Saturday, August 11, 2007

Canada’s economy still has solid momentum

Canada’s economy still has solid momentum
Canada’s economy enjoyed strong momentum going into the second quarter, but mixed
data for April and May resulted in a downward revision to the market’s forecast for the degree of monetary policy tightening in the pipeline.

The pace of job creation paused in April and May, although the unemployment rate held at its 33-year low and wage growth firmed, signalling that labour market conditions are tight. April’s headline numbers in the manufacturing, retail and wholesale reports were disappointing, although manufacturing and retail activity actually firmed in the month after adjusting for price changes; only wholesalers saw a big dip in sales.

Real GDP growth flattened out in April compared to the rapid gains in February and
March, but even with only a modest pick-up in May and June the economy is on track to grow at close to its potential rate in the second quarter. After the strong increase in the first quarter and with the economy already operating in a state of excess demand, a trend like increase in the second quarter spells no relief from the upward pressure being exerted on prices. This means that the Bank will have to raise the overnight rate if the mediumterm
inflation target is to be met.

See how the TREB Average Prices have escalated over the past 10 years

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829

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