Bank of Canada poised to hike interest rates next week for first time since 2010

[taxi]

26 minutes ago, Shift-4 said:

And I just happen to be planning a last minute trip south  

Hmmm... Wonder if we'll see Canadian retailers rush to drop their prices the way they did when the dollar went down?

[D-Money]

3 hours ago, apollo said:

Man... I really wish I locked a 5 year fixed mortgage and bought a place last year... hindsight 

Generally, prices will fall as interests rates rise.

 

Although, in hindsight we would have all bought anything in Vancouver we could years ago!

[Shift-4]

19 hours ago, taxi said:

Hmmm... Wonder if we'll see Canadian retailers rush to drop their prices the way they did when the dollar went down?

Or banks only budging up their prime rates by 15 basis points like when BOC dropped prime............oh wait

[nuckin_futz]

Some of these numbers are ridiculous. Pretty sure this will result in the 3rd rate hike in 6 or 7 months.

 

Canada’s jobless rate hits four-decade low as hiring surges

The unemployment rate fell to its lowest level in more than 40 years as Canada closed out a calendar year that saw it produce jobs at a pace not seen since 2002.

 

Statistics Canada reported Friday that the unemployment rate dropped to 5.7 per cent in December, down from 5.9 per cent the month before, to reach its lowest mark since comparable data became available in 1976.

 

"The books closed on a phenomenal year for Canadian employment with another spectacular result for December," CIBC economist Nick Exarhos wrote in a brief report.

 

"In our judgement, that should be enough to see the Bank of Canada hike rates later this month, with the employment figures more than enough to offset recent disappointments on GDP."

 

In December 2016, the unemployment rate was 6.9 per cent, the report said. The last time the jobless rate was 5.8 per cent was October 2007.

 

The unemployment reading fell last month as the economy generated 78,600 net new positions, including 23,700 full-time jobs. [Expectations were for gains of only 2k].

 

By region, Quebec and Alberta saw the biggest increases last month with each province adding more than 26,000 new jobs. Quebec's unemployment rate fell 0.5 percentage points to 4.9 per cent, while Alberta's dropped 0.4 percentage points to 6.9 per cent.

 

The December reading marked the 13th-straight month of job gains, however, about half of those positive numbers were within the survey's margin of error.

 

For 2017, the agency's labour force survey said employment rose 2.3 per cent for its fastest growth rate in 15 years. The economy added 422,500 jobs last year with the gains driven by 394,200 new full-time positions.

 

By industry, factories saw employment increase 3.5 per cent in 2017, while the services sector experienced a boost of two per cent.

 

The survey also found that over the last year the number of employed people aged 55 and over rose 5.3 per cent. This exceeded the 2.9 per cent rate of population growth for the age group.

 

Among core-aged workers, those between the ages of 25 and 54, employment increased 1.6 per cent last year.

 

In a separate report Friday, Statistics Canada says the country's merchandise trade deficit widened to $2.5-billion in November, compared to a $1.6-billion deficit the month before, as imports outgrew exports.

 

https://www.theglobeandmail.com/report-on-business/economy/canadas-job-market-blows-past-forecasts-jobless-rate-af-40-year-low/article37511429/

 

*************************

 

The Bank of Canada meets on Jan 17.

 

The many Trudeau detractors will have to go back to criticizing his hair or his penchant for selfies because there is very little to dislike about the Canadian economy at the moment.

[Ryan Strome]

2 hours ago, nuckin_futz said:

 

********************

 

The many Trudeau detractors will have to go back to criticizing his hair or his penchant for selfies because there is very little to dislike about the Canadian economy at the moment.

I'm not a Trudeau fan at all but I'm happy that the unemployment rate in Canada is dropping to lows not seen in 40 years. I'm also happy about his pledge to invest significantly in the military. However there is still things that him and his government can be criticized for, massive deficit( 3 times more than promised) defending a corrupt finance minister and I suppose the environmentalists would be upset that this government will not meet it's Paris commitments.

 

 

[Warhippy]

3 hours ago, nuckin_futz said:

 

 

*************************

 

The Bank of Canada meets on Jan 17.

 

The many Trudeau detractors will have to go back to criticizing his hair or his penchant for selfies because there is very little to dislike about the Canadian economy at the moment.

I take reports about jobs from June through August and December with a huge grain of salt due to seasonal employment.  January and September almost always show either minor gains or losses.

 

It's hard to argue those numbers at all though and it's certainly a good thing to see.  I am still hoping to see a minimum of 2 rate increases this year.  Coupled with the increased costs of everything it should start helping bring costs down finally.  If they can tackle the endless increases on delivery rates for electricity and natural gas even better.

 

But people have been living far beyond their means now for about a decade.  Jumping in to homes they can't afford, a new leased vehicle every 2nd year, 4 trips a year and so much more.  This is the last year I finance anything for my business without serious need and for very good reason.

 

Alberta leading the way in growth, BC still among the country's leaders as well.  Sask falling.  Country doing well overall economically and soon to see debts being paid down.  All without the significant help of the oil dollar.  It's kind of not looking very good for the right and their finger pointing 

[Ryan Strome]

36 minutes ago, Warhippy said:

I take reports about jobs from June through August and December with a huge grain of salt due to seasonal employment.  January and September almost always show either minor gains or losses.

 

It's hard to argue those numbers at all though and it's certainly a good thing to see.  I am still hoping to see a minimum of 2 rate increases this year.  Coupled with the increased costs of everything it should start helping bring costs down finally.  If they can tackle the endless increases on delivery rates for electricity and natural gas even better.

 

But people have been living far beyond their means now for about a decade.  Jumping in to homes they can't afford, a new leased vehicle every 2nd year, 4 trips a year and so much more.  This is the last year I finance anything for my business without serious need and for very good reason.

 

Alberta leading the way in growth, BC still among the country's leaders as well.  Sask falling.  Country doing well overall economically and soon to see debts being paid down.  All without the significant help of the oil dollar.  It's kind of not looking very good for the right and their finger pointing 

The seasonal thing is something I think people are overlooking but nevertheless the numbers are still promising. I'm not sure Saskatchewan is falling, certainly they have seen better times. You mention B.C being among the leaders of the County, well I guess you and me should stop knocking the B.C liberals eh?

 

Ontario isn't doing very well and Wynne will likely be defeated this year. Quebec is doing well and if that continues I think the Federal liberals could all but sweep Quebec. Quebec also is having a provincial election with the provincial liberals behind in the polls but I think that will change and the Liberals will win a majority government in Quebec.

 

Alberta is doing fairly well and with expectations high the growth will likely continue. Unfortunately for the NDP in Alberta they're still very unpopular in Alberta and it's looking more and more like they will get decimated in the 2019 election.

 

I just hope oil has a nice rise this year and moving forward. I don't want to see a msp or pst but somehow we have to pay down our massive deficit.

[Harvey Spector]

I don't see interest rates increasing this month but I do see at least one rate hike before summer.  After that it is anyone's guess.

 

The job numbers look great, our overall economy is running full steam ahead.  The real estate market in Canada has alot to do with that.  It may cool down this year so these jobs reports may look quite different 6 months from now.  We will see.

[Harvey Spector]

Looks like a majority of the new jobs created last month were PART TIME jobs...

 

BCREA ECONOMICS NOW

 

Canadian Employment - January 5, 2018

 

Strong Canadian job growth continued in December as employment increased by 79,000 jobs.  However, most of the job gains were concentrated in part-time work, which rose by 55,000 jobs. The the national unemployment rate fell 0.2 points to 5.7 per cent, the lowest level of unemployment since comparable data became available in 1976.  In the twelve months to December, employment in Canada was up 2.3 per cent, or 423,000 jobs. Strong fourth quarter job growth and historically low national unemployment will put extra pressure on the Bank of Canada to raise interest rates in 2018.

In BC, employment rose by 5,600 jobs, although full-time employment declined by 6,200 while part-time work was up 11,800.   The provincial unemployment rate fell 0.2 points to a Canada-wide low of 4.6 per cent. BC finished 2017 with employment growth of 3.6 per cent or 83,000 jobs

 

The British Columbia Real Estate Association (BCREA) is the professional association for more than 20,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

[nuckin_futz]

4 hours ago, Warhippy said:

I take reports about jobs from June through August and December with a huge grain of salt due to seasonal employment.  January and September almost always show either minor gains or losses.

 

 

Was curious about this, so I looked it up. You can consider economic data my "corsi" fetish.

 

Canadian jobs created or lost for the last 5 years in those months:

 

June 2017 +45.3K

June 2016 -0.7K

June 2015 -6.4K

June 2014 -9.4K

June 2013 -0.4K

 

July 2017 +10.9K

July 2016 -31.2K

July 2015 +6.6K

July 2014 +41.7K

July 2013 -39.4K

 

August 2017 +22.2K

August 2016 +26.2K

August 2015 +12K

August 2014 -11K

August 2013 +59.2K

 

June and July showed no discernible trend. Only discernible trend is in August. August would make for a pretty short season.

 

Jan 2017 +48.3K

Jan 2016 -5.7K

Jan 2015 +35.4K

Jan 2014 +29.4K

Jan 2013 -21.9K

 

Sep 2017 +10K

Sep 2016 +67.2K

Sep 2015 +12.1K

Sep 2014 +74.1K

Sep 2013 +11.9K

 

Jan and Sept had some of the bigger numbers.

 

3 hours ago, Harvey Spector said:

I don't see interest rates increasing this month but I do see at least one rate hike before summer.  After that it is anyone's guess.

 

The OIS market (Overnight Index Swap) is pricing in an 80% chance of a hike on Jan 17. There is little significant data scheduled to be released from now until then to sway the markets either way.

 

 

[Harvey Spector]

3 minutes ago, nuckin_futz said:

The OIS market (Overnight Index Swap) is pricing in an 80% chance of a hike on Jan 17. There is little significant data scheduled to be released from now until then to sway the markets either way.

 

 

That is interesting info.  I'd be shocked if the BOC bumped up the rate 0.25% on January 17th.  It would definitely cause a ripple effect in the real estate market as buyers are still trying to adjust to the new stress tests.  I guess we will find out soon enough.

[Ryan Strome]

37 minutes ago, nuckin_futz said:

Was curious about this, so I looked it up. You can consider economic data my "corsi" fetish.

 

Canadian jobs created or lost for the last 5 years in those months:

 

June 2017 +45.3K

June 2016 -0.7K

June 2015 -6.4K

June 2014 -9.4K

June 2013 -0.4K

 

July 2017 +10.9K

July 2016 -31.2K

July 2015 +6.6K

July 2014 +41.7K

July 2013 -39.4K

 

August 2017 +22.2K

August 2016 +26.2K

August 2015 +12K

August 2014 -11K

August 2013 +59.2K

 

June and July showed no discernible trend. Only discernible trend is in August. August would make for a pretty short season.

 

Jan 2017 +48.3K

Jan 2016 -5.7K

Jan 2015 +35.4K

Jan 2014 +29.4K

Jan 2013 -21.9K

 

Sep 2017 +10K

Sep 2016 +67.2K

Sep 2015 +12.1K

Sep 2014 +74.1K

Sep 2013 +11.9K

 

Jan and Sept had some of the bigger numbers.

 

The OIS market (Overnight Index Swap) is pricing in an 80% chance of a hike on Jan 17. There is little significant data scheduled to be released from now until then to sway the markets either way.

 

 

Whoa whats up with July 2016 and 2013?

 

 

[Harvey Spector]

1 hour ago, Ryan Strome said:

Whoa whats up with July 2016 and 2013?

 

 

I had to fire some of my assistants...  

[Ryan Strome]

22 minutes ago, Harvey Spector said:

I had to fire some of my assistants...  

[kingofsurrey]

9 hours ago, Warhippy said:

 

Alberta leading the way in growth, BC still among the country's leaders as well.  Sask falling.  Country doing well overall economically and soon to see debts being paid down.  All without the significant help of the oil dollar.  It's kind of not looking very good for the right and their finger pointing 

Clearly the NDP in both Alberta and BC are leading the way with sound financial management.

So great to see after both provinces had such financially irresponsible  governments in place before the more fiscally responsible NDP  got elected in both provinces. 

[Ryan Strome]

10 minutes ago, kingofsurrey said:

Clearly the NDP in both Alberta and BC are leading the way with sound financial management.

So great to see after both provinces had such financially irresponsible  governments in place before the more fiscally responsible NDP  got elected in both provinces. 

B.C was leading the way under the B.C liberals. You, me and hip all knock the BC liberals but if B.C is doing well it would be the B.C liberals not a government that has been in power for 6 months.

 

Btw fiscally responsible might not be the best line to use..

[kingofsurrey]

13 minutes ago, Ryan Strome said:

B.C was leading the way under the B.C liberals. You, me and hip all knock the BC liberals but if B.C is doing well it would be the B.C liberals not a government that has been in power for 6 months.

 

Btw fiscally responsible might not be the best line to use..

BC Liberals ran BC into the ground the last 10 years.  Wiped out the middle class of this once prosperous province.......  

Cost of living went up .. up and up...  user fees  up ... up and up.... tolls { WTF ) ^^^^^    ,   MSP premiums ... only in BC    while BC liberals ran the province. 

 

 

 

[Ryan Strome]

1 minute ago, kingofsurrey said:

BC Liberals ran BC into the ground the last 10 years.  Wiped out the middle class of this once prosperous province.......   

 

 

 

Well I would agree but B.C was leading the way under them. Imo B.C creates tons of lowing paying jobs which looks good on paper but when you look at the poverty in B.C It's clear the jobs being created are near useless because people can't afford to live there. It is really sad, you're right.

[Harvey Spector]

Canadian businesses are making a Bank of Canada rate hike next week a sure thing

Last week, red hot Canadian job numbers had economists scrambling to switch their predictions for the Bank of Canada’s next rate hike to January 17. Now, a new survey has those economists saying a January rate hike is a sure thing.

 

The Bank of Canada’s quarterly Business Outlook Survey has found that Canadian businesses had an overwhelmingly positive outlook about the economy in 2018. The broader-based indicator of future sales came in at 55 per cent, the third highest reading on record.

 

“Businesses are indicating rising and inflationary capacity pressures that will reinforce the [Bank of Canada’s] bias toward hiking rates next week,” writes Scotiabank VP and head of capital markets economics Derek Holt, in a recent note.

 

The survey comes on the back of 13 straight months of job gains, and an unemployment rate of 5.7 per cent, the lowest level since 1974.

 

Last year, the Bank of Canada hiked the overnight rate twice, bringing it up 50 basis points from its historically low 0.5 per cent. Now, Holt predicts the Bank will raise the overnight rate by 25 basis points on January 17, and he’s not alone.

 

“I think this survey adds to the evidence that the economy remained quite strong in the fourth quarter,” RBC economist Josh Nye tells BuzzBuzzNews. “We’re seeing a positive economic outlook from businesses, which seem to be responding more to economic conditions than to any concerns about NAFTA.”

 

Uncertainty about the ongoing NAFTA negotiations has been listed by many economists as potential reason for delaying another rate hike. But according to Holt, it seems likely that the Bank of Canada Governor Stephen Poloz will “deal with NAFTA risks if and when they arise.”

 

“Canadian businesses’ investment and hiring plans are not indicating great concern toward NAFTA negotiations and that is a big sigh of relief at this point,” writes Holt. “This reinforces Poloz’s bias to…treat it as business as usual in the meantime and conduct monetary policy accordingly.”

 

Ultimately, Nye feels that the survey is the final push towards a January rate hike.

 

“We saw this kind of positive sentiment in the Q2 survey, which was followed by a rate hike,” he says. “It seems very likely that this pattern will continue in January.”

As for Holt, he’s not willing to give an absolute prediction — but he does seem pretty confident.

 

“Does the survey settle with 100 per cent certainty the debate over whether the [Bank of Canada] will hike next week or not?” asks Holt. “Of course not, but it does add to our conviction.”

 

http://news.buzzbuzzhome.com/2018/01/canadian-businesses-making-bank-canada-rate-hike-next-week-sure-thing.html

[nuckin_futz]

Bank of Canada hikes rates again, but warns of NAFTA fallout

 

The Bank of Canada is raising its key interest rate for the third time in six months as the Canadian economy gathers steam, but it warned that its next moves may hinge on the fate of NAFTA.

Governor Stephen Poloz and his central bank colleagues raised the benchmark rate by a quarter percentage-point to 1.25 per cent Wednesday. The move follows similar rate hikes in July and September.

"Recent data have been strong, inflation is close to target and the economy is operating roughly at capacity," the bank said in statement accompanying its rate decision.

 

The widely expected move is expected to cause banks and other financial institutions to raise rates on mortgage rates and other loans.

While economic conditions look good now, the bank expressed growing concern about the future of the North American free trade agreement – the foundation of Canada's trade with the United States. The bank said speculation the U.S. may pull out of the deal is already holding back business investment in Canada and it poses a threat future exports.

 

"Uncertainty about the future of NAFTA is weighing increasingly on the outlook," the bank said.

The central bank's latest forecast, also released Wednesday, predicts economic growth will slow significantly to 2.2 per cent this year and 1.6 per cent in 2019, down from an estimated pace of 3 per cent in 2017. The projections are roughly in line with the bank's October forecast.

The latest projections reflect the bank's "negative judgment on business investment and trade," according to the statement.

Trade uncertainty is already affecting investment by U.S. and European companies, which the bank said have been making fewer new investments in Canada since mid-2016. The bank estimates that trade uncertainty will cut business investment over the next two years by two per cent. That translates into a 0.3 per cent per year drag on growth – a slightly larger hit than the bank estimated in October.

"At this stage, it is difficult to predict the possible outcomes of trade negotiations and the timing, incidence and magnitude of their effects," the bank added in its Monetary Policy Report.

 

The threat of greater protectionism remains the most significant risk to Canada's export-dependent economy, the bank said. The bank pointed out that roughly half of Canada's exports to the U.S. benefited from preferential NAFTA tariffs in 2016. The U.S. buys roughly three-quarters of what this country exports.

The recent move by the U.S. to slash business taxes cuts both ways for Canada, creating a small net positive for the economy. Tax relief will boost U.S. growth, driving Canadian exports higher, but also cause some companies to shift investment south of the border to take advantage of those tax breaks, according to the Bank of Canada.

Many economists expect the central bank to raise rates at least two more times this year.

But the bank said it remains "cautious" about raising rates further.

"While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target," according to the statement.

The central bank judges that 3 per cent is the neutral level for its overnight rate – the point where interest rates are neither revving up growth nor applying the brakes.

 

Beyond the NAFTA uncertainty, most economic pieces are falling into place for the Bank of Canada. Inflation has inched up to near the bank's two per cent target and should stay close to that level over the next two years, in spite of "temporary" fluctuations in energy prices in the months ahead, the bank said.

Meanwhile, strong job gains are driving consumer spending and housing investment. The bank also highlighted "promising signs" in capital investment, company formation, and more workers joining the labour force.

Canada's economy generated an impressive 420,000 jobs in 2017. At 5.7 per cent, unemployment hasn't been this low since 1976. Wages are starting to creep up after years of stagnation. And companies are busier than they've been since the last recession.

The bank also pointed out that Canada's economy is getting a lift from higher oil prices, now at more than $60 (U.S.) per barrel for many grades. But those benefits are being "diluted" because of a widening spread between Canadian and world crude prices.

Going forward, the engines of growth for the economy will be business investment and exports, rather than consumers and home construction, according to the bank. That's largely because of higher interest rates and new tighter mortgage rules put in place this month.

 

https://www.theglobeandmail.com/report-on-business/bank-of-canada-hikes-rates-again-but-warns-of-nafta-fallout/article37632908/