Economic News and Forecasts

Periodically, as a member service, DHI Canada prepares a review of economic activity and forecasts from sources such as Statistics Canada, the Bank of Canada and the Canadian chartered banks.  This information is captured on this page. 

Canadian GDP Figures for February Released

April 29, 2022 - Statistics Canada today that Canada's GDP grew by 1.1% in February. This is higher than the 0.8% growth anticipated in their February flash estimate, and points to a 1.4% increase for Q1 GDP over Q4, indicating an annualized rate of 5.7%. This will do nothing to cool the Bank of Canada's intention to continue hiking interest rates this year - Bank Chair Tiff Macklem has already suggested they will increase the overnight rate by as much as another 75 basis points (to 1.75%) at their Board of Governors' June 1 meeting. Canada's estimated Q1 growth of 1.4% contrasts with the US's contraction of 1.4% (annualized). Non-residential construction increased by 1.4% in February, although most of the gain was in alterations and improvements. You can read the full report here.

Another Interest Rate Hike by the Bank of Canada Announced

April 13, 2022 - The Bank of Canada (BoC) announced another expected increase in its benchmark interest rate - this time doubling the rate to 1.00% and citing increasing inflationary pressures. The BoC forecast for the CPI has increased to almost 6% in the first half of the year, and is now expected to remain well above the Bank's "control range" of 1% to 3% throughout the year. At the same time, the Bank announced it would begin quantitative tightening on April 25. The announcement reiterated March's statement that interest rates will need to rise further, and many pundits expect they will end the year at 2.00%, with the increases liikely happening in 0.25 basis point increments. 

The Bank also revised its growth outlook for Canada, reflecting recent strong economic conditions. It is now calling for 4.25% increase in GDP this year, 3.25% in 2023 and 2.25% in 2024. At the same time, they are forecasting a slight decrease in their global GDP forecast due to increased volatility due to the war in Ukraine and tightening of global financial conditions, as many central banks are increasing their overnight rates and also entering a period of quantitative tightening. The full announcement is available here.

GDP Numbers for January Released

March 31, 2022 - Statistics Canada today released the January GDP numbers. The economy overall posted a 0.2% increase for the month, in spite of COVID-related lockdowns. Leading the charge were construction (up 2.8%), utilities (a 4.0% increase) and retail spending (up 2.6%). Non-residential construction was up 0.5% overall, with growth in industrial, commercial and residential building. February's flash estimate calls for 0.8% growth. You can read the full report from StatsCan here.

Bank of Canada Increases Interest Rates as Expected

March 2, 2022 - The Bank of Canada (BoC) today announced it was increasing its benchmark interest rate to 0.50%. This is a quarter-point hike from the "effective lower bound" rate of 0.25% that has been in effect since the onset of the pandemic. In increasing its rate, the BoC cited the current relatively high inflation rate (5.1% in January - well above the Bank's 2% target), strong economic growth, quick recovery from the Omicron variant of COVID-19, and the effect tht Russia's invasion of the Ukraine is having on food and energy prices. Tha Bank noted "As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further," and also talks about quantative tightening (decreasing its portfolio of Government of Canada bonds). While acknowledging that there continues to be concern about the emergence of new strains of COVID-19, the tone of today's announcement was generally hawkish, and we can expect additional increases this year - perhaps as soon as April. You can read the announcement here.

Q4 and Full Year 2021 GDP Numbers Are In, And They Look Pretty Good!

March 1, 2022 - Statistics Canada today released Q4 and full year GDP results. StatsCan reports the economy grew 1.6% in Q4, an annualized rate of 6.4%, and that growth for the full year was 4.8%. Growth for the quarter was above the 5.8% the Bank of Canada estimated in its January Monetary Policy Report. Growth for the year was slightly above the 4.3% we forecast in our November 2021 update. Investment in non-residential structures, machinery and equipment was up by 2.1% in Q4. The full report is available through StatsCan.

This relatively strong GDP performance, combined with higher rates of inflation, virtually assures the Bank of Canada will raise its benchmark rate at Wednesday's meeting.

Bank of Canada January Monetary Policy Report Sets the Stage for Interest Rate Hikes

February 10, 2022 - The latest Bank of Canada Monetary Policy Report (MPR), released January 26, builds on their January 26 interest rate announcement (see below) and makes it very clear that an interest rate increase can be expected sooner rather than later. The MPR amplifies statements in the interest rate announcement about the absorption of economic slack and highlights the rising rate of inflation as a danger to the economy. You can read the MPR on the Bank's website.

StatsCan Releases November 2021 GDP Growth, Sneak Peek at Q4 and FY2021 Numbers

February 1, 2022 - Statistics Canada figures released today showed that Canada's GDP rose 0.6% in November, with growth in both goods- and services-producing industries at about that level. Of interest to DHI members, non-residential construction grew by 0.5% in November; this increase came from institutional construction, as both industrial and commercial construction fell in the month. StatsCan estimates that December GDP will be essentially unchanged, that Q4 economic growth will come in at 1.6% and growth for calendar 2021 will be 4.9%. The full report is available on the Statistics Canada website.

BoC Holding Interest Rate Again, But Maybe For The Last Time

January 26, 2022 - The Bank of Canada (BoC) announced today that it is again holding its benchmark interest rate at the effective lower bound of 0.25%, but it has removed its "extraordinary forward guidance", meaning that we can expect the rate to rise as early as early March. The BoC said that economic slack has now been absorbed, pointing to the increase in employment in the last year (job numbers are now above pre-pandemic levels); the probable continuing high inflation due to supply chain bottlenecks and a tightening labour market; a robust, if uneven, international economic recovery; strong Canadian GDP growth; and a weaker-than-expected effect of the Omicron COVID-19 variant. 

The Bank is forecasting Canadian GDP to grow by 4.5% in 2021 and 4% in 2022. It also expects inflation to be about 5% in the first half of 2022, easing to 3% by year-end. This expectation means that the BoC will revert to its traditional role of using monetary policy to control inflation. In line with future interest rate increases, the BoC said it would consider reducing its holdings of Government of Canada bonds (part of its quantitative easing program) when it beging hiking rates. At present, BoC policy is to maintain current levels of bond holdings. You can read the Bank's full announcement here.

US Fed Also Opens The Door To March Interest Rate Hikes

January 26, 2022 - The Federal Reserve's Federal Open Market Committee (FOMC) , like the Bank of Canada (BoC), held the line on interest rates but, again like the BoC, signalled that rates could soon go up. Today's statement by the FOMC said rate hikes "will soon be appropriate" in light of continuing high inflation and strength in the labour market. This could come as quickly as early-March. Also, like the BoC, the Fed said it could begin shrinking its balance sheet by reducing its bond holdings when rate increases kick in.

US Fed Sounding More Hawkish

December 16, 2021 - The US Federal Reserve finished two days of meetings yesterday and issued a statement speeding up the end of its quantitative easing (QE) program. Original plans would have had it completely wound down by mid-2022 but, with yesterday's announcement, it looks to finish in March. This opens the door to an accelerated timetable for rate hikes next year, and an increase in the number of hikes from the previously planned one to as many as three. Given the action today by the Bank of England in raising its rate and the sped-up winding down of the European Central Bank's QE program, it gives more credence to a possible boost in the Bank of Canada's overnight rate as early as April.

Federal Government's Fall 2021 Economic Statement

December 15, 2021 - the federal government yesterday presented their fall 2021 economic statement. Their forecast for GDP growth was 4.6% in 2021, 4.2% in 2022 and 2.8% in 2023; the 2021 figure was lower by 1.2 percentage points than projected in the April budget, but 2022 and 2023 are"broadly in line with budget 2021." The government also adjusted its budget deficit esimates for last year and this year (previous estimates are in brackets; numbers in billions of dollars): 2020-21 -$372.7 billion (-$354.2 billion) and 2021-22 -$144.5 billion (-$154.7 billion). They are forecasting that the deficit will be down to -$13.1 billion by 2026-27.

BoC Interest Rate Announcement - Same As It Ever Was

December 8, 2021 - The Bank of Canada announced its overnight lending rate today and, to no one's surprise, it remains at 0.25%. The announcement reaffirms the Bank will not raise the rate until current economic slack is absorbed, sometime in the middle quarters of 2022. For interest rate doves, the BoC did acknowledge that the future course of the Omicron variant, high interest rates, and supply chain disruptions (especially due to the recent flooding in BC) could weigh on economic growth and cause them to maintain the current overnight rate at its current level until later in 2022. The Bank also notes that, in spite of high employment and decreasing unemployment, GDP still remains 1.5% below pre-pandemic levels. You can read the text of the BoC announcement here.

DHI Canada's November Economic Forecast Update/Review Now Available

December 2, 2021 - We're pleased to present DHI Canada's November 2021 economic forecast. While there was good news, in the form of a higher-than-expected Q3 GDP, there remain considerable uncertainties: the course of COVID-19, the inflation outlook, future monetary policy, and the impacts of weather (especially in the west). Read all about it here.

Even StatsCan Can Be Wrong - Q3 GDP Outperforms!

December 2, 2021 - Statistics Canada released Q3 GDP figures on November 30, reporting 1.3% quarter-over-quarter growth; annualized, that's 5.3%. This result exceeds the 2.0% annualized growth they predicted in October. The economy was driven by consumer spending on services (up by 6.3% over Q2) and semi-durable goods (up by 14.0% quarter-over-quarter). At the same time, they released September GDP figures, showing a 0.1% growth over August. Finally, they also provided a flash estimate for October, calling for a healthy 0.8% boost. Read the Q3 article here and the September report here.

August GDP Growth Disappoints; Q3 Estimate Not Rosy Either

October 29, 2021 - Statistics Canada today released the August GDP figures, showing growth of 0.4% over July. This contrasts with their flash estimate of 0.7% (see below). The August increases was fueled by growth in services-producing industries, which were up 0.6%; goods-producing industries fell 0.1%. In good news for our industry, non-residential building construction grew by 0.4%. Statistics Canada is projecting that the economy will not show any growth in September and that Q3 growth will be 0.5% compared to Q2. Based on this, the annualized Q3 projection is about 2.0%. You can read the full article on the StatsCan website.

Bank of Canada Announcement on Interest Rates Sounds a Hawkish Note

October 27, 2021 - The Bank of Canada announced today that, while it was maintaining the interest rate at the effective lower bound of 0.25%, it was ending its quantitative easing (QE) program and moving to "reinvestment only" - purchasing Government of Canada bonds solely to replace maturing bonds. The Bank also reduced its Canadian GDP growth forecast to 5.1% for 2021 and 4.3% for 2022, with a slightly increased growth rate of 3.7% for 2023. It is now forecasting that economic slack will be taken up "in the middle quarters of 2022", opening the door for an increase in the bank rate as soon as April; this is earlier than previously called for. You can read the announcement here.

Stats Can Says July GDP Better Than Flash Estimate; Releases August Flash Estimate

October 1, 2021 - Statistics Canada today released the July GDP figures. While their flash estimate called for a decline of 0.7%, the actual decrease was only 0.1%; 13 of 20 industrial sectors showed increases, led by accommodation and food services. Construction fell by 0.9%, due largely to a decline in residential building construction. Non-residential construction, by contrast, was up 0.5%, with an increase in institutional building construction more than offsetting drops in commercial and industrial construction. StatsCan's flash estimate for August calls for a 0.7% increase in real GDP. The full announcement is available here.

A "No News" Announcement from the BoC on Interest Rates

September 8, 2021 - The Bank of Canada (BoC) held the line on interest rates today and is making no change to its quantitative easing (QE) program. Interest rates remain at the effective lower bound of 0.25% and QE stays at $2 billion per week. The BoC's announcement noted the decline in Q2 GDP, reflecting "a contraction in exports, due in part to supply chain disruptions, especially in the auto sector" and a pull-back in housing market activities. The Bank did not provide an updated economic outlook, saying only that the global economic recovery had "solid momentum" going into Q3, but sounding a cautionary note about COVID-19 case counts and global supply chain disruptions. You can read the BoC announcement here.

Stats Can Announces Q2 2021 and June 2021 GDP, and Provides Flash Estimate for July

August 31, 2021 - Statistics Canada announced today that Q2 2021 GDP fell by 0.3% compared to Q1. This is an annualized rate of decline of 1.2%. It follows three consecutive quarters of GDP growth after the Q2 2020 pandemic-related decline of 11.3%. Investment in non-residential construction increased in the quarter at an annualized rate of 1.2%. StatsCan's article is available here.

June GDP matched expectations (see below), growing by 0.7% compared to May. StatsCan reports that 15 of 20 industry subsectors posted growth in the month. Non-residential construction fell by 1.1%, led by declines in commercial and industrial construction, although institutional construction grew. Stats Can's flash estimate for July GDP calls for a 0.4% decline. You can read about it in more detail here.

GDP News from Statistics Canada - April, May and June

July 30, 2021 - Statistics Canada today released its May GDP figures, revised April GDP and provided a preliminary estimate for June. StatsCan originally reported a 0.3% decline in April GDP (story below); this has been revised downward to 0.5%. May, as they had forecast, came in down 0.3%. The better news is that, as the economy reopens across the country, June is expected to be back on the plus side with a 0.7% increase and Q2 should post an overall increase of 0.6% compared to Q1 (an annualized rate of 2.4%). Overall, non-residential construction in May was up marginally by 0.1%; industrial construction was a downward drag, while commercial and institutional construction both grew. The StatsCan article is available here.

DHI-C's July 2021 Economic Review and Forecast

July 8, 2021 - DHI Canada is pleased to release our latest economic review and forecast - considerably sunnier than that of December 2020, thanks to the global economic recovery, the apparent retreat of COVID-19 and the accompanying reopening of the economy. There may still be some unevenness ahead, and the non-residential construction sector has a little way to go before recovering to pre-pandemic levels, but we have increased our forecast for GDP growth this year. You can read the whole thing here.

April 2021 GDP Report from Statistics Canada

June 30, 2021 - Statistis Canada released its April GDP figures today. GDP shrank in April by 0.3% - well below the initial expectation of a 0.8% contraction. This is the first decline in GDP after 11 months of growth. Non-residential building construction grew by 1.1% in the month. StatsCan also issued a preliminary estimate for May GDP, forecasting another 0.3% shrinkage. The full report is available on the Statistics Canada website.

Revised 2020 GDP Figures, with Provincial Breakdowns, Released by Statistics Canada

May 3, 2021 - Statistics Canada released revised GDP figures for 2020 today, changing shrinkage in the economy to 5.3% from the 5.4% reported in March. The provincial/territorial GDP breakdown showed all provinces down compared to 2019, with only the Yukon (1.1% growth) and Nunavut (3.5% growth) bucking this trend. Services-producing industries contributed more to the overall decline than did goods-producing industries, with transportation and warehousing; arts, entertainment and recreation; accommodation and food services; and other services (excluding public administration) being especially hard hit. In the service sector, only finance and insurance industries showed growth in all jurisdictions, while real estate and rental/leasing activities, were up in most regions. The full text of the announcement is here.

Bank of Canada Ups 2021 GDP Growth Estimate

April 22, 2021 - The Bank of Canada yesterday announced it is continuing to keep interest rates at the lower effective bound of 0.25% and is scaling back its quantitative easing (QE) support - purchases of Government of Canada bonds - from $4 billion to $3 billion per week, effective April 26. They have also scaled up their forecast for GDP growth to 6.50% in 2021 - a significant increase over the 4.0% growth forecast in their January 2021 Monetary Policy Report (MPR). The Bank now anticipates growth moderating to 3.75% in 2022 and 3.25% in 2023; the January MPR had estimted 4.8% and 2.5% respectively. The announcement calls for inflation to return to a sustainable 2% (the midpoint in the Bank's inflation-control range) in the second half of 2022 and implies that interest rates could rise at that time. The Bank notes this forecast of recovery is sensitive to the continuing evolution of the pandemic and the pace of vaccinations. You can read the announcement here.

Bank of Canada Holds the Line on Interest Rates

March 10, 2021 - The Bank of Canada announced today it is keeping interest rates at the effective lower bound of 0.25% despite the improved GDP in Q4 2020. The tone of the announcement remained somewhat dovish: "While economic prospects have improved, the Governing Council judges that the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved." Overall inflation is currently close to 1%, with core inflation between 1.0 and 1.3%. The monetary policy support mentioned consists of maintaining interest rates where they are and continuing the bond repurchase (quantitative easing) program at the current level of at least $4 billion per week. The announcement referenced the Banks January projection that inflation wouldn't return to a sustainable 2% and economic slack would not be absorbed until into 2023. The full text of the Bank's announcement is available here.

Statistics Canada Releases Q4 2020 and Calendar 2020 GDP

March 4, 2021 - Yesterday, Statistics Canada released GDP figures for Q4, along with GDP for the full year. In Q4, GDP grew 2.3% (an annualized rate of 9.5%) while, for the year, it fell an unprecedented 5.4%. Non-residential construction fell 10.9% in the quarter, reflecting weak demand for office buildings and shopping malls - victims of remote working and online shopping, respectively. For those of you keeping score, DHI Canada's forecast was for 2.5% growth in Q4 and a decline for the full year of 5.8% - close, but no cigar. You can read the article from StatsCan here.

2021 DHI-C Economic Forecast

December 16, 2020 - DHI Canada today has released our 2021 economic analysis and forecast. We're predicting a few bumps in the road yet as we move into recovery after the pandemic-related recession earlier this year. A slightly abbreviated version of this forecast will appear in the January 2021 issue of Door Safety + Security magazine. You can read the longer version here.

Q3 2020 GDP Released

December 1, 2020 - Statistics Canada released the 2020 third quarter GDP. The economy grew 8.9% in real terms in Q3 compared to Q2; this is an annualized rate of 40.6% Growth is less than anticipated (StatsCan's flash estimate for Q3 was about 46%), but was still a record-breaking level. Non-residential building activity decreased by 0.3% compared to the second quarter. so there is slight continuing weakness in our sector. You can read the StatsCan release here.

Summary of Bank of Canada's Monetary Policy Report, October 2020

November 2, 2020 - The Bank of Canada (BoC) issues a quarterly Monetary Policy Report (MPR), which we use as one of the inputs to our Economic Forecasts. In the April and July MPR, the Bank departed from its practice of including definitive economic forecasts, but returned to it in the October issue. We thought a digest of the MPR might be of interest to members and others, so we have prepared one. If you'd like to read the entire MPR, you can do so here.

StatsCan Releases August GDP; Q3 Flash Estimate

October 30, 2020 - Statistics Canada today released August GDP figures, showing the economy grew 1.2% month over month - a much slower pace than the 3.1% revised growth in July. The news was not so rosy for non-residential construction, which contracted a further 1.7%, with all components (industrial, commercial and institutional/governmental) being down. By contrast, residential construction grew 1.8% in the month. StatsCan also provided flash estimates for September (0.7% growth over August) and Q3 (approximately 10% growth compared to Q2, or an annualized rate of about 46%). Even with the relatively robust growth in Q3, we are still about 5% below pre-pandemic GDP levels. The release is available from StatsCan.

Bank of Canada Rate Still Holding at 0.25%

October 28, 2020 - The Bank of Canada today confirmed it is holding the overnight rate at the effective lower bound of 0.25%. In its release, the Bank indicated it would continue to maintain this rate until its target inflation rate of 2.0% is "sustainably achieved"; they estimate this will not happen "until into 2023". At the same time, the Bank will be gradually reducing purchases under its quantitative easing (QE) program to $4 billion per week (down from $5 billion when the program was initiated); between maintaining the rate at 0.25% and reducing QE purchases, the Bank estimates it will be providing at least as much monetary stimulus as before.

The Bank is projecting a 5.5% decline in Canada's GDP for 2020, followed by two years in which growth will average 4%. They note that "Growth will likely be choppy as domestic demand is influenced by the evolution of the virus and its impact on consumer and business confidence."

July GDP Figures Released

September 30, 2020 - Statistics Canada released the July GDP figures today. With month-over-month growth of 3%, GDP growth is slowing down. This is the thrid consecutive monthly increase in GDP, but it still leaves the economy 6% below February's pre-COVID levels. Construction activity was up by 0.6%, due to increased activity in residential and repair construction. Non-residential building fell by 3.0%. The flash estimate for August indicates a 1.0% increase in total GDP over July. You can read the release from StatsCan here.

Canadian Bank Rate Remains Unchanged at 0.25%

September 10, 2020 - To no one's suprise, the Bank of Canada announced yesterday it was maintaining the bank rate at the effective lower bound of 0.25%. In the press release, the Bank noted that recovery in the third quarter will probably be stronger than predicted in their July Monetary Policy Report, but this will be followed by a "protracted and uneven recuperation phase, which will be heavily reliant on policy support." The reference to policy support is confirmation that interest rates will likely remain at their current levels for some time to come. This was further clarified in the release: "The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved." The release sounded a note of caution, noting that the path of the recovery will be dependent on what happens with COVID-19, and stated the Bank will maintain its current quantitative easing program, under which they are repurchasing at least $5 billion worth of Government of Canada bonds each week. You can read the full announcement here.

Construction Investment and Building Permit Activity

September 3, 2020 - Last week, Statistics Canada released information on investment in construction (for June 2020) and building permit activity (for July 2020). While non-residential construction in June exeeds pre-COVID levels and is actually running ahead of June 2019, there is no corresponding recovery in non-residential building permits: as of the end of July, it's still down more than 13% compared to February 2020 and over 21% below July 2019. You can read our analysis here.

Q2 2020 GDP Released by Stats Can - and as Expected, It's Not Good News

August 28, 2020 - Statstics Canada reported on Canadian Q2 GDP today. The economy shrank by 11.5% compared to Q1 - an annualized decline of 38.7%. This is marginally better than predicted in July (see below), but still "the steepest [decline] since quarterly data were first recorded in 1961". All sectors of the economy were down. Non-residential business building construction fell in Q2 by an annualized 11.8%, while government investment in non-residential buildings was down 4.1%. As a comparison, the total US GDP shrank at an annual rate of 31.7% in Q2. With the reopening of the economy, we're expected to be back in growth mode in Q3. Full information is available on the Stats Can website.

May 2020 GDP Grows; Stats Can Releases Flash Estimates for June and Q2

July 31, 2020 - Statistics Canada today released their May GDP figures, showing growth of 4.5% over April, with 17 of 20 industrial sectors posting increases. Non-residential construction was up 56.7%, as all three subsectors (industrial, commercial and institutional) recorded double-digit increases. The flash estimate for June calls for a further 5% growth as provincial economies continue reopening. However, Q2 GDP is expected to show a 12% decline compared to Q1 (approximately a 40% annualized decline). You can read the article here.

Bank of Canada Holds Interest Rates, Forecasts GDP Decline in 2020 of Almost 8%

July 15, 2020 - The Bank of Canada today held interest rates steady at 0.25%, which it calls the effective lower bound. In its release announcing the rate, the Bank said "The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved," so we can expect to see this rate for the forseeable future, probably well into 2021. At the same time, the Bank forecast a contraction in GDP for 2020 of 7.8% before returning to growth (5.1% in 2021 and 3.7% in 2022). The Bank will also continue its quantitative easing program. The full press release is available on the Bank's website.

Government of Canada Releases Economic and Fiscal Snapshot

July 15, 2020 - The Government of Canada (Department of Finance) last week released an economic and fiscal snapshot for Canada's economy in the wake of COVID-19. They are forecasting a contraction in GDP for 2020 of 6.8% followed by growth of 5.5% in 2021. This is generally within the ranges identified by private sector forecasters. Unemployment in 2020 is expected to be about 9.8%, declining to 7.8% in 2021. They are also calling for a federal deficit in 2020-21 of $343.2 billion - about 10 times that projected deficit of $34.4 billion for 2019-20. Some $227.9 billion of the deficit will result from the government's COVID-19 Economic Response Plan. This will bring the accumulated federal debt to just over $1 trillion, or 49.1% of GDP. Full details are available here.

April 2020 GDP and Flash Estimate for May Released

June 30, 2020 - Statistics Canada today released April 2020 GDP figures. Their earlier "flash" estimate called for a decline of 11% compared to March, but the results were actually marginally lower than that, at -11.6%. The carnage was widespread, with all 20 reporting sectors seeing declines. Non-residential construction fell by 36.0% as commercial, public and industrial construction were all down by double-digits. The bright spot in today's announcement was the "flash" estimate for May, which indicates an increase of approximately 3.0% as a result of reopening initiatives across the country. Read the release here.

June 2020 Economic Forecast

June 29, 2020 - Fearlessly looking into our crystal ball, DHI Canada has prepared an economic review and updated forecast for the balance of 2020 and into 2021. As grisly as it is, you can read it here.

StatsCan Releases March 2020 GDP and Flash Estimate of April 2020 GDP

June 1, 2020 - Statistics Canada released a "flash" estimate for April 2020's Gross Domestic Product, forecasting an 11% decline for the month compared to March. They note that this is a preliminary estimate and that it will be revised as more information becomes available. However, taken together, the March and April declines will likely be the largest consecutive monthly decreases on record. March GDP fell by 7.2%, with almost all sectors being down as a result of measures taken to restrict the spread of COVID-19. Construction (of all types) was down by 4.4%, the largest decrease since the 3.3% contraction experienced by the sector in January 2009. Please see here for more information.

Q1 2020 GDP Down, But Not As Far As Expected

May 28, 2020 - Statistics Canada today released figures for the first quarter's GDP. They show a decline of 2.1% compared to Q4 2019, or an annualized decrease of 8.2%, due to COVID-19. Pundits had expected a 10% annualized decline, so the damage is not as severe as originally anticipated. This marks the sharpest decrease since economic output fell 2.3% (quarter over quarter) in the first quarter of 2008 as a result of the financial crisis. Non-residential construction actually showed an increase over Q4 of 0.5%, although StatsCan notes that "Technical and operational delays were encountered in the production of source data on buildging construction investment" and warned that larger than usual revisions may be made as actual data becomes available. Full details are available from StatsCan's website.

2020 Economic Forecast

January 2020 - Our 2020 economic forecast, written in November 2019 and published in Door Security + Safety magazine's January issue calls for moderate growth in 2020's Canadian GDP (1.4%) amid a general softening of the economy. At the time, we identified uncertainty around pending resolution of international trade disputes, but rejected the idea of a recession. You can read the details here.

Q3 2019 GDP Growth Rate Slows, As Expected

December 4, 2019 - Statistics Canada released Q3 GDP figures on Friday. Overall, they show a moderated growth rate of 1.3% (quarter over quarter, seasonally adjusted at annual rates [SAAR]). Of interest to DHI-C members, non-residential building activity showed annualized growth of 11.1% (a quarterly increase over Q2 of 2.7%) - an unexpectedly strong showing. Exports were down by 1.5% SAAR, driven by non-energy exports, and imports were relatively flat. GDP performance in the quarter is in line with recent expectations, although it's moderately lower than the consensus estimates we reported in our September economic forecast (see below). Detailed information is available here.

Bank of Canada Maintains Overnight Rate

December 4, 2019 - As was almost universally expected, the Bank of Canada maintained its overnight rate at 1.75% today. In its press release, the Bank said there is evidence the global economy is stabilizing and it expects global growth to edge higher over the next couple of years. Economic growth in Q3 2019, while lower than that in Q2, came in at the expected 1.3%, the household sector growth is holding up and inflation remains at around 2%. Not surprisingly, the bank noted international trade tensions as an ongoing wild card, and cited it (and the Canadian economy's ability to absorb tade shocks) as the key factor it will be monitoring in deciding whether to decrease the rate in 2020. The announcement was therefore relatively neutral in terms of whether we can expect any decreases in the coming year. You can read the press release on the Bank's website.

August 2019 Investment in Building Construction Data Released

October 28, 2019 – On October 21, Statistics Canada released the August Investment in Building Construction figures. Nationally, investment grew by 1.4% compared to July (seasonally adjusted at annual rates, and expressed in current dollars). Most of that growth was in residential construction (up 1.8%). Non-residential construction investment increased by 0.5% in the same period; within this sector, commercial construction and institutional/governmental construction were both up (0.8% and 0.2% respectively), while industrial construction fell by 0.4%. Detailed information is available here.

August 2019 Construction Permit Data Released

October 9, 2019 – Statistics Canada today released data on building permits for August 2019. Overall, building permit activity declined by 1.7%, from $10.0 billion to $9.8 billion. Residential activity increased by 7.2% ($6.4 billion in August compared with $6.0 billion in July) but non-residential permits declined by 14.8% ($3.4 billion in August versus $4.0 billion in July). In the non-residential sector, only the industrial subsector posted an increase (11.3%, going from $758 million to $844 billion); the commercial and institutional/governmental subsectors were both down – 13.6% and 37.3% respectively. We've prepared a summary of the data for selected types of construction. You can find complete information on the Statistics Canada site.

July 2019 GDP Data Released

October 1, 2019 - Statistics Canada today released GDP data for July (here). Goods-producing industries' output fell by 0.7% while service-producing industries grew by 0.3%; the net result was no GDP growth for the month. Non-residential construction was up by 0.7% - the seventh time in eight months activity in this sector increased. All sub-sectors - commercial, industrial and public sector - showed increases.

DHI Canada 2019 Q2 Economic Review and Forecast

September 18, 2019 - DHI Canada is pleased to present its 2019 Q2 economic review and forecast. We discuss late breaking information, including the recent drone strikes on Saudi Aramco - read it here!

Canadian Interest Rates Unchanged

September 5, 2019 - The Bank of Canada left its target interest rate unchanged at 1.75% yesterday. This represents a balancing act between an unexpectedly strong GDP performance in Q2 on the one hand, and several moderating factors on the other - an expectation that GDP growth will slow in the balance of the year, slower growth in consumer expenditure in Q2, and international trade tensions (chiefly between the US and China). The Bank's announcement (here) indicated it remains watchful, and did not contain any particularly strong hints about future interest rate policy, although some analysts think that a decrease in the rate next month is a definite possibliity. The Bank did note the inverted bond yield curves that have developed recently in the Canadian and other economies - usually a signal of an upcoming recession. This risk might be sufficient to cause a rate drop at some point during the rest of the year.

Data on Canadian GDP Q2 2019 Released

September 5, 2019 - Statistics Canada released data for the second quarter gross domestic product August 30. Seasonally adjusted at annual rates and in 2012 dollars, the economy showed a surprising growth rate of 3.7%, helped by a 13.4% annualized increase in exports. For comparison, the US economy showed only a 2% growth in the same period. Business investment (non-residential structures, machinery and equipment) was down by an annualized 16.2% in the quarter, driven by a decline in machinery and equipment investment and engineering construction; investment in non-residential structures continued to grow, but the pace slowed compared to the first quarter. The growth rate for consumer spending slowed to an annualized 0.5% for the quarter, compared to 0.7% for the first quarter, in spite of a 1.7% annualized growth in employment income. A full analysis is available on the Stats Can website.

May GDP Data

July 31, 2019 - May gross domestic product data was released by Statistics Canada today. It shows a total growth of 0.2% over April, led by manufacturing, which posted a gain of 1.2% for the month. Construction activity also grew by 0.9% month-over-month, although this was driven primarily by residential (up 2.2% over April); non-residential construction fell slightly by 0.1% StatsCan's analysis is here.

April GDP Data

June 28, 2019 - Statistics Canada today released data for monthly gross domestic product by industry. Overall, GDP grew by 0.3% in comparison with March. The construction sector also showed gains; the increase for all construction was 0.2% in April, while non-residential construction increased 0.7% month-over-month. This is the fifth consecutive month of increases for non-residential construction, and all subsectors (industrial, commercial and institutional) were up. You can read the analysis here.

April 2019 Investment in Building Construction

June 24, 2019 - Statistics Canada has released building construction investment statistics for April 2019 ( Overall building investment grew at a seasonally adjusted 2.5% to $14.87 billion current dollars over the March 2019 levels. Most of the growth came from residential construction, which was up 3.6% to $10.14 billion. Non-residential construction showed a more anemic growth rate of 0.4% to $4.73 billion. Investment in industrial construction also grew 0.4% to $892 million; commercial construction increased 0.3% to $2.71 billion and institutional/governmental increased 0.5% to $1.13 billion.

In constant (2012) dollars, netting out the effects of inflation, performance was somewhat better. Overall construction investment grew 2.8% to $12.49 billion, residential investment was up 3.9% to $8.41 billion, and non-residential grew by 0.7% to $4.08 billion. Within the non-residential construction sector, industrial investment increased by 0.7% to $771 million, commercial construction was up 0.6% to $2.32 billion and institutional/governmental investment grew to $989 million (an increase of 0.8%). In context, institutional governmental construction investment has actually fallen  by 0.8% compared to its December 2018 level of $997 million; this is likely an effect of the planned easing of government stimulus programs that were begun in 2008/2009 along with a generally more conservative approach to budgeting, which is focusing on deficit reduction.

DHI Canada 2019 Economic Review and Forecast

May 1, 2019 - DHI Canada is pleased to present the first quarter 2019 economic review and updated forecast.  You can read it here.

2018 GDP Estimates Released

April 3, 2019 - Global News is reporting that Canada's GDP is estimated to have grown by 1.8% in 2018, below forecasts of 2.1% but in line with our November 2017 forecast (below) of 1.8% to 1.9%.  Very slow growth in the fourth quarter pulled GDP for the year down.  You can read the Global News article here.

DHI Economic Briefing - Construction Activity Report 2018

February 25, 2019 - Statistics Canada has released reports on construction activity for December 2018 and GDP for November 2018.  Growth in the construction sector has been driven by increases in non-residential construction, but the picture net of inflation isn't quite so rosy.  We've put the information together for you, and you can read it here.

DHI Canada Economic Review and Forecast

December 13, 2018 - DHI Canada is pleased to present its economic review and forecast for 2018-19.  You can read it here.

2017 GDP Figures Released

April 23, 2018 - Statistics Canada today released results for 2017 GDP.  The economy grew in 2017 by 3.0% (the high end of our forecast from November 1), driven by household spending, business investment in non-residential structures and machinery and equipment, and exports of goods and services.  Of particular interest to members, investment in non-residential structures contributed about 0.02% to total GDP growth for the year; for comparison, machinery and equipment contributed about 10 times that.  Total business investment, excluding residential structures, grew by 2.6% for the year after a decline of 9.4% in 2016.  The forecast for 2018 is for slow growth in this area of the economy - about 0.8%, primarily as a result of public sector spending.  Oil and gas spending intentions, indicating a decline of almost 12% for 2018, will be the major downward force.  However, if recent increases in oil prices continue, this may change although the effect will not likely be felt until the second half of the year. You can read the Statistics Canada report here.

Bank of Canada Holds the Line on Interest Rates

March 7, 2018 - The Bank of Canada today kept its target interest rate at 1.25% today.  Analysts say this is due to a combination of international trade uncertainty and slowing growth in jobs and the economy.  The international trade front is clouded by the Trump administration's recent announcement of higher tariffs on US imports of steel (25%) - about 90% of our total steel exports are destined for the US - and aluminium (10%) plus the generally gloomy feeling after the most recent round of NAFTA negotiations.  Although the economy grew at a projected rate of 3.0% in 2017, Q4 growth was slower than the Bank expected.  Recent softening in the dollar exchange rate (today, it's trading at below US$0.77, down from the US$0.78-$0.80 we've seen lately) may also have contributed, as has the fact that inflation is running close to the bank's target of 2%.  The Bank maintained its position that interest rates will continue to rise long-term, but was more cautious about short-term increases than it was in February.  You can read the Bank's announcement here.

Canadian Operating Profits Down in Q4 2017

February 23, 2018 - Statistics Canada reports that operating profits from Canadian corporations decreased by 1.9% in Q4 2017 compared to the prior quarter, and were 0.7% lower than Q4 2016.  Total profits earned by Canadian corporations in the last quarter of 2017 were $98.6 billion.  Compared to Q3, net profits fell by 3.3% to $76.5 billion.  Financial services led the decline, with most areas of non-financial industries actually seeing profit increases.  You can the notice here.

Canadian Building Permit Activity - December 2017

February 9, 2018 - Statistics Canada released December 2017 building permit data this week.  December 2017 saw a slight decrease in non-residential construction permits issued compared to November, but overall, December 2017 showed growth in permit activity over the same month in 2016.  Preliminary figures in permit activity for the full years 2017 and 2016 also showed general increases.  Read our report and analysis here.

Bank of Canada Raises Interest Rates

January 17, 2018 - As predicted, the Bank of Canada raised its target interest rate by a quarter point to 1.25% today.  The Bank cited a positive business outlook, recent strong jobs reports, inflation at or near the 2% target, and forecast economic growth of 2.2% in 2018 as reasons for the rate hike.  The announcement reports that uncertainty over the future of NAFTA has been priced into the economic growth forecast, so the Bank has not felt that any interest rate action regarding the potential unwinding of the trade pact is necessary at this time.  Speculation last week that the Bank might hold the rate at 1% in the wake of wide-spread fears of an imminent unilateral US pullout from the NAFTA talks appear to have been unfounded.  The Bank also said that interest rates should continue to rise over the longer term, but that it would monitor economic developments to determine what rate action might be necessary.  The next scheduled rate announcement is March 7, 2018.  You can read the text of the Bank's announcement here.

Interest Rates to Rise

January 9, 2018 - The Bank of Canada is widely expected to increase its interest rate at its meeting January 17.  The expectation is based on strong business sentiment as captured in the Bank's Business Outlook research and the most recent employment figures, which showed unemployment at its lowest level in about 40 years and the creation of an estimated 80,000 jobs in December 2017.  The US Federal Reserve Board is also expected to increase American interest rates in March, so the Canadian hike will anticipate that event.  The Canadian dollar continues to hover around the 80 cent US mark as a result.

October 2017 GDP - Construction

December 22, 2017 - Statistics Canada reported GDP statistics for October 2017 today.  Overall, GDP was unchanged from September 2017, although total construction activity declined by 0.1%, led by non-residential construction (down 0.3%).  This is the first decline in total construction and non-residential construction in four months.  Within the non-residential area, a decline in commercial activity more than offset growth in industrial and institutional construction.  Economic results are in line with Bank of Canada predictions of a softening economy in the 4th quarter of 2017.  See the data here.

Exports of Doors/Windows/Frames and Automatic Door Closures

December 11, 2017 - Statistics Canada reports exports of doors/windows/frames for Q3 2017 ($213 million) were slightly lower than in Q2 but well ahead of levels seen in Q1 2017 and Q4 2016 and that the vast majority of sales were to the US. Exports of automatic door closures in Q3 2017 ($406 thousand) were substantially above levels in the previous three quarters.  2017 year-to-date exports of doors/windows/frames ($704 million) indicate that the final 2017 export volume will, we believe, likely equal 2016's $748 million.  Year-to-date levels are well above the final year totals for the period 2014-2015.  Automatic Door closure exports for 2017 to date ($1.1 million) are about one third of 2016 levels but slightly above levels for 2014-2015.  See the data here.

DHI-C Quick Economic Briefing - August GDP, NAFTA

November 1, 2017 - DHI Canada is pleased to present its Quick Briefing on Canadian Gross Domestic Product (GDP), our own economic forecast and the possible future of the North American Free Trade Agreement (NAFTA).  The briefing is available here.

Bank of Canada News

October 25, 2017 - The Bank of Canada today decided to keep its target overnight lending rate at 1%.  Some forecasters were predicting a rate increase this month, but the Bank decided that, given strong Canadian economic activity, inflation below the target rate of 2% and the somewhat uncertain international economic situation (especially as regards NAFTA renegotiations), there was insufficient justification to raise the rate.  An increase in December is still a possibility.  You can read the announcement here.

In its October Monetary Policy Report (MPR), the Bank is projecting Canadian GDP growth of 3.1% in 2017, 2.1% in 2018 and 1.5% in 2019.  Growth, which has been strong in the first half of 2017, is expected to moderate somewhat in the last two quarters.  Business investment, which includes investment in non-residential construction, is expected to remain robust over the three-year projection horizon.  You can access the full MPR here.

Q3 2017 Non-residential Building Statistics

October 16, 2017 - Statistics Canada has released non-residential building statistics for Q3 2017.  Nationally, the non-residential sector (industrial, commercial and institutional) saw growth of 3.6% compared to Q2.  The big "winners" were educational buildings in the institutional sub-sector (up 18% compared with 4.6% growth for the sub-sector overall) and office buildings in the commercial sub-sector (which led the sub-sector to a 2.6% growth rate).  The industrial sub-sector saw 6.0% growth, led by investment in the construction of farm buildings and, to a lesser extent, manufacturing plants.  For the Statistics Canada bulletin and links to various tables, please click here.

Q2 2017 Non-residential Building Statistics

August 9, 2017 - Statistics Canada has released its report on Q2 2017 non-residential building construction.  While overall construction activity was up by 0.3% in current dollars, it actually fell by 0.7% in terms of constant (2007) dollars - constant dollars net out the effects of inflation.  Read the full article here.

Summer 2017 Review

August 1, 2017 - A lot has happened since our first review – recovery from the Fort McMurray fires, the end of the oil price shock, Brexit and election of a new US government, to name a few.  How will these and other events impact our economic future?  Click here to read the summer 2017 DHI-C economic forecast review.

Summer 2016 Review

August 4, 2016 - As a service to members, DHI Canada is pleased to present its first review of economic forecast data.  How do you expect to fare in the next couple of years?  Read the full article here.