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An uptick in the Canadian economy!

Canadian-Housing-Economy

Statistics Canada revealed that Canadian wholesale numbers climbed 3.3% to $59.1 billion in January, which is the largest monthly gain since November 2009, and beats the expectation of 0.5%. There was a substantial uptick in auto sector sales, which acts as a de-facto secondary economic indicator. Wholesale sales were up in four of the seven subsectors and grew by a whopping 17.1% to $11.9 billion, which is the highest gain in the last 3 months. Also, retail sales kicked off on a strong note, as January increased by 2.2%, recovering the loss of a month earlier. The impact of the sales was widespread, which helped the bounce back from December. This data is heartwarming because it is in line with the outlook on consumer spending, which would allow for the achievement of a 3% annualized growth target.
Earlier, other economic data was also pleasing, as home sales for February grew by 5.2%, after it had reached record levels in April 2016. Tightening market conditions have raised prices of dwellings and thus the sale of homes have shifted to regions, thought of as more affordable, away from the Vancouver. While the Canadian housing market has shown considerable strength as of late, however, it has remained volatile. Some corroborate the current market conditions as signs that the economy may be starting to turn the corner. Some regions, such as Alberta and Saskatchewan, prices may have bottomed out, and now should rebound during the remainder of the year. With this renewed strength, there is also the possibility for the market bubbles, as the forecast if for the value to rise starkly forecasted higher by 17% YoY in some regions.Housing starts - Canadian economy 2017
Manufacturing sector data remained heartwarming as well, as the momentum, which had gathered during late 2016, has carried over to 2017, which should help the Canadian economy post a reasonably robust Q1 of 2017. In addition, leading indicators, such as new and unfulfilled orders appear to be looking better than they did in the preceding months. Thus, the manufacturing data has beaten the consensus of 0.6% for January reaching a figure of 0.7%. Some analysts would argue, net trade numbers, driven by a depressed loonie, and the US as a robust trading partner, net demand for the industry has proven to be a boon. However, it is difficult to ascertain whether new economic factors, can truly counterbalance the effect of an oil price shock that the Canadian economy has faced. Still, it would be a farce to believe that the economy has structurally moved away from its oil dependence.
While job creation as of late has been boosting household income and this wealth effects has translated into wholesale, retail and household sales numbers and lifted prices, there are some uncertainties to contend with in the future. For example rising future long-term interest rates, raising the cost of borrowing, the housing market is likely to cool down, as the indebted consumers would be forced to rein in their spending. However, this is in the long-term as per expectation consumer spending growth should maintain a healthy trend of 2% for now.

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