TEC Canada is pleased to provide the Andersen Monthly Economic Report exclusively to our members. The former assistant chief of the Bank of Canada’s research department, Dr. Peter Andersen provides valuable economic insight to help you make better business decisions.
With the U.S. and China reaching a Phase One deal, the ‘worst-case scenario’ is off the table – for now. Work towards a Phase Two deal will mean stronger commodity prices and stronger CAD as well. The Canadian economy continues to report poor numbers; business sector productivity is up only 0.6% y/y while worker compensation and unit labour costs are up y/y/ 4.4% and 3.8% respectively. A strong U.S. consumer, low weekly jobless claims and the recent swing from net oil and petroleum importer to exporter (first time since 1949) forecasts at least 9 more months of U.S. economic growth before the next recession. The U.S. housing sector is beginning to appear as a growth sector with new home sales up 31.6% in October from a year earlier.
- The volume for non-energy and energy exports have been flat since mid-2018 causing companies to have weaker profit margins
- Alberta and Saskatchewan are showing outright declines in business activity as well as housing starts, falling well below their 2000-2018 average. BC is declining economically from the slowdown in China and the Pacific Rim. Quebec however will be the nation’s economic growth leader with an advance of 2%
- De-escalation in the U.S./China trade war means Canada should remain recession free through 2021
- Spending on intellectual property (software, R&D) is soaring at record levels; 7.8% increase on a y/y basis. This is now near spending on manufactured equipment ($1.022B vs. $1.237B)
- The south continues to be the strongest market for new single-family homes. Compared to a year ago (October), new home sales are up 41%. Out west, new home sales are also up at 22% y/y; however many metro areas in California show y/y price declines – San Jose, San Francisco/Oakland, San Diego and Anaheim
- There is a recovery for global commodity prices with a stabilization in lumber, gypsum and insulation pricing. A revival in U.S. housing construction and a more positive global economic outlook will increase copper prices