Canada’s Economy Unexpectedly Contracted in Q2

Latest News Angela Calla 8 Sep

Housing Dampened Economy in Q2

This morning’s Stats Canada release showed that the economy unexpectedly contracted in the second quarter by 1.1%, down from the revised 5.5% gain in the first three months of the year. The Canadian dollar dipped on the news to $.7921 as questions of resiliency in the face of the delta variant mount. Economists in a Bloomberg survey were anticipating a 2.5% expansion. Adding to the disappointment, economic growth fell a further 0.4% in July, according to a preliminary estimate.

The weak GDP data reduces the odds of the Bank of Canada tapering their bond purchases at their policy meeting on September 8th. It also highlights the output gap–the degree to which the economy remains below full economic capacity–remains a big issue. The Bank has forecast the gap to close by the middle of 2022. While that remains uncertain, we continue to expect growth to rebound in the third quarter.

Increases in investment in business inventories, government final consumption expenditures, business investment in machinery and equipment, and investment in new home construction and renovation were not sufficient to offset the declines in exports (-4.0%) and homeownership transfer costs (-17.7%), which include all costs associated with the transfer of a residential asset from one owner to another.

Housing investment reshapes the economy

Since the third quarter of 2020, housing investment has emerged as the predominant contributor to economic activities and capital stock—with residential capital stock surpassing non-residential capital stock. Moreover, the average housing investment for the previous four quarters was 17% higher than the average over the last five years.

Housing investment

Both new construction and renovations—the components of residential capital stock—have shown sustained growth since the third quarter of 2020. Because of the ability to work from home, savings from less travel and reduced participation in other activities, low mortgage rates and increases in home equity lines of credit, spending has continued to increase on new houses (+3.2%) and home renovations (+2.4%).

After taking on $62.3 billion of residential mortgage debt in the last half of 2020, households added $84.2 billion more residential housing debt in the first half of 2021.

Supply chain disruptions continue to impact motor vehicles

Shortages of microchips and other inputs curtailed trade in motor vehicles and domestic consumption. Household purchases of new passenger cars (-7.2%) and trucks, vans and sport utility vehicles (-1.6%) decreased, while business investment in medium and heavy trucks, buses and other motor vehicles fell 34.2%. Longer plant shutdowns because of international supply chain disruptions have constrained imports of parts and led to significant decreases in exports. Low production of motor vehicles and parts resulted in an 18.9% drop in exports of passenger cars and light trucks and an 8.7% decline in tires, motor vehicle engines and parts exports. Inventories had another quarter of significant drawdowns in response to supply needs.

Double-digit household savings rate continues

The modest rise in household spending (+0.7%, in nominal terms) was outpaced by growth in disposable income (+2.2%), leaving households with more net savings than in the previous quarter. Household incomes were primarily bolstered by employees’ rising compensation and increasing transfers received from the government, which were partially offset by a 2.8% rise in personal income taxes.

Consequently, the savings rate reached 14.2%—the fifth consecutive quarter with a double-digit savings rate—as various pandemic-related restrictions and uncertainty continued to limit the scope of household consumption. The household savings rate is aggregated across all income brackets; in general, savings rates are greater in higher income brackets.

Bottom Line

Today’s release is, in some respects, ‘ancient history.’ It is still widely expected that the economy will rebound in the third quarter. With the surge in household savings and continued growth in personal disposable income, pent-up demand is likely to boost consumption for the remainder of this year. All eyes will be on the August employment report released Friday, September 10th. The Bank of Canada will likely continue to proceed cautiously. Another tapering of the bond-buying program will come under scrutiny, and forward guidance will continue to suggest no rate hikes until the second half of next year.

The source of this article is from SherryCooper.com/category/articles/


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Canadian economy unexpectedly contracted

Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, continues quantitative easing

Latest News Angela Calla 9 Jun

FOR IMMEDIATE RELEASE
Bank of Canada Update
Ottawa, Ontario
 

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which continues at a target pace of $3 billion per week.

With COVID-19 cases falling in many countries and vaccine coverage rising, global economic activity is picking up. Growth remains uneven across regions, however. The US is experiencing a strong consumer-driven recovery and a rebound is beginning to take shape in Europe, while a resurgence of the virus is hampering the recovery in some emerging market economies. Financial conditions remain highly accommodative, reflected in broadly higher asset prices. Commodity prices have risen further, notably oil, and the Canadian dollar has seen a further appreciation.

In Canada, economic developments have been broadly in line with the outlook in the April Monetary Policy Report (MPR). Despite the second wave of the virus, first quarter GDP growth came in at a robust 5.6 per cent. While this was lower than the Bank had projected, the underlying details indicate rising confidence and resilient demand. Household spending was stronger than expected, while businesses drew down inventories and increased imports more than anticipated. Renewed lockdowns associated with the third wave are dampening economic activity in the second quarter, largely as anticipated. Recent jobs data show that workers in contact-sensitive sectors have once again been most affected. The employment rate remains well below its pre-pandemic level, with low wage workers, youth and women continuing to bear the brunt of job losses.

With vaccinations proceeding at a faster pace, and provincial containment restrictions on an easing path over the summer, the Canadian economy is expected to rebound strongly, led by consumer spending. Housing market activity is expected to moderate but remain elevated. Strong growth in foreign demand and higher commodity prices should also lead to a solid recovery in exports and business investment. Despite progress on vaccinations, there continues to be uncertainty about the evolution of new COVID-19 variants. More broadly, the risks to the inflation outlook identified in the April MPR remain relevant.

As expected, CPI inflation has risen to around the top of the 1-3 percent inflation-control range, due largely to base-year effects and much stronger gasoline prices. Core measures of inflation have also risen, due primarily to temporary factors and base year effects, but by much less than CPI inflation. While CPI inflation will likely remain near 3 percent through the summer, it is expected to ease later in the year, as base-year effects diminish and excess capacity continues to exert downward pressure.

The Governing Council judges that there remains considerable excess capacity in the Canadian economy, and 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. In the Bank’s April projection, this happens sometime in the second half of 2022. The Bank is continuing its QE program to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding adjustments to the pace of net bond purchases will be guided by Governing Council’s ongoing assessment of the strength and durability of the recovery. We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.

Information note

The next scheduled date for announcing the overnight rate target is July 14, 2021. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

Content Type(s)PressPress releases
 
To view the article on the Bank of Canada website click here.

Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling bookThe Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Team Banner housing market

COVID-19 and The Workplace: What employers and employees need to know.

General Angela Calla 8 Apr

I’d like to share with you some important information on how COVID-19 has, and will continue to, affect the workplace. This is a great source for both employers and employees.

Presented by: Catherine Coakley & Grant Morrison, BTM Lawyers on April 3rd, 2020

WATCH THE RECORDING 

What you’ll learn in the presentation:

  • Terminations and Layoffs
  • Aim I entitled to temporarily layoff my employees?
  • Are my employees entitled to severance?
  • How much severance or notice are my employees entitled to?
  • Programs and Benefits Available to Employees and Employers Impacted by COVID-19
  • Canada Temporary Wage Subsidy
  • Canada Emergency Response Benefit
  • EI Sickness & Regular Benefits
  • BC Emergency Benefit
  • Tax Relief for Businesses
  • Business Credit Availability Program & Canada Emergency Business Account
  • Maintaining a Safe Work Environment
  • Review amendments to Employment Standards Act that provide unpaid job security for workers unable to work for reasons related to COVID-19
  • Are employers entitled to prevent an employee from going to work due to the risk of exposure due to COVID-19?
  • Are employees entitled to refuse to attend work due to the risk of exposure to COVID-19?
  • Attendees will takeaway:
  • Be given the tools necessary to take advantage of available benefits and programs to lessen the financial burden of the COVID-19 pandemic
  • Understand their rights and obligations in dealing with the fallout of the COVID-19 pandemic
  • Provided with the tools to take advantage of newly announced programs
  • Understand your right and obligations as employers and employees in facing the health and economic challenges brought by the COVID-19 pandemic

 

More about Grant & Catherine:

Grant Morrison and Catherine Coakley from BTM Lawyers LLP. Grant and Catherine are experienced employment lawyers that have years of experience representing both employers and employees in a wide range of workplace issues including layoffs, wrongful dismissals, severance negotiations, human rights and WorkSafe BC issues.  BTM Lawyers LLP is a community based full-service law firm that has served the Tri-Cities for over 40 years. Learn more and contact them at 604-937-1166

 

Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Information for renters and landlords during COVID-19

Latest News Angela Calla 7 Apr

The B.C. government reassures renters they will not be evicted if they cannot pay rent during the state of emergency related to novel coronavirus (COVID-19). As announced on March 25, 2020, the Province has halted evictions during the COVID-19 crisis.

To support renters who are facing a loss of income during the pandemic, a new Temporary Rental Supplement (TRS) will also offer up to $500 a month to help renters pay part of their rent and help ensure landlords continue to receive at least some rental income right now. More information about this program will be available by mid-April 2020. While the program will launch later this month, qualified tenants will be able to receive supplemental rent support for April, May and June 2020. This supplement is in addition to funding available from the federal government and the $1,000 B.C. Emergency Benefit for Workers.

There are existing programs for renters, such as Shelter Aid for Elderly Renters (SAFER) and the Rental Assistance Program (RAP).

More information on these programs is available online.

In response to the challenges posed by the current crisis, there are also programs available from the federal government online.

While the rental supplement is designed to help renters pay their rent during this emergency, renters will be responsible for any outstanding rent owing after the state of emergency has ended.

Renters who are not experiencing financial hardship should still pay their rent. Tenants who are able to make even a partial rent payment are encouraged to do so.

The people providing rental housing rely on rent payments to pay for their utilities, mortgages and other bills related to the rental property. If renters are unable to pay the full rent or need more time, they are encouraged to inform their landlord and to apply for the supplement and other support programs.

People interested in the new TRS program should monitor the BC Housing website for details on eligibility, the application process and other steps. This information will be posted on this website in the coming weeks.

To protect both renters and landlords during this time, the Province has frozen rent increases for existing tenants, allowed landlords to restrict the use of common areas by tenants or guests to protect against the transmission of COVID-19, and given renters the right to control who enters their units, except in emergency circumstances. These measures and others are outlined in the March 25, 2020, announcement.

Renters and landlords are encouraged to do their best to come to mutual solutions during the pandemic. People with specific questions should contact the Residential Tenancy Branch.

For translations and further info please visit the BC Government Website.

 

Landlord BC is comprised of passionate professionals and industry experts, BC’s top resource for owners and managers of rental housing, a member-driven professional association leading the rental housing industry in BC, over 3,300 members strong. Their members include property owners, property managers with purpose-built rentals, secondary suites, and investment properties. Passionate about making members jobs easier, legislation clearer, and the rental housing market better for everyone.

 

Angela Calla is a 16-year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders to get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.