A veteran Bay Street economist says the Canadian economy has slowed more than enough to justify an interest rate cut by the Bank of Canada, and that underlying inflation may be lower than the central bank thinks.
“I think that the Canadian economy is pretty well flat on its back,” David Rosenberg, founder and president of Rosenberg Research, told BNN Bloomberg in a Thursday interview.
“Unlike in the U.S., where real GDP (gross domestic product) growth is over three per cent year-over-year, it’s 0.9 per cent here… 0.9 per cent with population growth of 3.2 per cent, so in real per capita terms, the decay in Canadian economic activity is just continuing.”
Rosenberg said that despite the Bank of Canada acknowledging at its last rate decision that the economy has moved from a state of excess demand to one of excess supply, the bank still hasn’t made any commitment to lowering rates.
“What are they waiting for? They certainly should not be waiting for the (U.S. Federal Reserve),” he said.
“It wouldn’t be the first time that the bank went on its own when economic conditions dictate that they should… but they should be striking now.”
These readings have further fuelled bets that the Bank of Canada will lower its key interest rate at its next policy decision in June, with most Bloomberg-tracked economists now expecting a 25-basis point cut.
Rosenberg said he believes those concerns are overblown, as the way in which Canada measures its consumer price index (CPI) is “totally different” than in the U.S., adding that “you can’t compare the two countries.”
He argued that when the most volatile components are stripped out of Canada’s CPI, the country’s inflation levels are already at, or close to, the Bank of Canada’s two per cent target.
Rosenberg added that by keeping its key interest rate at five per cent until now, the Bank of Canada will be forced to cut rates more aggressively over the next year, which will put significant downward pressure on the loonie.
“When it comes time to cut, by waiting so long, they’re going to cut harder, so they’re going to make the same mistake twice in different directions… the longer they wait, the more they’re going to have to do,” he said.
“The reality is that underlying inflation, properly measured in Canada, is already on target, and the economy is building up excess capacity. You don’t need an economics degree to know that that’s going to lead to further disinflation ahead, so (the Bank of Canada) will be scrambling hard.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
