July 2014 Economic Update
Building on the robust 1.3% gain in April, Canadian retail sales increased 0.7% in May, led by record auto purchases and higher sales in 7 out of 11 subsectors.
Despite higher inflation and higher consumer debt, consumer spending remains strong, suggesting that consumer confidence in the economy is still high.
Canada’s oil production is expected to almost double by 2030, due to growing global demand and continued uncertainty in the Middle Eastern and Russian oil market.
Stronger demand will create market expansion opportunities for Western Canada, and will increase demand for oil-related machinery and equipment from other parts of Canada.
Rising energy costs and lack of quality in China and India are creating more U.S. demand for Canadian products, according to KPMG’s annual manufacturing outlook.
Canadian manufacturing is poised to grow again as a result of these key changes in the way business is being done around the world and its close proximity to the United States.
Canadian wholesale sales jumped by 2.2% in May and hit a new record, powered mostly by the largest increase in sales of motor vehicles and parts since November 2009.
Canada’s wholesale sector is showing surprising strength, signalling that 2nd quarter gross domestic product (GDP) growth might reaccelerate after a disappointing 1st quarter.
The economy shed 9,400 jobs in June and unemployment rate is now at 7.1%, marking the slowest annual employment growth in more than 4 years.
The lack of job growth in the country is becoming apparent and indicates that Canada is failing to gain from improving conditions in the U.S.
Record rainfall and widespread flooding in Saskatchewan resulted in up to 3 million acres of flooded farmland, which are unlikely to produce crops this year.
These flooded acres represent big financial losses for farmers, and will lead to low market inventories, especially for Canola, while market prices for crops will likely spike.
Pushed by price increases in food, transportation and shelter, Canadian inflation is at 2.4%, which is its highest in almost 2.5 years.
Wage increases are not growing at the same pace as price increases, leaving Canadians worse off, since they are earning less but spending more.
Canada’s resource-rich provinces are attracting high levels of business investment, while the rest of the country is seriously lacking in private investment.
This imbalance reflects the growing wealth gap among Canadian provinces, which is bad for the overall economy as it slows long-term growth and productivity.
The Customer Innovation (CI) team is a Northbridge shared services team with a mandate to drive customer centricity across the organization. They’re focused on building knowledge and increasing awareness of our customer groups through a number of national and regional initiatives. In addition to their monthly Economic Update feature, they manage the new Innovation Station blog – a great way to obtain economic and sector-specific insight, keep up with insurance industry news, share information, and find out what Northbridge is doing to get ahead in a rapidly changing marketplace.