Next Rate Hike?
When will the Bank of Canada increase rates? The consensus seems to be sometime in 2013:
Royal Bank: The BoC will not likely make any changes to policy this year, and we have moved our call for the first rate hike to Q1/13 from Q4/12. (Source)
TD Bank: We now don’t expect the Bank of Canada to hike rates until March 2013, as stricter mortgage regulations have reduced the urgency for monetary policy to squeeze the brakes on household debt accumulation. (Source)
Bank of Montreal: BMO has revised its forecast of the resumption of interest rate hikes by the Bank of Canada from January 2013 to July 2013. The half-year delay in rate hikes flows from three factors: the current and expected easing policy of the U.S. Federal Reserve, a downgraded Canadian economic outlook and the recent move to tighten mortgage rules (Source)
Canadian housing starts for June will be announced on Tuesday. BMO is already blaming the new mortgage rules – that haven’t even come into effect yet – on the expected dip.
BMO: “While there remains plenty of chatter about a coming correction (already evident in Vancouver), the level of new building has been robust—housing starts have averaged 214,800 units so far this year after 193,000 in 2011, well above household formation of around 180,000. Given that building permits have been running a bit below starts in recent months, we suspect starts will dip close to 200,000 units in June. Incessant bubble chatter and the latest moves by Ottawa to tighten mortgage insurance rules (announced June 21) may have slightly dampened activity.” (Source)
Canadian Wage Growth
Hourly wages continued their progression, up 3.4% compared to twelve months earlier. This was the largest year-to-year increase in almost three years. (Source)
Canadian Job Growth Slows In June
CIBC: All good things must come to an end, and so it goes with the short-lived Canadian spring hiring bonanza. Job creation slowed for the second straight month, with employment increasing by a tame 7.3K, broadly in line with the street’s expectations. With discouraged workers leaving the labour force, the jobless rate managed to edge down to 7.2%, hardly a bullish driver for declining joblessness.
The skew towards full-time hiring provides some solace, and the six-month trend is still tracking a healthy 26K clip. Nonetheless, today’s report raises concerns that the pace of employment growth could be shifting back into lower gear.
The +50K monthly hiring prints seen in the spring were stunning, and may have overstated the true figures, given the Labour Force Survey’s small sample size and tendency for large standard errors (+/- 28K).
Since then, signs suggest hiring has decelerated, with the June print lending further support to the view that hiring won’t be able to rival the tempo seen a few months ago. (Source)
Calgary & Alberta Job Market
Both Calgary and Alberta experienced job losses in June, according to Statistics Canada.
The federal agency reported Friday that the Calgary census metropolitan area had 1,200 fewer jobs than in May, down 3.1 per cent, but the unemployment rate fell from 4.9 per cent to 4.8 per cent in June.
On a year-over-year basis, there were 6,100 fewer jobs in the Calgary region, down 14.0 per cent.
In the province, there were 8,600 fewer jobs than in May, down 0.4 per cent, and the unemployment rate rose from 4.5 per cent in May to 4.6 per cent in June – the lowest in the country. (Read more in today’s Calgary Herald)
Toronto Condo Sales Plummet
June sales of condos in Toronto, Canada’s largest city, dropped 18%, to 1,996 units, from last June, the Toronto Real Estate Board said. Prices of condo units advanced 2%, to an average 342,044 Canadian dollars ($337,188). Sales of detached, single-family homes rose 7%. (Source)
Is it odd that sales dropped while prices increased? No. CIBC economist Benjamin Tal said,“We know that prices tend to follow sales by about three to five months,” meaning Toronto home prices could fall come autumn.
It seems that everyone except those in Toronto can see what is unfolding. The Toronto Real Estate Board is even claiming the land transfer tax is what’s hindering Toronto’s real estate market. Yes, the tax that took effect over four years ago on February 1, 2008. (Source)
Have a great weekend!