Skip to main content

Good news on Canada?

Over the past few days there has been a large amount of Canadian economic news:

(a)                Retails sales fell more than anticipated
(b)               Inflation was lower than anticipated (1.7%)
(c)                Q2 GDP growth is down (2.5%)
(d)               Wholesale trade was down, and inventories are rising

The data is a mix of good and bad news; the Canadian economy is clearly slowing, the Baltic Dry Index, which has dropped dramatically over the past month is an illustration of the change in trade of heavy things – for which Canada specializes.  Housing market seems to have reached an inflexion point, in all but two markets the losses of the 2007-08 housing slowdown have been fully made up (Calgary is still off by 10%). 

One key issue for Canada is inflation.  It would appear that deflation is not a problem in Canada, inflation appears to be well within the 1% to 3% range that the Bank of Canada favors at around 1.7% (once you strip out energy and food),  slightly down from the 1.8% level, and below the consensus forecast of 1.9%.

Worrying is the fall in wholesale trade and the commensurate rise in inventories, and the unknown as to capacity utilization.  Statistics Canada doesn’t provide a breakdown of the merchandise trade, so it is difficult to determine what percentage of imports are machinery – a reaction to the increase in the Canadian dollar that will force manufacturing firms to increase automation and reduce labor costs (via an increase in productivity).

The BoC has revised its growth forecast downward, and has also revised its estimate for the level of excess capacity available in the Canadian economy.  According to the Bank of Canada, 2010 GDP growth will be around 3.5% for the year, and full capacity utilization will not occur until the end of 2011.

Canada’s economist is dependent on exports; oil prices are hovering around $75 bbl and have for nearly a month.  Exchange rate between the CAD and USD is around 1.02 or 0.98 (depending on the scale used). 

Little economic news is expected this week, aside from the National Bank Terranet House price Index on Thursday, which everyone is anticipating to be flat.

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will slap them with no-fly status. Update;  It seems that what they threw on the airc
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more