Tuesday, September 13, 2011

RBC Economic Outlook

Good Afternoon, I hope this email finds you well. Please see below for Historical Housing Statistics, Bond Rates, Bank Rates and a link to the RBC Economic and Financial Market Outlook.

Total New Housing Starts (Seasonally adjusted and annualized)
Province May
2011 May
2010 June
2011 June
2010 July
2011 July
Newfoundland/Labrador 3,500 3,700 4,600 4,500 4,100 3,300
PEI 800 1,400 700 1,000 1,200 800
Nova Scotia 4,900 4,900 3,700 3,200 5,700 5,800
New Brunswick 2,900 4,900 4,000 4,700 6,000 6,100
Quebec 50,800 48,700 48,300 54,500 45,600 52,900
Ontario 58,200 64,600 74,500 56,100 75,200 53,200
Manitoba 6,400 4,400 5,700 8,100 7,400 9,700
Saskatchewan 5,800 4,300 8,300 6,200 5,600 5,300
Alberta 25,300 27,300 23,600 27,000 24,300 29,200
British Columbia 31,500 24,900 23,200 27,000 30,000 22,800
CANADA 190,100 189,100 196,600 192,330 205,100 189,100
Source: CMHC Housing Now - August 2011 and August 2010. This seasonally adjusted data goes through stages of revision at different times of the year.


Average MLS® Resale Price for Local Markets
City July 2011 July 2010
Halifax $ 262,723 $ 245,944
Saint John $ 158,448 $ 176,061
Quebec $ 240,225 $ 237,605
Montreal $ 317,519 $ 303,317
Ottawa $ 342,925 $ 322,342
Toronto $ 459,122 $ 420,455
Hamilton/Burlington $ 349,235 $ 309,293
Winnipeg $ 238,258 $ 225,191
Saskatoon $ 303,439 $ 289,715
Regina $ 272,548 $ 281,836
Calgary $ 397,613 $ 402,809
Edmonton $ 334,444 $ 329,731
Vancouver $ 761,673 $ 657,815
Victoria $ 467,052 $ 496,943
Source: Canadian Real Estate Association

Bank of Canada Interest Rate
July 19, 2011 1.00 %
September 7, 2011 1.00 %
October 25, 2011 Next meeting date
Source: Bank of Canada


Bank Prime Lending Rate
July 20,2011 3.00 %
September 8, 2011 3.00 %
October 26, 2011 Next meeting date
Source: Bank of Canada


US Federal Reserve Board Discount Rate
June 22, 2011 0.00 % - 0.25 %
August 9, 2011 0.00 % - 0.25 %
September 20, 2011 Next meeting date
Source: US Federal Reserve
*US Federal Reserve has indicated it will keep this rate until Q2 2013


Exchange Rate $CDN($US)
July 28, 2011 1.0509
August 19, 2011 1.0153
September 1, 2011 1.0251
Source: Bank of Canada

Government of Canada Bonds
Bond Type July 27, 2011 August 17, 2011 August 31, 2011
1 year Treasury Bill 1.25 % 0.93 % 0.97 %
3 year BenchmarkBond Yield 1.71 % 1.12 % 1.27 %
5 year BenchmarkBond Yield 2.15 % 1.52 % 1.68 %
10 year BenchmarkBond Yield 2.88 % 2.39 % 2.49 %
Source: Bank of Canada
TORONTO, Sept. 12, 2011 /CNW/ - RBC Economics downgraded their forecast for the Canadian economy in 2011 after a mild contraction in the second quarter and softer growth in the U.S. and Euro-zone economies. According to the latest RBC Economic Outlook issued today, Canada's real GDP is projected to grow by 2.4 per cent this year - a reduction of 0.8 percentage points from the forecast issued in June.

"Financial market volatility certainly took a toll on business and consumer confidence this summer. Our expectation that the global economy will avert another downturn, however, should temper the slide we've been seeing in the equity markets and in commodity prices," said Craig Wright, senior vice-president and chief economist, RBC. "We are cautiously optimistic that Canada's economy will continue to pick up speed next year, growing at a rate of 2.5 per cent."

Since June, increased market volatility has created uncertainties about the global economy. South of the border, the U.S. Federal Reserve recently committed to keeping interest rates low for a sustained period in order to ward off lacklustre growth. RBC expects that the Bank of Canada will do the same until mid-2012, when rate increases are likely to come into effect.

"The Bank of Canada is likely to maintain its key lending rate at one per cent, given lower expectations about the outlook for U.S., a mild contraction in second quarter Canadian growth and benign inflation pressures," said Wright. "Policy will be geared towards supporting fragile business and consumer confidence in the near-term."

Going forward, Canada's headline inflation rate is forecast to drift lower, thanks to the recent declines in commodity prices. RBC projects that core inflation will remain within the Bank's target range, which will alleviate the pressure on the Bank to resume its tightening campaign.

"Canada's labour market has more than fully recovered from the loss experienced in the downturn," said Wright. "As of August, Canada had 164,000 more people employed than during the pre-recession peak and so far this year, employment gains have been concentrated in full-time jobs."

The business investment cycle is on an upswing in Canada, growing at double digit rates throughout 2010 and the first half of this year. More businesses have cash available due to improved profits and better access to financing. The strong Canadian dollar has also provided support for increased investment.

At the provincial level, Saskatchewan leads the way in terms of economic growth, with Alberta and Newfoundland and Labrador following closely behind. Manitoba is projected to improve its economic standing in 2011, while Ontario, British Columbia, and Prince Edward Island fall slightly below the national average. Quebec continues to show mixed results and is positioned with the remaining Atlantic provinces at the back of the pack.

"In the second half of this year, we expect both the Canadian and the U.S. economies to rebound," said Wright. "Global growth will buoy commodity prices and fears of rate cuts will turn into expectations of rate hikes and the Canadian dollar is likely to further appreciate in 2012."

RBC Economics has cut its U.S. growth projection to 1.7 per cent in 2011, representing a full percentage point reduction to growth. To a large degree, this change is a result of a significant downward revision to historical U.S. data that indicated both a deeper recession and a weaker recovery. The downward revision also reflected one-off factors like poor weather conditions restricting non-residential construction activity, the Japanese disasters cutting into auto production and sales, and gasoline price reducing income to spend on other goods and services. As the weight of these factors dissipates, RBC expects growth to pick up. For 2012
, RBC Economics is projecting growth of 2.5 per cent in the U.S.

A complete copy of the RBC Economic and Financial Market Outlook is available . A separate publication, RBC Economics Provincial Outlook, assesses the provinces according to economic growth, employment growth, unemployment rates, retail sales, housing starts and consumer price indices.

Questions, Call Our Office, We're Here to Help.

Jared Dreyer, Your Mortgage Professional
604 649-5991

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