the Future Skills Centre. A sophisticated and data-rich projection tool, the MOST is designed to offer unique insights into the skills that will power Canada’s future labour markets.

Online experience  |  8-min read
October 11, 2022

Recent months have seen a growing number of Canadians leave the workforce due to retirement. In September, 294,500 Canadians left their job in the previous year due to retirement. Retirements fell during the pandemic amid concerns over the rising cost of living and as pandemic restrictions, such as the inability to travel, incentivized many to delay their exit from the workforce.

Quick take  |  3-min read
October 7, 2022

According to the Global Supply Chain Pressure Index (GSCPI), pressures in the supply chain decreased in August. This compounds the easing observed over the past four months showing positive results for the future of trade as we approach the holiday season. Furthermore, shipping rates fell an average of 29 per cent in September as global demand slowed.

Quick take  |  2-min read
October 5, 2022

As businesses across Canada embark on a new era, there are plenty of bright prospects across several industries in the Canadian economy. But which sectors will come out ahead?

Online experience  |  2-min read
October 4, 2022

Rising interest rates are beginning to feed through the economy, causing demand to weaken and growth to slow. Various indexes also suggest that the global supply chain disruptions are also easing. While these are a prerequisites to bringing inflation back to its target rate, the Bank of Canada is unlikely to take its foot off the brake anytime soon.

Quick take  |  3-min read
September 29, 2022

Consumer confidence is roughly at the same level it was in the Fall of 2020. At 75 points, the index is currently lower than its pre-pandemic level. With confidence this low, the likelihood that consumer confidence will sink drastically lower is unlikely. Consumer confidence tends to fall quickly, while the rebound takes time and needs months of a conducive economic environment to avoid any trepidation by consumers.

Quick take  |  3-min read
September 26, 2022

After an extended period in coasting mode, the Bank of Canada has put interest rates in gear and stomped on the accelerator. Along with the US Federal Reserve (the Fed), the Bank’s goal is to bring inflation to heel before it becomes more embedded in the psyche of businesses and consumers. With luck, the two financial institutions have gotten the timing right.

Online experience  |  8-min read
September 21, 2022

Down a little more, but still a long way to go. Year-over-year CPI growth cooled further in August, but the pace of this deceleration is likely cold comfort for Canadian households and businesses. Prices for services grew amid high demand for travel and tourism. Propelled by higher interest rates, mortgage interest costs also increased.

Quick take  |  3-min read
September 20, 2022

At long last, supply chain issues are easing. Global shipping costs and delivery times are on the decline. This has contributed to the price of goods manufactured in Canada declining for the third straight month in July, which is the main reason nominal manufacturing sales fell. After an increase last month, volumes ticked up again in July, an encouraging sign that the global factors holding back real manufacturing growth are beginning to dissipate.

Quick take  |  3-min read
September 14, 2022

This week, the overnight rate rose for the fifth time this year. The increase marks the latest move by the Bank of Canada in the battle against inflation. Higher interest rates will cause consumption and investment demand to weaken, which in turn will see firms hire fewer workers. High vacancy rates across the economy may provide a counterweight again job losses; nonetheless, we expect the unemployment rate to rise further in the months ahead.

Quick take  |  2-min read
September 9, 2022

Interest rates are close to peaking after today’s 75 basis point increase. After several rounds of relatively heavy rate hikes by the Bank, the overnight rate is now 3.25 per cent, which is above the upper range of the Bank’s neutral range (2 to 3 per cent). This means that interest rates above 3 per cent will have a restrictive effect on the economy.

Quick take  |  3-min read
September 7, 2022

The slight decrease in the trade balance should not spark any jitters. The reduction in the trade balance this month is largely driven by the drop in oil prices. The decrease in oil prices over the past couple of months is driven by a few factors.

Quick take  |  3-min read
September 7, 2022

Softening gas prices in July have raised hopes that inflation may be peaking. While measures of core inflation have yet to follow suit, inflation expectation are particularly sensitive to changes in fuel prices. And while inflation continues to squeeze household budgets, for governments, it means higher revenues from income, corporate income and sales taxes.

Quick take  |  3-min read
August 31, 2022

An increase in short-term inflation expectations (1 year) signals that consumers are increasingly worried about the immediate future regarding inflation. However, with the decline in the Consumer Price Index (CPI) in July and the continued decrease in gas prices, we are likely to see worries about short-term inflation expectations decrease.

Quick take  |  2-min read
August 22, 2022

Could this be the beginning of the end of our inflationary ascent? Year-over-year growth of Canada’s CPI may be heading in a more positive direction; namely, downward. Gasoline prices fell in July which helped to ease price pressures throughout the economy. The psychological effects of falling fuel prices also bode well for inflation expectation setting. Fluctuations in the price of gas disproportionately influence consumer perceptions of inflation.

Quick take  |  2-min read
August 16, 2022

Over-reliance on the U.S. market could hurt the Canadian auto sector in the long-run. In late July, Canadian automakers were relieved to hear that U.S. lawmakers finally agreed to propose an amendment to the Inflation Reduction Act, which would move away from only providing tax credits to American-made electric vehicles.

Quick take  |  2-min read
August 15, 2022

Over the past 30 months, the global and Canadian economies have experienced more dramatic change and volatility, by most measures, than in the prior 30 years. Pandemic, inflation, and war have made prognostications about the future, or the path ahead for the economy, challenging at best. And even as we hope for pandemic waves to settle and the war to end, a return to “normal” may in fact look very different from the pre-pandemic past.

Issue briefing  |  12-min read
August 15, 2022

Seeking to bring inflation down the Bank of Canada is raising interest rates. By reducing demand in the economy, higher interest rates are deflationary. As demand for goods and services weakens, hiring among firms is expected to slow. Historically, cycles of tightening monetary policy are associated with a rise in the unemployment rate.

Quick take  |  2-min read
August 5, 2022

With the sailing of the first ship carrying Ukrainian grain (corn) leaving Odesa, global grain prices are forecasted to ease after spike to a record high in March. There are 16 more full ships queued up to depart from Ukraine carrying wheat, sunflower seeds, corn, and sunflower oil. Price impacts will settle but will remain elevated. Improvements in food prices will take time.

Quick take  |  2-min read
August 4, 2022

In Canada’s modern, knowledge-based, and service-centric economy, employers are increasingly thinking about work from a skills perspective. Old-fashioned labels like “blue collar” and “white collar” are no longer relevant. As well, factors such as educational attainment or work experience are only proxies for assessing the skills of workers. This means that we need a more sophisticated way to talk about employment opportunities.

Issue briefing  |  10-min read
August 3, 2022
Partner—Future Skills Centre

Both crude oil and gas prices have fallen in recent weeks. Fears of worsening economic conditions have engendered pessimism in financial markets. Flagging consumer confidence signals that Canadians may soon cut back on purchases at gas pumps. As a significant driver of inflation, falling energy prices should provide some relief against the rising cost of living. Yet there remain significant supply challenges, not least the ongoing conflict in Ukraine.

Quick take  |  2-min read
July 29, 2022

This month recorded an increase in the short-term (one-year) inflation expectations, with the long-term (three-year) outlook also seeing a modest increase. This signals that consumers are confident that inflation will be tamed in the long-run but remain worried about the immediate future. Inflation expectations are crucial in determining where wages and prices are headed. Consumers are concerned about how much purchasing power they have with their real wages.

Quick take  |  3-min read
July 25, 2022

After 15 months beyond the Bank of Canada’s inflation target range, have we reached the peak? Not just yet. Price growth continued to be broad-based in June. Month-over-month, all CPI categories continued to expand (in seasonally adjusted terms).

Quick take  |  3-min read
July 20, 2022

Even on the back of rising prices, nominal manufacturing sales fell in May. In our latest national forecast, manufacturing output growth will slow but is not expected to turn negative this year. But, as recessionary winds blow stronger, the near-term risks to manufacturing sales are tilting to the downside.

Quick take  |  2-min read
July 14, 2022

If the Bank of Canada does not raise its target inflation rate over the short term, it risks overshooting interest rate hikes and tipping the Canadian economy into a recession. In May, the Consumer Price Index (CPI) inflation rose by an annual rate of 7.7 per cent compared to 6.8 per cent in April. The Bank’s current stance is to bring down inflation to its target rate of 2.0 per cent, a difference of 5.7 percentage points. That is a considerable gap given how rate hikes have already made their impacts felt.

Quick take  |  4-min read
July 13, 2022

The last time the Index of Business Confidence declined for the fourth-consecutive time was during the 2007–08 financial crisis. In this latest survey, a question on the likelihood of a recession was included. More than half the respondents believe that the next economic recession in Canada will be between six to twelve months from now.

Quick take  |  4-min read
July 13, 2022

Amid tight labour market conditions, the employment rate has risen among diverse groups within the population. This includes core-aged male and female indigenous workers living off reserve as well as recently landed immigrants. Similarly, the employment rate among core-aged female workers, stood at 81.3 per cent in June, just shy of the record high recorded in the previous month.

Quick take  |  2-min read
July 11, 2022

Supply chains are adjusting to the new normal. The pandemic and its resultant effects on spending patterns and supply chains have altered business’ inventory management and import patterns. The disruptions of normal seasonal buying patterns point to continued swings in trade results in the months ahead.

Quick take  |  2-min read
July 7, 2022

Minimum wage policies and their effects have long been studied in academic circles. But with social and economic inequality commanding more of the public’s attention these days, the issue has taken on fresher interest. Newer and more granular sources of data have allowed for different analytical techniques and new findings.

Issue briefing  |  7-min read
July 5, 2022

All eyes remain laser-focused on inflation. As the Bank of Canada cranks up interest rates, flagging consumer and business confidence are early signs of an economic slowdown. This would translate into reduced hiring and the prospect of potential job losses. But given the significant unmet labour demand in the economy, the labour market appears well-positioned to absorb job losses and limit the economic cost as interest rates start to bite.

Quick take  |  2-min read
June 30, 2022

Housing price increases over the past few years severely eroded housing affordability and galvanized national attention. It is essential to remember that, in any market, prices are determined by both supply and demand. This means that while Canada certainly needs more homes, attention must be paid to demand-side questions like who is buying them, how purchasers are paying for them and what buyers are doing with them.

Op-ed  |  4-min read
June 29, 2022

Another month, another uncomfortably high inflation reading. Price growth was broad-based across categories, though the usual suspects appeared again in May. Gasoline price increases, for example, remain astoundingly high. This month’s release also included used car price data for the first time and combined with a recent update to the CPI basket likely mechanically increased price growth in May’s published figures..

Quick take  |  3-min read
June 22, 2022

Once the pandemic loosens its grip on Canada and the world, economic growth will slow down sharply from the plus 4.0 per cent increase forecast for 2022 as the economy returns to some state of normalcy. Growth prospects are comparatively weak because the aging of Canada’s population will lead to a slowdown in labour force growth, which will limit consumer and investment spending.

Online experience  |  8-min read
June 21, 2022

This month recorded a decrease in the long-term (3-year) inflation expectations and an increase in the short-term inflation expectations (1-year). This signals that consumers are more worried about the immediate future regarding inflation and remain relatively confident that inflation will be under control in the long term.

Quick take  |  3-min read
June 20, 2022

The wild waxing and waning of commodity prices continues to impact manufacturing subsectors unequally. High energy prices pushed nominal sales of petroleum and coal products up by 3.7 per cent while sales volumes rose. On balance, after stripping away the impact of rising prices, manufacturing growth in April was mild at best.

Quick take  |  2-min read
June 14, 2022

With job vacancies still sky-high, near-term employment growth will be constrained by the labour supply. The unemployment rate is holding steady at record lows, but the slow growth in employment isn’t for lack of demand. Employment in accommodation and food services is still 14.0 per cent below pre-pandemic levels as firms struggle to find workers.

Quick take  |  3-min read
June 10, 2022

Trade figures disappointed in April. Digging deeper into the data revealed a decrease in exports of energy products. This was the result of planned maintenance shutdowns in April in the Alberta oil sands, particularly for upgraded facilities that produce synthetic crude oil. However, the combined increases in exports of natural gas and coal almost entirely offset the decline in crude oil exports in April.

Quick take  |  2-min read
June 7, 2022

Although wage growth remains below its pre-pandemic peak, it too has begun to accelerate as the final missing piece in the labour market puzzle falls into place. It is true that some individuals have not fully benefited from the recovery. But, in aggregate, Canada’s labour market is the tightest it has been in decades.

Issue briefing  |  9-min read
June 7, 2022

A monetary policy-induced economic slowdown is possible if inflation persists. For now, the probability of a recession happening in the near term remains low, judging by tight labour market conditions, terms of trade (the ratio between the price of exports and imports), and recoveries in sectors severely impacted by the pandemic. Still, if the Bank is hyperfocused on reducing inflation with no immediate success, it risks raising rates more than the Canadian economy can handle.

Quick Take  |  2-min read
June 1, 2022

Tourism in Canada may have reached a turning point. Two years of pandemic malaise have battered the industry, but the fever might finally be lifting. Canada’s doors are opening to visitors from far and wide. Attitudes toward the pandemic are changing. And businesses are hiring in anticipation of better times ahead.

Online experience  |  8-min read
June 1, 2022

Connecting the dots between trade agreement commitments and domestic policy is vital in regulating the digital economy in Canada. As Canada moves forward with projects like its Digital Charter, it must reckon with the fact that Canadians’ digital lives are deeply interconnected with foreign actors, entities, and states.

Issue briefing  |  13-min read
May 31, 2022

Rising energy prices saw Canada’s terms of trade improve for the second consecutive month. Underpinning the improvement was the continued rise in energy prices, spurred by the invasion of Ukraine by Russia in February. However, persistent supply-side bottlenecks have resulted in some of the highest inflation in decades. The subduing impact of rising interest rates has raised fears of weakening growth and a heightened risk of recession.

Quick Take  |  2-min read
May 31, 2022

As restrictions were lifted spending patterns continued to adjust. Unencumbered by restrictions consumers are seizing the opportunity to redirect spending towards services including hospitality, recreation and travel. The rising cost of living will force households to devote a higher share of expenditure towards essential items such as energy and food.

Quick Take  |  2-min read
May 26, 2022

With inflation the highest since January 1991, affordability remains a key concern for consumers. In addition, the re-opening of the hard-hit hospitality sector will likely exacerbate the current inflation fire with increased travel numbers. This is excellent news for businesses that were hit hard during the pandemic but makes sharper price growth within this sector highly likely, especially when coupled with a strong labour market, higher commodity prices, and supply chain disruptions.

Quick Take  |  3-min read
May 20, 2022

Headline inflation figures will likely ease as “base effects” wane this year. Year-over-year inflation slipped outside of the Bank of Canada’s range in April last year, when it reached 3.4 per cent. As inflation has only continued to grow since then, the year-over-year comparisons to last year’s high inflation months will be less extreme. However, monthly price growth is likely to remain strong.

Quick Take  |  2-min read
May 18, 2022

Manufacturing sales rose yet again, thanks primarily to higher prices. Still, real inventories have also been on an upward trend over the last few months. This shows that some manufacturers have adapted their strategies to the volatility of the supply crunch. But all is not rosy. Rising input costs, increasing labour shortages, and sporadically high rates of absenteeism due to COVID waves in Canada are adding unnecessary strains to an already precarious situation.

Quick take  |  2-min read
May 16, 2022

Employment made minimal gains in April in a sign that the Canadian economy is at full employment, with total employment rising by 15,000 and the unemployment rate inching down to 5.2 per cent. Record low unemployment and sky-high job vacancies have prompted federal and provincial governments to ease regulation on hiring temporary foreign workers.

Quick take  |  2-min read
May 6, 2022

Russia’s invasion of Ukraine has shown up in trade numbers. Total trade (exports plus imports) with Russia was $2.8 billion in 2021, representing 0.2 per cent of Canadian trade activity. Meanwhile, total trade with Ukraine in 2021 was $447 million. Therefore, the direct impact of the trade sanctions imposed on Russia should be minimal for Canadian merchandise trade values.

Quick take  |  2-min read
May 4, 2022

Seemingly taking a page from the federal budget’s playbook, this provincial fiscal plan echoed the increased spending and infrastructure themes of its federal counterparts. This de-emphasis on a balanced budget as the critical fiscal target over the next few years allows the province the flexibility to present a more realistic—though still challenging—spending plan that will not detract from the economic recovery.

Quick take  |  5-min read
April 29, 2022

Savings among Canadian households remain elevated and continue to provide fuel for consumer spending. With restriction stringency across the country now at the lowest level since the pandemic began, consumers are increasingly directing their purchases towards services.

Quick take  |  2-min read
April 29, 2022

Since the previous survey in February 2022, we have seen the Bank of Canada raise interest rates. The expectation is for the Bank to continue raising rates to get inflation under control. Russia’s invasion of Ukraine has also placed further pressure on global supply chain disruptions and commodity prices. Given these events, another drop in the Index of Business Confidence was more than likely expected.

Quick take  |  3-min read
April 25, 2022

Our view is that growth in retail sales will be modest throughout the remainder of 2022. The year is shaping up to be the least stringent in terms of public health restrictions since 2019, encouraging consumers to spend on leisure activities such as travel and entertainment. And with interest rates on the rise to tackle sky-high inflation, households will have to think more carefully before financing big-ticket items.

Quick take  |  2-min read
April 22, 2022

In April, the Bank of Canada switched into high gear and raised its overnight rate by 0.5 per cent (it now sits at 1.0 per cent). The BoC’s rapid moves will reel in domestic sources of price growth and may convince Canadian consumers and businesses that the situation will soon be under control.

Quick take  |  2-min read
April 20, 2022

A solid economic recovery from the Omicron variant and the quick rebound in the labour market has boosted economic activity, absorbed economic slack, and encouraged consumer confidence. However, affordability remains a key concern for consumers. Inflationary pressures exacerbated by supply chain disruptions and higher commodity prices undoubtedly affect consumer behaviour and consumption patterns.

Quick take  |  2-min read
April 19, 2022

Canadian manufacturing sales managed to grow in February even as horns blared and trucks blocked exports from crossing the Ambassador Bridge in Windsor. Though the blockade lasted less than a week, it did bring some auto production lines to a halt as the cross-border movement of components slowed. Producers found a way to work around this, allowing real motor vehicle manufacturing sales to grow by 25.0 per cent.

Quick take  |  2-min read
April 14, 2022

With rates rising by 50 basis points, it appears that the persistence of inflation was underestimated, leaving the Bank scrambling to raise rates faster than previously expected. The Bank seems to have fallen far behind the curve while inflation expectations continue to climb up. The longer it takes for the Bank to bring down inflation to its 2 per cent target, the higher the chance of workers demanding (even) higher wages and businesses passing on higher costs to consumers (even more).

Quick take  |  3-min read
April 13, 2022

With the prospect of future lockdowns much diminished, a partial return of workers to offices is underway. However, the pandemic has showcased the feasibility of remote working and many employers are opting for fully or partially remote working arrangements going forward. Amid recruitment challenges and labour scarcity, employers are facing pressure to be flexible and accommodate staff preferences wherever possible.

Quick take  |  2-min read
April 8, 2022

The federal government benefited from a significant improvement in its fiscal capacity in the short time since the December 14th Economic and Fiscal Update 2021 (EFU 2021). According to Budget 2022, the government’s fiscal position improved by roughly $85.5 billion, over the six-year projection horizon, because of improved revenues and lowered costs. Strong inflation coupled with a commodity price boom has bolstered government revenues.

Commentary  |  12-min read
April 8, 2022

We expected a noticeable disruption to trade numbers in February. Some border crossings between Canada and the United States were blocked by protesters, inhibiting the regular movement of goods between the two countries. Although exports and imports via these border crossings were affected in February, this shock was not prevalent. The blocked border crossings appear to have had little impact on aggregate trade values. We should see a rebound in the numbers in March.

Quick take  |  3-min read
April 5, 2022

The inflation we are seeing today is a textbook supply and demand story. When too much money chases too few goods, you get inflation. There are several factors behind the rise in inflation, including the government’s massive fiscal spending to fight off the pandemic-induced crisis. But Canada wasn’t the only country that opened its fiscal taps.

Commentary  |  4-min read
April 1, 2022

Ontario’s government has just introduced the “More Homes for Everyone Act”, which it hopes will deter speculators from driving up the cost of housing, protect homebuyers from unfair treatment by developers and accelerate development timelines to get more homes built faster.

Commentary  |  3-min read
March 31, 2022

Inflation has surged in Canada after remaining largely dormant since the end of the 2008–09 global recession. In 2020, the COVID-19 pandemic struck, causing demand in the Canadian economy to collapse and holding the increase in consumer prices. However, a combination of factors, including the reopening of the economy, base effects, supply chain disruptions, soaring oil prices, and widespread shortages of semiconductors and other key products, has caused consumer prices to expand at a 4.0 to 5.0 per cent pace since the spring of 2021—well above the Bank of Canada’s upper target range.

Issue briefing  |  16-min read
March 25, 2022

After a two-year roller coaster, the territorial economies are trending upward, driven by a bright outlook for many minerals extracted in Canada’s North. The tourism sector will also enjoy a much-needed boost in the short term following the loosening of travel restrictions in Canada and around the globe. And over the next two decades, travel activity in all three territories is poised to grow, as investments in infrastructure and a growing Canadian population drive a greater number of visits to the North.

Online experience  |  8-min read
March 24, 2022

The pandemic is refusing to go away quietly, leaving an indelible mark on short- and long-term prospects for the provincial economies. The rebound in output and employment to their pre-pandemic highs is nearly complete, but the COVID virus’s nasty habit of morphing into new variants is keeping Canada from getting to the next stage—reclaiming lost economic potential.

Online experience  |  8-min read
March 23, 2022

The index stays below 100 for the second month. However, it is important to note that certain regions such as Ontario, British Columbia, and Alberta experienced increased consumer confidence, signaling that there is reason to be optimistic, and the labour market remains upbeat, with most Canadians remaining optimistic that jobs will continue to return six months from now.

Quick take  |  2-min read
March 21, 2022

After a difficult end to 2021, retail sales posted a bounce-back in January. However, much of the increase was due to tighter restrictions on high-contact services such as dining out and entertainment. With fewer options to spend their savings on, consumers redirected their spending to retail goods, a trend we’ve seen throughout the past two years.

Quick take  |  2-min read
March 18, 2022

Vladimir Putin’s war is a tragedy that has resulted in thousands of innocent civilian lives lost and millions displaced. Ukrainians and Russians are being killed in battle, and Ukraine’s cities and infrastructure are being turned to rubble. The economic fallout for both countries is devastating, and the effects will be felt globally.

Commentary  |  5-min read
March 17, 2022

When filling up your gas tank is already an emotionally fraught experience, February’s CPI figure will likely add fuel to Canadian anxieties over their purchasing power. Inflation is top-of-mind for many Canadians and households report that they are changing their spending habits (buying less meat and opting for cheaper brands, for example) in the wake of rising prices. Scheduled dairy price increases added to food bills in February.

Quick take  |  2-min read
March 16, 2022

In January, manufacturing sales inched upward on the back of higher prices. However, real sales volumes fell as producers dealt with higher levels of absenteeism due to the Omicron wave. As the pandemic recedes again, COVID-19 should present less of a problem for production. But manufacturers are still struggling with worker shortages in an increasingly tight labour market.

Quick take  |  2-min read
March 15, 2022

Russia’s invasion of Ukraine has been deeply disturbing and has had a tragic effect on the people in Ukraine. From an economic perspective, the war has destroyed Ukraine’s economy and much of its infrastructure. The war costs and international sanctions have severely damaged Russia’s as well but the impacts are not confined to these countries. The conflict has added new risks to a world economy that was already struggling with rising inflation, bottlenecks in supply chains and the lingering effects from the pandemic.

Quick take  |  5-min read
March 15, 2022

In February the Canadian economy added 337,000 jobs, offsetting the losses in January by a wide margin, with labour force participation rates rising 65.4 per cent and the unemployment rate dropping 5.5 per cent. The easing of restrictions, introduced to combat the Omicron variant, underpinned the expansion in employment this month.

Quick take  |  3-min read
March 11, 2022

The Russia Ukraine conflict is an increasing worry globally, and Canada has responded to the situation in Ukraine by imposing further restrictions on trade with Russia. However, the effect on Canada’s direct trade with both nations will be minimal. In 2021, imports from Russia totaled $2.1 billion, making up 0.3 per cent of all Canadian imports, while exports to Russia on a customs basis amounted to $657 million, representing 0.1 per cent of Canada's total merchandise exports to the world.

Quick take  |  3-min read
March 8, 2022

The rate hike finally came! And it had to be done. However, the impact this has on Canadian households will be evident soon. Canadians have some of the highest debt levels per household among Western countries (owe $1.77 for every dollar they earn). As such, any incremental increase in rates, while necessary, will squeeze leveraged Canadian households.

Quick take  |  2-min read
March 2, 2022

When an employer wants to fill a vacant job, they are really looking for a set of skills to help them complete specific tasks. Until that employer can recruit a new employee, they don’t have access to the skills they need. So job vacancies can actually be thought of as skill-set vacancies: an unmet need for particular skills.

Online experience  |  8-min read
March 2, 2022

The shock of Russia’s invasion of Ukraine has upended conditions far and wide. What people had hoped was only bluster and brinksmanship from Vladimir Putin quickly turned into the unthinkable when his troops crossed the border on February 24. The tragedies the Ukrainian population are having to endure are difficult for outsiders to comprehend. The international community quickly slapped sanctions on key elements of the Russian economy, but their effects so far pale in comparison with the direct human costs within Ukraine’s borders.

Commentary  |  4-min read
March 1, 2022

December concludes a volatile year for the Canadian economy. Despite multiple pandemic waves and extreme climate events, Canada added over 850,000 jobs and administered over 70 million vaccine doses.Although several thorny challenges have emerged, including inflation, supply chain disruptions, and labour market friction, the latest GDP numbers portray an economy in recovery.

Quick take  |  3-min read
March 1, 2022

The index dipped below 100 for the first time in nine months. Still, it is important to note that certain regions such as Quebec, Saskatchewan and Manitoba experienced a slight uptick, hinting that not all is dark and gloomy. In fact, most Canadians are optimistic that jobs will return six months from now, despite the lingering government restrictions and vaccine mandates.

Quick take  |  2-min read
February 22, 2022

After a rough end to 2021 that spilled over into January, we expect the road ahead to be smoother. Many provinces initiated reopenings in early February, and most have already lifted capacity restrictions on retailers. Quebec’s retailers, for example, welcomed the recent news that vaccine passports were no longer mandatory to enter big box stores.

Quick take  |  2-min read
February 18, 2022

Modest growth in December despite flooding in British Columbia brought a turbulent year for Canadian manufacturers to a close. Still, plenty of challenges lie ahead for the manufacturing sector. Although sales expanded month-over-month, the spread of the Omicron variant began to slow production in the final weeks of 2021.

Quick take  |  2-min read
February 16, 2022

The pandemic isn’t done with us yet, nor is high inflation. Reimposed restrictions following the spread of Omicron have kept demand concentrated on select components of the CPI. Stuck at home, consumers continue to spend on goods rather than services.

Quick take  |  2-min read
February 16, 2022

Business optimism continues to fade. Most businesses surveyed don’t think that economic conditions will improve in Canada over the next six months. Companies are attributing their weaker outlook to rising wage demands, labour shortages, increasing cost of capital, and a withdrawal of government support measures.

Quick take  |  3-min read
February 8, 2022

Canada’s trade – both exports and imports – made a comeback last year, thanks to eased restrictions in most parts of the world. What’s more, despite the drop in exports in December, the previous quarter finished strong, with Canada's merchandise exports up 7.1 per cent compared to the previous quarter.

Quick take  |  2-min read
February 8, 2022

The arrival of the Omicron variant in Canada and the restrictions that followed have again set back the labour market in an all-too-familiar chain of events. As we have seen before, industries that are unable to relocate workers remotely bear the brunt of job losses, meaning low-wage, high-contact services tend to be the worst-affected..

Quick take  |  3-min read
February 4, 2022

November brings positive news for several of the worst-affected industries, such as accommodation and food services. Yet dark clouds loom on the horizon. The reintroduction of restrictions across Canada will weaken output and employment in several high-contact services.

Quick take  |  3-min read
February 1, 2022

The Bank of Canada’s decision to keep interest rates unchanged came as a surprise to the market. But it didn’t surprise us. It is indeed true that inflation has been above the Bank’s upper target rate for nine months. Besides, there is little slack left to absorb in the labour market. Both employment levels, hours worked, and vacancies exceed pre-pandemic levels. What’s more, the level of economic activity in Canada is hovering around full production capacity.

Quick take  |  2-min read
January 26, 2022

The Canadian Bilateral Trade Forecast, is a five-year forecast for Canadian exports and imports for a selection of trading partners and products. It is available both in nominal and real (price-adjusted) terms, for which the base year is 2012.

Online experience  |  8-min read
January 24, 2022

The Omicron variant swept through the country before the holidays, with most provinces seeing record high cases and hospitalizations. This forced many provinces to impose stricter restrictions, with the common denominator being limited customer capacity for retailers.

Quick take  |  2-min read
January 21, 2022

From boardrooms to living rooms, inflation remains the topic du jour. December’s CPI figures make that unlikely to change any time soon. Inflation has now been above Bank of Canada’s upper target range of three per cent for nine months.

Quick take  |  2-min read
January 19, 2022

With new lockdown measures imposed this month, and COVID-19 cases and hospitalizations on the rise, it comes as no surprise that the Canadian consumer feels less confident. Future optimism might further erode as consumers spend less and save more due to the uncertainty facing future prices.

Quick take  |  2-min read
January 17, 2022

Flooding in British Columbia led to material shortages and transportation issues for several manufacturers in November, and many supply chain currents are still flowing against the industry. Yet, activity in the sector continued to grow.

Quick take  |  2-min read
January 17, 2022

Long-term unemployment fell for the second straight month in December, before which the rate had been relatively constant since August. This at least partially reflects the withdrawal of the Canada Recovery Benefit (CRB) in favour of more targeted financial support.

Quick take  |  2-min read
January 7, 2022

Despite disruptions caused by flooding and landslides in British Columbia, exports and imports increased. Still, the overall growth in trade figures masks the hit British Columbia took. British Columbia’s goods exports fell while exports from other provinces were up.

Quick take  |  2-min read
January 6, 2022

Sparks flew in October as Canada’s production lines picked up the pace. Economic expansion was driven primarily by stronger manufacturing output with real GDP growing by 0.8 per cent, following 0.2 per cent growth in September.

Quick take  |  2-min read
December 23, 2021

Retailers joined manufacturers by posting a healthy gain in sales in October, making it tempting to believe that the supply crunch is getting better. But today’s release is not as positive as it may seem. In volume terms, retail sales are roughly in line with where they were in August, and sales at motor vehicle and parts dealers remain below levels from much of this year.

Quick take  |  3-min read
December 21, 2021

The last thing Canadians wanted during the holiday season was Omicron disrupting their plans. The new variant is creating an uncertain environment and dampening consumers’ optimism. Depending on the severity of infections and hospitalizations, we could see a further decline in consumer confidence in the coming months until booster shoots become more widely available.

Quick take  |  2-min read
December 20, 2021

November’s inflation figures may have been expected, but that doesn’t make them easier to digest. Prices rose across all major CPI categories. Supply chain disruptions remain one of the key drivers of price growth. Still, there is no denying that government spending has played a role in fuelling demand. Fiscal discipline is warranted in keeping higher prices at bay.

Quick take  |  2-min read
December 15, 2021

Transportation equipment continues to be the engine that drives manufacturing sales. Supply chain disruptions have been hurting production across all manufacturing segments, but automakers are feeling the brunt of them. While this morning’s release signals that supply bottlenecks are improving, manufacturers are not out of the woods yet.

Quick take  |  2-min read
December 15, 2021

The digital economy is growing. Thanks to technological advancements in international trade, businesses and consumers have increasingly turned online for purchases, and the demand for digital services—has gone up. There is widespread agreement that digital trade’s contribution to the Canadian economy is increasing, and that international trade is growing. But classifying and measuring the opportunities and challenges of digital trade is difficult.

Online experience  |  8-min read
December 10, 2021

Economic data are giving the Bank of Canada mixed signals. Supply chain disruptions continue to hamper the Canadian economy’s recovery, and the output gap is nowhere near closing. The latest GDP data show that output is still roughly 1.5 per cent below its level in the final quarter of 2019. Meanwhile, the labour market tells a different story.

Online experience  |  2-min read
December 8, 2021

With the fifth consecutive month of surplus under its belt, Canada’s international trade has started off the fourth quarter on solid footing. Still, looking under the hood reveals that not all is well. In October, export growth continued to be volatile and was skewed towards motor vehicles and energy products. The two industries combined accounted for almost 80 per cent of total export growth.

Quick take  |  2-min read
December 7, 2021

The Canadian Recovery Benefit came to an end in October and was replaced with more targeted measures. The removal of this financial support comes after employment recovered to above the pre-pandemic level in September. Over recent months concerns were raised that measures such as the CRB were disincentivizing the return of workers to employment.

Quick take  |  3-min read
December 3, 2021