Featured insights

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
David Ristovski—October 18, 2022
Focus Area—Canadian Economics

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
Sean Adams—October 14, 2022
Focus Area—Canadian Economics

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
Liam Daly—October 7, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—October 5, 2022
Focus Area—Canadian Economics

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
Liam Daly—September 29, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—September 26, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—September 20, 2022
Focus Area—Canadian Economics

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
Sean Adams—September 14, 2022
Focus Area—Canadian Economics

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
Liam Daly—September 9, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—September 7, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—September 7, 2022
Focus Area—Canadian Economics

Canadian youth are facing unique challenges that threaten to define Generation Z as the COVID Kids. Almost two-thirds of youth aged 15 to 24 reported the pandemic harmed their mental health. They’re coming of age while trying to catch up on months of lost learning amidst an affordability crisis. But there is a skill solution — the great outdoors.

Op-ed  |  2-min read
Andrew Young & Elaine Lam—September 6, 2022
Focus Area—Education & Skills

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
Liam Daly—August 31, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—August 22, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—August 16, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—August 15, 2022
Focus Area—Canadian Economics

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
Liam Daly—August 5, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—August 4, 2022
Focus Area—Canadian Economics

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
Liam Daly—July 29, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—July 25, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—July 20, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—July 14, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—July 13, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—July 13, 2022
Focus Area—Canadian Economics

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
Liam Daly—July 11, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—July 7, 2022
Focus Area—Canadian Economics

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
Liam Daly—June 30, 2022
Focus Area—Canadian Economics

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
Robin Wiebe—June 29, 2022
Focus Area—Canadian Economics

Canada recently announced plans to bring an unlimited number of Ukrainians to Canada on a three-year visa with the right to work while they are here. It’s an exciting and new plan for humanitarian migration. It also raises an important question. How do we deliver on the promise we make when we offer people resettlement in Canada?

Commentary  |  5-min read
Kathryn Dennler—June 28, 2022
Focus Area—Immigration

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
Kiefer Van Mulligen—June 22, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—June 20, 2022
Focus Area—Canadian Economics

Canada’s immigration response to the Russian invasion of Ukraine is both inspiring and unprecedented. Despite its reputation as a welcoming country, Canadian policy often makes it difficult for people needing protection to reach Canada. The Canada-Ukraine Authorization for Emergency Travel (CUAET) tackles one of the biggest hurdles—visa requirements. Travel to seek asylum is a human right. But the Canadian government imposes visa requirements on countries that send a high number of refugee claimants.

Commentary  |  3-min read
Kathryn Dennler—June 15, 2022
Focus Area—Immigration

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
Kiefer Van Mulligen—June 14, 2022
Focus Area—Canadian Economics

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
Sean Adams—June 10, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—June 7, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—June 1, 2022
Focus Area—Canadian Economics

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
Liam Daly—May 31, 2022
Focus Area—Canadian Economics

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
Liam Daly—May 26, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—May 20, 2022
Focus Area—Canadian Economics

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
Sean Adams—May 18, 2022
Focus Area—Canadian Economics

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
Maxime Arseneau—May 16, 2022
Focus Area—Canadian Economics

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
Liam Daly—May 6, 2022
Focus Area—Canadian Economics

Canada has an ambitious emissions reduction agenda. Lowering greenhouse gas emissions (GHG) by 40–45 per cent relative to 2005 levels by 2030 means a reduction of 295–330 Mt CO2e in the next eight years. How do we get there? While heavy-duty freight and other transport sectors are undergoing transition as well, technologies for those segments are not advancing fast enough to deliver on the government’s timeline.

Op-ed  |  5-min read
Brett Goodwin—May 5, 2022
Focus Area—Sustainability

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
Momanyi Mokaya—May 4, 2022
Focus Area—Canadian Economics

Positive mental health allows us to cope with changes and difficult challenges in our day-to-day lives, personally as well as professionally. The pandemic blurred this boundary as employees worked from home, many simultaneously caring for children and other loved ones while living a more isolated lifestyle.

Commentary  |  3-min read
Sarah Storm—May 4, 2022
Focus Area—Human Resources

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
CBoC Economics Team—April 29, 2022
Focus Area—Canadian Economics

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
Liam Daly— April 29, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—April 25, 2022
Focus Area—Canadian Economics

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
Richard Forbes—April 22, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—April 20, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—April 19, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—April 14, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—April 13, 2022
Focus Area—Canadian Economics

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
Liam Daly—April 8, 2022
Focus Area—Canadian Economics

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
CBoC Economics Team—April 8, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—April 5, 2022
Focus Area—Canadian Economics

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
Sohaib Shahid—April 1, 2022
Focus Area—Canadian Economics

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
Robin Wiebe—March 31, 2022
Focus Area—Canadian Economics

One in five Canadian employees is working a job that is at considerable risk of automation. And for these 3.5 million people, there are few or no options to transition into lower-risk occupations without undergoing significant retraining. This isn’t to say that these workers will lose their jobs and have to find new ones, rather, their roles will likely undergo major changes in the coming years. In this sense, transition also means transformation.

Op-ed  |  4-min read
Darren Gresch—March 30, 2022
Focus Area—Innovation & Technology

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
Momanyi Mokaya—March 21, 2022
Focus Area—Canadian Economics

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
Richard Forbes—March 18, 2022
Focus Area—Canadian Economics

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
Pedro Antunes—March 17, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—March 16, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—March 15, 2022
Focus Area—Canadian Economics

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
Kip Beckman—March 15, 2022
Focus Area—Canadian Economics

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
Liam Daly—March 11, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—March 8, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—March 2, 2022
Focus Area—Canadian Economics

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
Ted Mallett, Pedro Antunes, Sohaib Shahid—March 1, 2022
Focus Area—Canadian Economics

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
Liam Daly—March 1, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—February 22, 2022
Focus Area—Canadian Economics

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
Maxime Arseneau—February 18, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—February 16, 2022
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—February 16, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—February 8, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—February 8, 2022
Focus Area—Canadian Economics

Canada achieved an important milestone in September, with employment returning to its pre-pandemic peak. However, with the arrival of the Omicron variant, we anticipate a longer runway to recovery, which continues to be uneven, with many groups not fully participating. Addressing these inequities will require a multi-faceted approach so that everyone can share in the country’s prosperity.

Op-ed  |  4-min read
Michael Burt and Pedro Barata—February 8, 2022
Focus Area—Education & Skills
Partner—Future Skills Centre

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
Liam Daly—February 4, 2022
Focus Area—Canadian Economics

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. To make matters worse, the latest wave comes after the government tightened financial support measures for businesses and workers.

Quick take  |  3-min read
Liam Daly—February 1, 2022
Focus Area—Canadian Economics

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
Sasan Fouladirad—January 26, 2022
Focus Area—Canadian Economics

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. On top of that, steadily rising prices, waning household savings, and lingering supply chain disruptions are also taking their toll on the retail industry.

Quick take  |  2-min read
Maxime Arseneau—January 21, 2022
Focus Area—Canadian Economics

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. Gasoline and housing-related costs remain some of the strongest upward contributors to year-over-year price increases.

Quick take  |  2-min read
Kiefer Van Mulligen—January 19, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—January 17, 2022
Focus Area—Canadian Economics

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. Motor vehicle manufacturing sales, which have been plagued by semiconductor shortages, managed to grow.

Quick take  |  2-min read
Kiefer Van Mulligen—January 17, 2022
Focus Area—Canadian Economics

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. The Canada Worker Lockdown Benefit, which debuted in November, only applies to those affected by recent or ongoing lockdowns. This likely spurred some of the long-term unemployed to either find employment or drop out of the labour force.

Quick take  |  2-min read
Sean Adams—January 7, 2022
Focus Area—Canadian Economics

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
Momanyi Mokaya—January 6, 2021
Focus Area—Canadian Economics

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. Many manufacturing subsectors posted gains, but greater production in motor vehicle manufacturing carried the day. But the halcyon days of October seem distant from the topics of today’s headlines.

Quick take  |  2-min read
Kiefer Van Mulligen—December 23, 2021
Focus Area—Canadian Economics

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 (an industry hit hard by the shortages) remain below levels from much of this year.

Quick take  |  3-min read
Richard Forbes —December 21, 2021
Focus Area—Canadian Economics

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
Momanyi Mokaya —December 20, 2021
Focus Area—Canadian Economics

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
Kiefer Van Mulligen—December 15, 2021
Focus Area—Canadian Economics

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
Richard Forbes—December 15, 2021
Focus Area—Canadian Economics

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.

Quick take  |  2-min read
Sasan Fouladirad—December 8, 2021
Focus Area—Canadian Economics

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
Momanyi Mokaya—December 7, 2021
Focus Area—Canadian Economics

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
Liam Daly—December 3, 2021
Focus Area—Canadian Economics

As provinces lifted restrictions, Canadians headed outdoors and spent more. Throughout the pandemic, households amassed large amounts of savings thanks to government support measures. But now that the economy is opening up, Canadians are unleashing their savings, pushing economic growth higher.

Quick take  |  2-min read
Liam Daly—November 30, 2021
Focus Area—Canadian Economics

It’s human nature to want to improve things. But sometimes, in trying to make things better, we can end up making them worse. So knowing when to act, and when not to, is often a sign of wisdom. In other words, if it ain’t broke, don’t fix it. And that is what’s needed as the Bank of Canada renews its mandate with the federal government for the next five years.

Op-ed  |  4-min read
Pedro Antunes and Sohaib Shahid—November 29, 2021
Focus Area—Canadian Economics

Over the past year, businesses were understandably telling us that they thought their investment prospects would improve in the six months ahead. However, the optimism is fading, and firms are shifting their focus from the economic recovery to concerns about the pandemic’s fallout.

Quick take  |  2-min read
Richard Forbes—November 25, 2021
Focus Area—Canadian Economics

Supply chain disruptions are turning out to be the bane of consumer confidence. The near future doesn’t look too bright as consumers’ optimism is likely to further erode. Canadians are likely to spend less and save more due to the uncertainty surrounding future prices and supply chain disruptions that have no end in sight. Worse still, this is all brewing in the backdrop of a looming pandemic entering an endemic phase.

Quick take  |  2-min read
Momanyi Mokaya—November 22, 2021
Focus Area—Canadian Economics

Supply chain disruptions are taking their toll on retail sales by limiting the number of goods retailers can sell. This is particularly evident at automotive dealerships, as the global shortage in semi-conductors has left automakers no choice but to cut production in recent months. The availability of many other goods, such as electronics and appliances, has been hit disproportionally hard by the supply crunch as well.

Quick take  |  2-min read
Richard Forbes—November 19, 2021
Focus Area—Canadian Economics

If any good is coming of inflation this year, it’s that the vocabulary of Canadian economists is being refined. We’re now familiar with all the nuances that “permanent,” “transitory,” and “transitory but not short-lived” can imply. Semantics aside, it’s difficult to make the case that inflation is transitory.

Quick take  |  2-min read
Kiefer Van Mulligen—November 17, 2021
Focus Area—Canadian Economics

You can’t go anywhere these days without hearing about supply chains, bottlenecks, and shortages. These disruptions are making life difficult for many Canadian manufacturers and are unlikely to go away any time soon. Shortages of key inputs and intermediate goods (including semiconductors) and shipping challenges are adding to the delays and slowdowns.

Quick take  |  2-min read
Kiefer Van Mulligen—November 15, 2021
Focus Area—Canadian Economics

After employment surpassed the pre-pandemic level in September, you would be forgiven for thinking the jobs recovery was complete. Based on today’s population, this difference amounts to just over 250,000 jobs. There’s still lots of work to do.

Quick take  |  3-min read
Liam Daly—November 5, 2021
Focus Area—Canadian Economics

Today, the government of Ontario released its fall Economic Outlook and Fiscal Review, with an emphasis on its post-pandemic recovery plan. The economic and fiscal outlook is much improved in comparison to Budget 2021, released in March. The province still forecasts a string of deficits through to 2023-24, but cumulatively, they are nearly $50 billion lower than previously expected.

Quick take  |  3-min read
Richard Forbes and Daniel Fields—November 4, 2021
Focus Area—Canadian Economics

Despite the improvement in the goods trade balance, September’s merchandise trade numbers were largely disappointing, as the trade sector continues to grapple with supply disturbances. The spread of the Delta variant inflamed disruptions to supply chains and continued to take a major toll on some sectors, such as the motor vehicles and parts industry.

Quick take  |  2-min read
Doris Chu—November 4, 2021
Focus Area—Canadian Economics

Following the reopening of the economy, the Canadian consumer wants to spend more. But global supply chain disruptions and labour shortages are creating challenges for firms to meet consumers’ demands. This is driving prices upwards, forcing a lot of Canadians to hold back from spending on large-ticket items.

Quick take  |  3-min read
Liam Daly—October 29, 2021
Focus Area—Canadian Economics

As expected, the Bank reduced its monetary stimulus. But that was the easy part. A more arduous journey lies ahead. Supply chain disruptions are here to stay at least until the summer of next year. These disruptions are not only fanning inflation but also subduing growth.

Quick take  |  3-min read
Sasan Fouladirad—October 27, 2021
Focus Area—Canadian Economics

This morning’s release is particularly encouraging for two key reasons. First, retailers are doing well despite facing more tough competition from leisure activities (such as travel and in-person dining) following the loosening of public health restrictions. Second, retail sales grew at a healthy clip despite ongoing supply chain issues, which have hurt the availability of many consumer goods.

Quick take  |  2-min read
Richard Forbes—October 22, 2021
Focus Area—Canadian Economics

September’s inflation print should remind the markets to go beyond the transitory vs persistent debate. Inflation has been above the Bank of Canada’s upper target range of 2 to 3 per cent for half a year. Something is transitory if it doesn’t change behavior. But we are seeing businesses change behavior, for example when it comes to setting higher prices for their goods and services.

Quick take  |  3-min read
Anna Feng —October 20, 2021
Focus Area—Canadian Economics

As new COVID-19 cases dropped, consumer confidence picked up. The improvement in October’s Consumer Confidence Index mainly reflects the uptick in consumers’ confidence in future employment, as more job openings are expected following the economic reopening.

Quick take  |  1-min read
Anna Feng—October 18, 2021
Focus Area—Canadian Economics

A recovering global economy means more demand for Canadian manufacturing products. Sustained growth in primary metal manufacturing (used as an input in construction and many manufacturing subsectors) is indicative of the global recovery underway. Demand for raw and intermediate materials has shot up, driving prices higher.

Quick take  |  2-min read
Kiefer Van Mulligen—October 14, 2021
Focus Area—Canadian Economics

September marks the end of the third quarter, during which the labour market added almost 350,000 jobs. A direct result of the reopening of the economy, these gains represent a significant step forward for the labour market. With employment now past its pre-pandemic level, we expect job growth to moderate over the coming months as the economy continues to absorb spare capacity.

Quick take  |  2-min read
Liam Daly—October 8, 2021
Focus Area—Canadian Economics

August’s merchandise trade numbers were encouraging, but much of this was due to higher energy exports. The monthly numbers highlighted the ongoing pandemic-induced challenges that many non-energy sectors have been enduring, with the most prevalent being fractured production processes owing to supply chain disruptions. With the pandemic far from over, the outlook for Canada’s merchandise exports remains on shaky ground.

Quick take  |  2-min read
Doris Chu—October 5, 2021
Focus Area—Canadian Economics

Canadians enjoyed greater freedom to spend on in-person dining, entertainment, and travel in July. As demand for these services grew, consumers redirected spending away from real estate and goods such as building material, garden supplies and sporting goods.

Quick take  |  2-min read
Liam Daly —October 1, 2021
Focus Area—Canadian Economics