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Canada

Economics

Economic Overview

Canada is a relatively small, open economy that is closely integrated with its largest trading partner, the US. Both manufacturing and technology have strong cross-border linkages to US-based firms and trends, while the financial and real estate sectors have engaged in aggressive global expansion. The country is also a major commodity exporter across the energy, food, and metals complex. An openness to immigration adds to favorable demographics but has also compounded a housing boom driven by easy financial conditions.

Canada

Real Gross Domestic Product

Gross Domestic Product, chained 2012 dollars, monthly change, %, SA, updates monthly

Real Gross Domestic Product measures the change in the inflation-adjusted value of all goods and services produced in the economy. It comprises private consumption and investment, inventory buildup, government spending and net exports. Markets watch this indicator to gauge the strength and composition of growth.

Canada

Net Change in Employment

Employment, monthly change, SA, updates monthly

The Net Change in Employment measures the monthly change in the number of people employed. In Canada, the estimate includes both full-time and part-time employment and includes the number of persons who work for pay or profit, or perform unpaid family work. Markets monitor this number to gauge the strength of consumer spending, which impacts economic growth and monetary policy expectations.

Canada

Unemployment Rate

Unemployment Rate, all persons, %, SA, updates monthly

The Unemployment Rate measures the percentage of the labor force currently not working but actively seeking employment. Markets monitor the unemployment rate to assess the cyclical health of the economy and the likelihood that wage demands may increase inflationary pressures.

Canada

Consumer Price Index

Consumer Price Indices, annual change, %, updates monthly

The Consumer Price Index is a measure of the change over time in the average prices paid by consumers for a market basket of consumer goods and services. As the most widely used measure of inflation, changes in the index are closely followed by policymakers, financial markets, businesses, and consumers. Statistics Canada reports an ‘All-Items’ number that includes all categories in the calculation basket, three preferred measures of core inflation preferred by the Bank of Canada: 'Trim', which excludes components whose rates of change in a given month are located in the tails of the distribution of price changes, 'Median', which corresponds to the price change located at the 50th percentile of the distribution of price changes in a given month, and 'Common', which tracks common price changes across categories. The Trim and Median measures are seasonally adjusted, All-Items and Common are not.

Canada

Policy Rate

Bank of Canada Target for the Overnight Rate, %

The Policy Interest Rate is an overnight interest rate that the Bank of Canada targets in order to influence monetary variables in the economy, including consumer prices, exchange rates, and credit growth. The Bank of Canada adjusts the target for the overnight rate on eight fixed dates each year.

Canada

Money Supply Growth

M2 Money Supply, annual change, %, SA, updates monthly

M2 Money Supply is a measure of currency that includes cash, checking deposits, and non-cash assets that can easily be converted into cash. Markets don’t typically respond directly to changes in M2, but growth in the money supply can influence inflation, interest rates, and exchange rates over longer time horizons.

Canada

Bank of Canada Assets

Bank of Canada Total Assets, billions CAD, updates monthly

The Bank of Canada’s Balance Sheet is a financial statement that shows what the central bank owes and owns. The Bank’s assets consist primarily of Government of Canada and provincial bonds. Its liabilities are mostly currency in circulation, commercial bank reserves, and collateralized reverse repurchase agreements. The balance sheet is used to influence interest rates – when officials want to stimulate the economy, it expands, and when they wish to tighten financial conditions, it shrinks.

Canada

Debt Ratios

Credit to General Government, Non-Financial Corporate, and Household Sectors, % of gross domestic product at market value, updates quarterly

Aggregate Debt Ratios measure the total borrowing of the general government, non-financial corporate, and household sectors, expressed as a share of gross domestic product. Total debt is followed by investors as a gauge of the vulnerability of an economy to financial shocks. An overly fast pace of debt growth is also frequently associated with a buildup of unproductive investment and excessively high asset valuations.

Canada

Trade Balance

Trade Balance, balance of payments basis, billions CAD, SA, updates monthly

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported – generating a trade surplus – and a negative number indicates a deficit. Trade imbalances may reflect fleeting differences in growth rates or more permanent factors in the composition of growth or the endowment and price of natural resources.

Canada

International Investment Position

Credit to General Government, Non-Financial Corporate, and Household Sectors, % of gross domestic product at market value, updates annually

The Net International Investment Position is the difference between the external financial assets and liabilities of a nation. A nation with a positive position is a creditor nation and is generally considered a safe haven in financial markets. A nation with a negative position is a debtor nation, with deeper balance of payments vulnerabilities.