It has been a while since I have sent out a “good news” article, but here are three in one day. That is great!
1. The country's real estate market is so hot cities are running out of properties to sell
2. Canada's unemployment rate falls to 8.4%, first decline since recession
3. Surprise! U.S. sales rise in September
Average Canadian home prices up slightly, says Royal LePage survey
The Canadian Press
TORONTO - The housing market may be recovering, but is experiencing an undersupply of homes for sale in southern Ontario and elsewhere in Canada.
That's according to the latest house price survey by Royal LePage. It says with the recession retreating, home prices are stabilizing and unit sales are increasingly driven by improved affordability.
Royal LePage says the average price of a two storey home in Canada is up just 0.1 per cent from a year ago at $409,335.
Average bungalow values grew 0.06 per cent year-over-year to $341,146, while the price of an average condo increased 0.09 per cent to $243,748.
Royal LePage says a shortage in housing supply is leading to bidding wars in several cities, including Toronto, Montreal, St. John's, N.L.; St. John, N.B. Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria.
While the Atlantic provinces saw a strong recovery in home prices, western provinces have been slower to recover from significant price corrections in 2008, particularly in British Columbia and Alberta.
Ontario and Quebec saw home prices stabilize or gain slightly year-over-year with much of the recovery occurring in a strong third quarter.
Canada's unemployment rate falls to 8.4%, first decline since recession
By Julian Beltrame, The Canadian Press
OTTAWA - Canada's unemployment rate fell for the first time in nearly a year to 8.4 per cent last month, in perhaps the clearest indication the hard-hit labour market may be recovering sooner than expected.
The September jobs pick-up of 30,600 was five times larger than the economist consensus forecast of 5,000 and - along with a slight decrease in the number of workers looking for jobs - helped drop the national unemployment rate by 0.3 percentage points.
This was the second consecutive month of employment gains.
There was more good news - actual hours worked increased by 1.6 per cent.
More impressive, the agency said 91,600 full-time jobs were added in September, more than offsetting the 61,000 loss in part-time employment.
This reverses the pattern observed most of the past year as employers cut back by first reducing full-time workers to part-time status.
Economists consider employment a lagging indicator because employers usually will wait until they see clear signs that a recovery is underway and will be sustained before beginning to re-hire.
By contrast, the U.S. is still reporting massive monthly job losses even though most believe the economy there has turned the corner and begun to grow.
Canada has seen a fitful rebound from the downturn, although the most recent data on gross domestic product only extends to July and does not capture the next two months of job gains.
If there was a downside to the Canadian jobs data for September, it was that hourly wage growth slowed to 2.5 per cent, the lowest year-over-year wage gain in 2 1/2 years, and that all and more of the net job growth was in the public sector.
Also, adult men continue to have difficulty finding work. September saw a decline on employment among men aged 25 to 55, while women in the same age group saw employment rise by 41,000.
Since October, most of the employment losses have occurred among adult men and youth.
But Statistics Canada noted that the trend of Canada's labour market has been improving steadily forward since the outsized job losses of last winter.
"Since the peak in October 2008, employment has fallen 2.1 per cent (357,000), with the bulk of the decline occurring between October and march 2009," the agency noted.
"Since then, the trend in employment has levelled, with the number of employed almost the same in September as it was in March."
The biggest jobs gains came in industries that have been hardest hit by the recession. Manufacturers added 26,000 workers last month, and the construction trade, which may have been boosted by federal stimulus money, picked up 25,000 workers, the second consecutive gain.
Workers in education services also saw improvement with 18,000 jobs added to the sector last month, when students returned to schools, colleges and universities following the summer break.
Meanwhile, employment in transportation and warehousing slipped by 21,000.
Regionally, British Columbia, New Brunswick and Prince Edward Island saw significant job gains in September. Nova Scotia, Quebec and Manitoba saw outright job losses.
Surprise! U.S. sales rise in September
Up by 0.6%
Jessica Wohl, Reuters
U.S. retailers gave investors an early Christmas present, posting their first monthly sales increase in more than a year and suggesting that wounded consumers might begin to heal in time for the crucial holiday season.
Store chains that included Macy's Inc., Abercrombie & Fitch and Kohl's Corp. surprised Wall Street yesterday with better-than-expected September sales.
The Standard&Poor's retail index rose 1.6%, with shares of Macy's up 2.9% and Abercrombie rising 6%.
Based on 30 retailers, sales at stores open at least a year climbed 0.6%, compared with expectations for a 1.1% decline, according to Thomson Reuters data. Nearly 80% of the companies beat expectations.
The last time sales rose was in August 2008, when retailers notched a 0.2% gain. That was just before a financial collapse in September constricted credit worldwide and sent jobless rates climbing.
Retail experts cautioned that the sales results did not yet presage a consumer-driven recovery to the U.S. economy.
"You need to see sales coming through, margins holding and overall profit rising," said Michael Niemira, chief economist of the International Council of Shopping Centers. "That overall story needs to play out for retail recovery to be solid."
The ICSC said October same-store sales should be about flat with a year earlier, when retailers averaged a 4.1% drop, said Thomson Reuters data.
One factor in the higher September sales was an easier comparison with previous results. Same-store sales fell 0.9% in September 2008, Thomson Reuters data said.
"We only get better or stronger from here, given the weak comparisons with a year ago," Mr. Niemira said.
This year's later Labour Day holiday pushed a good chunk of sales from August into September, but analysts had wondered if rising unemployment would weigh more heavily on spending.
Yesterday, a U.S. Labor Department report showed new U.S. jobless claims hit a nine-month low, suggesting the employment market was healing despite a September setback.
Sales of clothing for the back-to-school season fuelled many retailers' performances, especially in the early part of the month. Several chains raised their profit forecasts for the current quarter, although Target Corp. said it still had a cautious view of its fiscal fourth quarter, which includes the holiday season.
Friday, October 9, 2009
Wednesday, October 7, 2009
The rate hike heard round the world
Here is an interesting article. Could this give the Bank of Canada an excuse to raise Prime earlier than 2010? Who knows, but it is shows how up and down the rate landscape is.
The rate hike heard round the world
Paul Vieira, Financial Post
OTTAWA -- The Reserve Bank of Australia has become the first major central bank to raise interest rates since the financial crisis, citing rising home and stock prices along with the traditional focus on growth and inflation - factors other central bankers are expected to make more prominent as they seek to prevent a repeat of debilitating asset bubbles.
The surprise move by Australian central banker Glenn Stevens was greeted with enthusiasm by markets, as it was interpreted as a sign a global economic recovery was on track. Equities, commodity prices and the Canadian dollar surged on the move, although giving up some gains in later trading.
The Australian rate increase now puts the spotlight on other central banks, such as Canada's, which has been steadfast in setting rates to ensure a 2% inflation target. But inflation in Canada is expected to remain benign until 2011, forecasters say, due to excess manufacturing capacity in the economy and a strong Canadian dollar that will keep a lid on import prices.
The loonie reached a one-year high Tuesday of US94.82¢, before closing at US94.38¢, up 0.93¢ from Monday's close.
"Inflation is not going to be a problem. Consumer spending, and the consumer response to cheap money, however, may be a problem," said Stewart Hall, economist with HSBC Securities Canada.
The consumer response is what might push the Bank of Canada, just like its Australian counterpart. In its decision, Australia's central bank cited solid gains in housing prices and a "significant" recovery in equity markets for raising its benchmark rate 25 basis points, to 3.25%.
"I do get the sense asset prices are going to be play a greater role in the formation of monetary policy," said Michael Gregory, senior economist at BMO Capital Markets. "Because the amount of stimulus is unprecedented, and at emergency levels, removing it won't follow the same rules of thumb."
As a result, he said, central bankers might be looking at new measures to determine when to raise rates. As opposed to looking strictly at inflation and growth, Mr. Gregory said central banks might be forced to pay as much attention to asset prices and credit spreads.
In Australia, the central bank has always paid close attention to housing prices - which are a national obsession and have been on a tear over the past decade - and view them as a guage of the overall strength of the economy.
One of the main debates in the aftermath of the financial crisis is the role central banks should play in averting future meltdowns, and what powers they should be granted to execute this task. By taking on a beefed-up role as overseeing the financial system, central banks would be expected to identify asset bubbles and pop them before they burst. The collapse of the U.S. real estate market, fuelled by low lending rates that attracted less-creditworthy buyers, sparked a credit crisis and global recession.
"The general view before the calamity was that monetary policy was not an effective tool in dealing with asset bubbles," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.
"But given how much damage was caused by the U.S. housing bubble, the view now is that cleaning up the mess afterward can be far too costly and that monetary policy may need to be responsive to asset prices."
Mr. Alexander was a co-author of a TD report released Tuesday, suggesting the Bank of Canada might be forced to raise rates before it expected should Canada's housing market continue its stellar performance.
Mr. Hall said the Bank of Canada has put itself in a "tiny bit" of a box by indicating it was prepared to keep its key interest rate at 0.25% until June 2010, on the condition that inflation would hit the 2% target in early 2011.
But Mr. Hall said the central bank "would do what it wants to do" should circumstances arise. "It won't get trapped by anything."
The Bank of Canada is set to deliver its next interest-rate on Oct. 20, followed by an updated economic outlook two days later. Analysts will be eyeing the documents closely for any change in tone regarding rates. In the meantime, the Bank of Canada's senior deputy governor, Paul Jenkins, is scheduled to speak in Vancouver Thursday regarding the future "challenges" facing central banking.
The rate hike heard round the world
Paul Vieira, Financial Post
OTTAWA -- The Reserve Bank of Australia has become the first major central bank to raise interest rates since the financial crisis, citing rising home and stock prices along with the traditional focus on growth and inflation - factors other central bankers are expected to make more prominent as they seek to prevent a repeat of debilitating asset bubbles.
The surprise move by Australian central banker Glenn Stevens was greeted with enthusiasm by markets, as it was interpreted as a sign a global economic recovery was on track. Equities, commodity prices and the Canadian dollar surged on the move, although giving up some gains in later trading.
The Australian rate increase now puts the spotlight on other central banks, such as Canada's, which has been steadfast in setting rates to ensure a 2% inflation target. But inflation in Canada is expected to remain benign until 2011, forecasters say, due to excess manufacturing capacity in the economy and a strong Canadian dollar that will keep a lid on import prices.
The loonie reached a one-year high Tuesday of US94.82¢, before closing at US94.38¢, up 0.93¢ from Monday's close.
"Inflation is not going to be a problem. Consumer spending, and the consumer response to cheap money, however, may be a problem," said Stewart Hall, economist with HSBC Securities Canada.
The consumer response is what might push the Bank of Canada, just like its Australian counterpart. In its decision, Australia's central bank cited solid gains in housing prices and a "significant" recovery in equity markets for raising its benchmark rate 25 basis points, to 3.25%.
"I do get the sense asset prices are going to be play a greater role in the formation of monetary policy," said Michael Gregory, senior economist at BMO Capital Markets. "Because the amount of stimulus is unprecedented, and at emergency levels, removing it won't follow the same rules of thumb."
As a result, he said, central bankers might be looking at new measures to determine when to raise rates. As opposed to looking strictly at inflation and growth, Mr. Gregory said central banks might be forced to pay as much attention to asset prices and credit spreads.
In Australia, the central bank has always paid close attention to housing prices - which are a national obsession and have been on a tear over the past decade - and view them as a guage of the overall strength of the economy.
One of the main debates in the aftermath of the financial crisis is the role central banks should play in averting future meltdowns, and what powers they should be granted to execute this task. By taking on a beefed-up role as overseeing the financial system, central banks would be expected to identify asset bubbles and pop them before they burst. The collapse of the U.S. real estate market, fuelled by low lending rates that attracted less-creditworthy buyers, sparked a credit crisis and global recession.
"The general view before the calamity was that monetary policy was not an effective tool in dealing with asset bubbles," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.
"But given how much damage was caused by the U.S. housing bubble, the view now is that cleaning up the mess afterward can be far too costly and that monetary policy may need to be responsive to asset prices."
Mr. Alexander was a co-author of a TD report released Tuesday, suggesting the Bank of Canada might be forced to raise rates before it expected should Canada's housing market continue its stellar performance.
Mr. Hall said the Bank of Canada has put itself in a "tiny bit" of a box by indicating it was prepared to keep its key interest rate at 0.25% until June 2010, on the condition that inflation would hit the 2% target in early 2011.
But Mr. Hall said the central bank "would do what it wants to do" should circumstances arise. "It won't get trapped by anything."
The Bank of Canada is set to deliver its next interest-rate on Oct. 20, followed by an updated economic outlook two days later. Analysts will be eyeing the documents closely for any change in tone regarding rates. In the meantime, the Bank of Canada's senior deputy governor, Paul Jenkins, is scheduled to speak in Vancouver Thursday regarding the future "challenges" facing central banking.
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