Economic Indicators For Canada

Bank of Canada Governor's Speech

Speech by the Governor for the Bank of Canada on the central bank’s views on the economy.

The market will generally focus on points that could suggest future interest rate changes. If the speech states that high housing prices are fuelling inflation, then the financial markets will expect an interest rate increase to suppress inflation.

Markets will also monitor the highlighted sectors in the upcoming period to gauge the likelihood of rate increases to come.

Participants will focus heavily on the language used in the Governor's speech.

If the Governor is pessimistic ("Hawkish") about the inflationary outlook for the economy, then the market assumes a higher likelihood of future rate increases. Optimism in the Governor's outlook ("Dovish") would suggest to markets that inflation is in check and that future rate increases are unlikely.

The Governor's speech is an opportunity to better understand what the goals are in managing the Bank of Canada and what stance is to be taken on controversial economic issues. For example, the Bank of Canada may state they favour a weaker currency in order to promote activity in the export sector. Markets would expect the Governor to keep interest rates low, ensuring a weaker currency, to make Canadian exports less expensive and more competitive.

Relevance: Three Star Tends to move markets on release
Release schedule: During the eight times the Bank of Canada changes key interest rates and any other time the Bank of Canada, the Canadian Government, or the Governor deems fit
Source of report: Bank of Canada
Web address:
Address of release: http://www.bankofcanada.ca/en/speeches/index.html

Bank of Canada Rate Decision

The decision to increase, decrease or maintain the interest rate.

A decision to lower rates can spur economic growth while inciting inflationary pressures. Rate increases tend to slow down inflation but stymie growth.

The Bank of Canada (BOC) has an inflation target of 1-3 per cent and they change interest rates accordingly to meet that goal.

The BOC's rate decision has significant influence on financial markets.

Changes in rates have a direct impact on interest rates for consumer loans, mortgages and bond rates.

The BOC issues a statement with every rate announcement.

Because the decision itself is usually highly anticipated, the wording of the BOC statement is usually as important if not even more important than the actual interest rate move made by the central bank.

The statement contains the bank's collective outlook on the economy as well as hints about future monetary policy.

When it comes to interest rates, the future direction of rates is usually far more important than its current rate.

Relevance: Three Star Tends to move markets on release
Release schedule: 9:00 AM (EST); eight times a year
Source of report: Bank of Canada
Web address:
Address of release:
AKA: Bank of Canada Monetary Policy, Target Overnight Rate, Key Interest Rate, Key Interest Policy Rate

Consumer Price Index (CPI)

The key gauge for inflation in Canada.

Simply put, inflation reflects a decline in the purchasing power of the Canadian Dollar, meaning each Dollar buys fewer goods and services.

CPI is the most obvious way to measure changes in purchasing power.

The report tracks changes in the price of a basket of goods and services that a typical Canadian household might purchase. An increase in the index indicates that it takes more Dollars to purchase this same set of basic consumer items.

As the most important indicator of inflation in Canada, the Consumer Price figures are closely followed by Canada's central bank. The Bank of Canada has a target inflation band of 1-3 per cent and uses CPI and Core CPI as its principle gauge (the Bank of Canada posts inflation targets and CPI on their homepage).

A rising CPI may prompt the central bank to raise interest rates in order to manage inflation and slow economic growth.

Higher interest rates make holding the Dollar more attractive to foreign investors and this higher level of demand places upward pressure on the value of the Dollar.

The Consumer Price Index excludes eight items which the Bank of Canada has deemed to have the most volatility from month to month. The goods omitted tend to fluctuate idiosyncratically and may distort CPI data.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:00 AM (EST); monthly, around the 20th of each month
Source of report: Statistics Canada
Web address: http://www.statcan.ca/start.html
Address of release: http://www.statcan.ca/english/Subjects/Cpi/cpi-en.htm

CPI Excluding Core Eight

The headline figure for CPI is the percentage change in the index on a month to month and year to year basis.

These eight items include: fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, inter-city transportation and tobacco products.

Changes in the CPI Excluding the Core Eight are recognised as a better indicator of inflation than the regular CPI.

The headline figure is reported as a percent change on both the month to month and year to year basis.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:00 AM (EST); monthly, around the 20th of each month
Source of report: Statistics Canada
Web address: http://www.statcan.ca/start.html
Address of release: http://www.statcan.ca/english/Subjects/Cpi/cpi-en.htm

Gross Domestic Product Quarterly (GDP)

A comprehensive measure of Canada's overall production and consumption of goods and services. GDP is a significant report in the FX Market, serving as one of the primary indicators of a country's overall economic health.

Robust GDP growth signals a heightened level of economic activity and often a higher demand for the domestic currency.

At the same time, economic expansion raises concerns about inflationary pressures which may prompt monetary authorities to increase interest rates.

Positive GDP readings are generally bullish for the Canadian Dollar, while negative readings are generally bearish.

Most production reports that lead to Canadian GDP are released before the official GDP number. Therefore, actual GDP figures usually confirm expectations. However, an unexpected release can move markets due to the significance of the figure.

Gross Domestic Product is calculated in the following way: GDP = C + I + G + (EX - IM)

C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The headline figures for GDP are the percentage growth rate from the previous quarter and the annualised percentage change in GDP.

Prices used are benchmarked to 1997 prices.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); quarterly
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Gross domestic product by industry

International Merchandise Trade

The difference between imports and exports of goods.

Merchandise Trade differentiates itself from Trade Balance because it does not record intangibles like services, reporting only on physical goods.

Because exports of tangibles like oil, gold and manufacturing contribute to a large part of Canada's GDP, trade data can give critical insight into developments in the economy and into foreign exchange rates.

Negative International Merchandise Trade (deficit) indicates that imports of goods are greater than exports. When exports are greater than imports, Canada experiences a trade surplus.

Trade surpluses indicate that funds are coming into Canada in exchange for exported goods.

Since such exported goods are usually purchased with Canadian dollars, trade surpluses usually reflect currency flowing into Canada and may lead to a natural appreciation of the Canadian dollar, unless countered by similar capital outflows (Canadian International Securities Transactions tracks such capital flows).

At a bare minimum, surpluses will buoy the value of the currency.

There are a number of factors that work to diminish the market impact of Canadian Merchandise Trade on markets.

The report is not very timely, released about three months after the reporting quarter. Developments in many of the components that comprise the figure are also usually well anticipated.

Since the report reflect data for a specific reporting quarter, any significant changes in the Merchandise Trade should have been felt during that quarter and not during the release of data.

Due to the overall significance of Trade on Foreign Exchange Rates, the figure has a history of being one of the more important reports out of Canada.

The headline figure for trade balance is expressed in millions of Canadian dollars and usually accompanied by a year-on-year percentage change figure.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, on the second week of each month
Revision schedule: Monthly
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Canadian International Merchandise Trade AKA: Merchandise Imports and Exports

Ivey Purchasing Managers Index (PMI)

A monthly measure of the change in purchases by corporate executives.

One hundred and seventy-five managers distributed among different regions and sectors are asked: "Are your purchases higher, the same, or lower than the previous month?" A headline value above 50 indicates an increase in purchases from the previous month and a value below 50 indicates a decrease.

The PMI can be used to measure business optimism and forecast economic growth. Business firms increase purchases and spending in response to growing demand for their goods and services, a high PMI suggests overall expectation for an expanding economy.

Furthermore, if businesses are optimistic of future economic conditions, they will increase spending now in order to prepare for future demand in their goods and services.

Note: The Institute of Supply Management publishes a similar index known as the "Reports on Business" for the United States.

Unlike the Canadian PMI, the Reports on Businesses uses mid-month data, adjusts for seasonality, and asks a combination of five questions. As a result, the Canadian PMI tends to have larger month to month movements than the U.S. version.

Relevance: Three StarTends to move markets on release
Release schedule: 10:00 AM (EST); monthly, on the fourth working day of the following month
Source of report: Joint Sponsorship between the Purchasing Management Association of Canada and the Richard Ivey School of Business
Web address:
Address of release:
AKA: Canadian Purchasing Managers Index

Leading Indicators

A composite index designed to forecast developments in the Canadian economy.

Movements in the ten indicators that comprise Leading Indicators are known to precede larger developments in the rest of the economy.

Growth in the index suggests a healthy and growing economy.

Indicators include stock market indices, the money supply, a number of durable goods indicators, the average workweek in the manufacturing sector, the real money supply, the US leading index and business and personal services employment.

Technical Note: The headline value is the percentage change in the composite index from the previous month.

The index is smoothed out by averaging the data of the most recent 5 months. The index is not weighted, and is compared to an initial 1992 base year value of 100.

Each point above 100 represents 1 per cent increase from the 1992 values. For example, if the index is at 105, it means that the index is 5 per cent higher than it was in 1992.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, around the 3 rd week of each month
Source of report: Statistics Canada
Web address: http://www.statcan.ca/start.html
Address of release: http://www.statcan.ca/english/Release/index.htm
Refer current year > Leading Indicators
AKA:Composite Index of Leading Indicators, Leading Indicators Index

Net Change in Employment

The net change in the number of people employed in Canada.

Increases in employment are generally accompanied by higher consumption and expenditure levels.

Higher employment, consumption and expenditures may lead to heightened inflationary pressures that encourage central banks to tighten monetary policy and increase interest rates to put upward pressure on the Canadian dollar.

Because this is the main employment report in Canada it tends to have significant impact on the market.

The headline figure is the change in employment in thousands.

Relevance: Three Star Tends to move markets on release
Release schedule: 7:00 AM (EST); monthly, at roughly the first week of the reporting month
Source of report: Statistics Canada
Web address:
Address of release: http://www.statcan.ca/english/Subjects/Labour/LFS/lfs-en.htm

Retail Sales

Gauges sales at Canadian retail outlets.

The report serves as a direct gauge of consumption and consumer confidence and is an important leading indicator for Canada and part of the Index of Leading Indicator used to forecast economic developments.

An increasing number of sales can signal consumer confidence and growth to come, but higher consumption can also lead to inflationary pressures.

The report considers sales for nine categories of retailers: automotive, furniture and electronics, building supplies, food and beverages, pharmaceuticals, clothing and accessories, general merchandise and miscellaneous.

Relevance: Three StarTends to move markets on release
Release schedule: Released mid-month at 8:30AM Eastern Time
Revision schedule:Monthly (with the next report)
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Retail trade
AKA: Retail Trade

Building Permits

The number of new building projects authorised for construction.

The figure is widely used as an indicator for developments in the housing market. Since receiving a permit to build is the first step in the construction process, growth in Building Permits reflects growth in the construction sector.

Due to the high outlays needed for construction projects, an increase in Building Permits suggests corporate and consumer optimism.

Leading indicators for the housing market respond quickly to changes in the business cycle, which makes the Building Permit figure can act as a leading indicator for the economy as a whole.

The headline is the seasonally adjusted percentage change in Building Permits from the previous month.

Relevance: Two Star Moderate market impact
Release schedule: 8:30 AM (EST); monthly, on the first week of the reporting month
Revision schedule:The report following next month
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Building permits

Housing Starts

Reflects the rate of growth in housing construction.

Housing Starts act as an indicator measuring the strength of Canada's construction sector and housing market.

Economists also use the figure as a leading indicator for the economy as a whole due to its sensitivity to changes in the business cycle.

Housing Starts slow at the onset of a recession and quickly grow at the beginning of an economic boom; consequently, a high Housing Starts figure forecasts strong economic growth.

The headline figure is the percentage change in new home starts.

Relevance: Two Star Moderate market impact
Release schedule: 8:15 AM (EST); monthly, one week after the reporting month
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Building permits
AKA: News Homes Built

New Housing Price Index

A component of the Consumer Price Index (CPI) that measures changes in prices for new homes.

Higher housing prices suggest stronger consumer demand and growth in the housing market.

Higher housing prices that accompany economic expansion often lead to inflationary pressures.

The headline number is the percentage change in the index.

Note: The New Housing Price Index takes into account the quality and features of the new homes sold. For example, if selling prices for new homes are unchanged but the features and quality of housing have increased (e.g. added swimming pool and better construction materials), then the price for new homes is considered to have fallen.

Relevance: Two Star Moderate market impact
Release schedule: 8:30 AM (EST); monthly, one week after the reporting month
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > New housing price index
AKA:New Homes Price Index

New Motor Vehicle Sales

Tracks automobile sales in Australia.

Though motor vehicle sales are a small component of the overall economy, expenditures of such "big-ticket" items give good insight into consumers' spending ability.

The figure gauges consumer confidence; consumers and businesses are only likely to make the outlays needed for motor vehicles if they are optimistic about their current and future economic well being.

The figure is reported both as the number of new automobile sales and as monthly percentage change.

Relevance: Two Star Moderate market impact
Release schedule: 1:30 (GMT); monthly, on approximately the 20th of the following month
Source of report: Australian Bureau of Statistics
Web address: http://www.abs.gov.au
Address of release: http://www.abs.gov.au/ausstats/abs@.nsf/mf/9314.0
AKA: Sales of New Motor Vehicles, Australia

Unemployment Rate

Percentage of labour force without jobs but willing to work and actively seeking employment.

Lower unemployment bodes well for the economy translating into more income-earning workers and greater consumption. While such increased expenditure accelerates economic growth it can also heighten inflationary pressures.

A higher unemployment rate tends to lead to lower consumer spending and a contracting economy.

The Unemployment Rate is one of the most watched headline indicators of Canada's labour market.

Relevance: Two StarModerate market impact
Release schedule: 7:00 AM (EST) on the first week of each month
Source of report: Statistics Canada
Web address:
Address of release: http://www.statcan.ca/english/Subjects/Labour/LFS/lfs-en.htm

Capacity Utilisation Rate

Measures the extent to which Canadian manufacturing companies make use of their productive capacity (factories and machinery).

Capacity Utilisation Rates act as an indicator of overall demand in the economy. High Capacity Utilisation Rates mean resources are in high demand and this exerts inflationary pressure.

High Capacity Utilisation Rates may also lead to new capital investments such as new plants and equipment that promote growth in the future.

The headline figure is reported as the ratio of actual production to potential production.

Note: The data is gathered from the Capital and Repairs Expenditure survey. Unlike some of the other surveys done by Statistics Canada , this survey is not mandatory.

Relevance: One StarRarely affects markets
Release schedule: 8:30 AM (EST); quarterly, roughly two and half months after the reporting period
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Industrial capacity utilization rates
AKA:Industrial Capacity Utilization

Consumption Spending

The portion of GDP that is solely contributed by the consumption of consumer goods and services.

Consumption spending may spark inflationary pressures, which could lead the Canadian central bank to raise interest rates.

Changes in consumption spending can also be used as a measure of economic growth but are not heavily relied upon since individuals can increase consumption without necessarily having an increase in income (e.g. by saving less or borrowing).

The report's importance is further deluded by its lack of timeliness.

The headline value is usually the percentage change in consumption spending from the previous month.

Relevance:One Star Rarely affects markets
Release schedule: 8:30 AM (EST); quarterly
Source of report: Statistics Canada
Web address:
Address of release:
Refer Year > Gross domestic product by industry
AKA: Consumption, Personal Consumption Expenditures, Household Expenditures

International Securities Transactions

The international flow of stocks, bonds and money market funds to and from Canada.

International Securities Transactions are a major component of Canada's capital account and give good insight into the demand that foreigners have for Canadian Investments and the Canadian dollar.

A positive balance reveals that more capital is entering Canada than leaving, suggesting that the Canadian security markets are competitive with those of other countries.

In the case of a trade deficit, positive capital account figures can offset such debt. If Canada were to benefit from both a trade surplus and a positive capital account, this would suggest that the Canadian dollar is in high demand, causing the currency to appreciate in value.

The headline figure is the net value of security flows in Canadian Dollars.

Note: The data breaks down the sources of capital flows and identifies which countries and markets are the primary investors of Canadian Securities.

Month to month figures can be volatile as results can be swung by any number of fastidious events. Because of this, the market tends to focus more on longer term trends in International Securities Transactions rather than on the monthly figure.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, two months after the reporting period
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Canadian International Transactions in Securities
AKA: International Transactions in Securities

Labour Productivity

The average productivity level of Canadian workers.

Labour Productivity is calculated by dividing the gross domestic product (GDP) by the number of hours worked, yielding output per hour, which is the key measure of productivity growth.

The availability of better technology and higher levels of education among the workforce are factors commonly attributed to increased productivity.

Growth in Labour Productivity is usually seen as a sign of a healthy economy; higher productivity allows higher output for a fixed population.

Rising Labour Productivity can also offset inflationary pressures associated with economic growth and spending.

Economic expansion attributed to increased Labour Productivity will not result in inflation, meaning that central banks will not need to increase interest rates during times of high growth.

The headline figure is the percentage change in output per hour.

Relevance: One StarRarely affects markets
Release schedule: 8:30 AM (EST); quarterly
Revision schedule: The report following next month
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Labour productivity, hourly compensation and unit labour cost

Manufacturing I/S Ratio

The ratio of inventory to shipments at Canadian manufacturing firms.

By examining inventories and shipments, the figure is able to gauge to what degree manufacturing firms are satisfying market demand.

Inventories include goods not yet sold by firms. Growing inventories are a sign of declining demand as unsold goods pile up in warehouses. Shipments data, on the other hand, is indicative of market demand.

A Manufacturing I/S Ratio greater than 1 suggests an inventory build-up and decreasing demand for manufactured goods, while a ratio less than 1 suggests an inventory reduction and increasing demand for manufactured goods.

The I/S Ratio can also be interpreted as an estimate of the time (in months) that it would take to exhaust inventories, holding shipments constant.

The data used to calculate the I/S ratio can be found in the monthly survey of manufacturing released by Statistics Canada each month.

The I/S ratio is also a component of the Canadian Leading Indicator Index.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, in the middle of each month
Source of report: Statistics Canada
Web address: http://www.statcan.ca/start.html
Address of release: http://www.statcan.ca/english/Release/index.htm
Refer current year > Monthly Survey of Manufacturing
AKA: Inventory to Shipments Ratio

Raw Materials Price Index (RMPI)

Measures the prices paid by Canadian manufacturers for key raw materials, including resources not produced in Canada.

Also known as the Producer Price Index, the RMPI is an early measure of inflation.

Although, producers may not pass on changes in raw material prices to consumers immediately, the index will record these cost pressures before they reach the end consumer and affect inflation rates.

The headline figure is the percentage change in the price index from the previous month and year.

The index includes prices for raw materials like mineral fuels, vegetable products, animal and animal products, wood, ferrous materials, non-ferrous metals and non-metallic minerals.

Relevance: One Star Rarely affects markets
Release schedule: 8:30AM (EST) roughly 30 days after the reporting month
Source of report: Statistics Canada
Web address:
Address of release: http://www.statcan.ca/english/Release/index.htm
Refer current year > Industrial product and raw materials price indexes
AKA: Industrial Product and Raw Materials Price Index

Survey of Manufacturing

Monthly report on Canada's manufacturing sector.

The data shows the current level of activity among Canadian manufacturers and gives insight into Canada's economy as a whole.

Since changes in GDP are heavily concentrated in the industrial sector, growth in manufacturing will usually lead to a higher GDP.

The report provides four key statistics: new orders, unfilled orders, shipments and inventories. The figures are usually studied in relation to each other, particularly the inventories-to-shipments ratio.

Note : Only 35,000 out of over 100,000 manufacturing firms in Canada are eligible to participate in the survey. Each month, 10,000 firms are chosen for the survey. If chosen, participation in the survey is mandatory.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, in the middle of each month
Source of report: Statistics Canada
Web Address:
Address of release:
Refer current year > Monthly Survey of Manufacturing

Wholesale Sales

The value of sales made by Canadian wholesalers.

Wholesalers sell to industries and retailers in quantities far larger than most consumers are willing to purchase.

Given that growth in Wholesale Trade usually precedes increases in retail trade and consumption, changes in Wholesale Sales can be used as an early indicator for the overall direction of the retail sector, consumption, and the economy.

The headline figure reports the monthly percentage change for Wholesale Sales, seasonally adjusted to account for variations in demand due to seasonal cycles.

These sectors are farm products, food, beverages, and tobacco products, personal and household goods, automotive products, building materials, machinery and electronic equipment and other products.

Relevance: One Star Rarely affects markets
Release schedule: 8:30AM (EST); monthly, in the middle of each month
Revision schedule:Monthly (with the next report)
Source of report: Statistics Canada
Web address:
Address of release:
Refer current year > Wholesale trade
AKA:Wholesale Trade

Back to Economic Indicators