Although Canada had a trade surplus for the third month in a row in January the surplus is declining. In December the surplus was 2.86 billion dollars but this shrank to 2.1 billion in January of 2012.
Exports declined by 2.3 per cent on lower shipment of industrial goods and materials as well as some precious metals. However energy exports increased as more crude oil was shipped out mostly to the U.S.
Imports also fell slightly by .6 per cent. An exception was automotive products which rose considerably by 7 per cent.
The U.S. Canada's largest trading partner accounts for almost three-quarters of Canada's exports. In January exports to the U.S. rose slightly up .3 per cent while imports fell by the same amount. Canada's surplus with the U.S. increased to 6.07 billion. This is the highest level since October of 2000. For more see this Globe and Mail article.
Showing posts with label High Canadian dollar. Show all posts
Showing posts with label High Canadian dollar. Show all posts
Saturday, March 10, 2012
Friday, March 2, 2012
Canada GDP grows slowly at 1.8 per cent in 4th quarter of 2011
The growth was in line with what economists had predicted. Although consumer spending and business investment was stronger foreign trade slowed. The strong dollar and economic slowdowns especially in Europe no doubt contributed to this result.
The third quarter growth rate was stronger at 4.2 per cent according to Statistics Canada. In the fourth quarter export growth declined from 16 per cent to 4.6 per cent while imports rose 2.2. per cent.
Manufacturers are struggling with a high Canadian dollar and also weak demand. However energy companies such as Enbridge are doing well as the demand for energy increases. For much more see this Bloomberg article.
Canada is the world's tenth largest economy. In the first half of this year the growth rate is predicted to be under two percent according to the central bank's forecast. Global financial problems and weaker demand are the main causes of the slower growth.
Saturday, March 13, 2010
High Loonie boon to travelers to the US
However as the article also notes the high loonie will also hurt exporters. While travelers to the US will benefit so will Canadian consumers since the cost of imported goods should decline as our dollars will purchase more in other countries. This is from the Star.
Emily Mathieu
Canada's manufacturers and exporters are likely to feel the squeeze after the Canadian dollar crept closer to parity on Friday following stronger-than-expected employment numbers.
"It's much more doubtful whether the Canadian economy can really live with a currency quite that strong on an extended basis, at least not until commodity prices are a lot higher than they are today," said CIBC chief economist Avery Shenfeld.
"We have already wiped out some of the manufacturers and exporters that had a tough time competing with a strong exchange rate."
On Friday, Statistics Canada reported that 60,000 full-time positions were created in February, with gains in business, building and other support services, manufacturing, health care and social assistance. The gains were offset by a loss of 39,000 part-jobs the same month.
Following the labour report, the loonie touched a 20-month high, briefly tapping 98.47 cents (U.S.), the highest level since July 2008.
The currency closed at 98.20 cents, up 0.57 of a cent.
Matthew Strauss, senior currency strategist with RBC Capital Markets, said the Canadian dollar is expected to move to parity during the first half of 2010.
"It seems we might even get there before the end of the month."
For cross-border shoppers and Canadians going south for March break, the strong loonie means better deals. But, for Canada's exporters and manufacturers, finally showing signs of life after dismal job losses, the surge could have a significantly negative impact.
"The rising dollar is a major challenge for Canadian exporters," said economist Erin Weir, with the United Steelworkers union.
Earlier in March, the Bank of Canada said it would maintain its target for the overnight rate at 0.25 per cent and the bank rate would also remain unchanged at 0.50 per cent, with the deposit rate remaining static at 0.25 per cent. The bank said, conditional on the current rate of inflation, overnight rates are expected to hold until the end of the second quarter of 2010.
Strauss said the central bank is expected to raise rates fairly aggressively, but it is not clear at what pace.
With files from The Canadian Press
Saturday, September 22, 2007
Buzz Hargrove on the High Loonie
I lifted this from the Progressive Economics Site. No doubt it has appeared elsewhere.
As a union leader in the manufacturing sector it is not surprising Hargrove is negative re the rising Canadian dollar. Although Hargrove is no doubt correct in his analysis as far as he goes there are other factors he ignores. It is the US dollar that is sinking perhaps even more than the Canadian dollar rising. That sinking is caused by several factors but among them the credit crunch and doubts about the US economy as well as the balance of payments problems.
A Black Day in Canada’s Economic History
By Buzz Hargrove
Some were popping champagne corks yesterday over the loonie’s attainment of full U.S.-dollar parity. But their celebration was misguided.
Yesterday was a black day in Canada’s economic history. Our dollar’s rise to parity is a symbolic milestone of the triumph of paper mania over economic reality. Far from celebrating, we should be thinking about new ways to stop it, and reverse it.
The loonie’s flight has been driven by a distorted, unbalanced boom in oil exports, and a corresponding surge of foreign takeovers of Canadian resource companies. The appreciation benefits just a small, specialized minority of Canadians: retailers, some investors, and snowbirds. For most of us, the high-flying dollar does much more harm than good. Our wealth comes from what we produce, not from paper. And the dollar’s rise badly undermines what we do.
Yesterday’s events, capping a five-year rise that is one of the most dramatic in global history, should give us pause to reconsider the causes and consequences of these incredible changes.
Some argue the appreciation reflects global market forces. This implies it’s a natural, efficient, and likely inevitable result.
But in fact this record-breaking run-up reflects a series of powerful, wasteful distortions – not efficient market pressures. Our currency is now at least 25 percent higher than any estimate of its real value (based on purchasing power parity, unit labour cost competitiveness, or any other pragmatic measure). That’s clearly a distortion.
It’s been pushed up by incoming flows of hot money, attracted by Canada’s renewed status as resource supplier (especially oil). That in turn reflects world oil prices driven skyward by cartel power, geopolitical instability, and monopoly pricing. More distortions.
Meanwhile, Canadian resource profits are astronomical largely because Canadians receive scandalously low royalties for non-renewable resources that they themselves own. Oil sands royalties (as low as 1 percent) were set when oil cost $20 per barrel, and the technology was unproven. Today oil is $80 per barrel, and the technology is utterly predictable. In that context, a 1 percent royalty is a blatant, distorting subsidy.
That lucre has sparked an unfettered, chaotic boom in northern Alberta – another distortion. Wages and prices rise, pushing up interest rates and reinforcing the dollar’s ascent. The takeover of Canadian resource companies is another distortion: deal-makers scramble to grab virtually any producer with a pulse, at unparalleled premiums, lest they be left behind when the M&A party ends. The fact that
Ottawa demands next-to-nothing of these takeovers in terms of protecting the Canadian public interest, simply throws gasoline on the fire.
The end result of this chain of distortions is that hard-working, productive Canadian manufacturing workers are losing their jobs by the thousand, every day. People who work more diligently and productively than ever before, are told they can no longer compete – all because of a greed-fueled orgy on currency and stock markets that is unsustainable, wasteful, and destructive.
This isn’t inevitable. Policy-makers could immediately release much of the hot air out from the loonie’s bubble. The Bank of Canada could cut interest rates; more importantly, it could announce that future monetary policy will be guided (like the U.S. Fed’s) by a broader view of Canada’s well-being, not solely inflation. The Alberta and federal governments could impose new royalties and taxes (within their respective jurisdictions) to ensure we all get more value from our own resources. Oil sands development could be managed at a more sensible, efficient pace. And Ottawa could turn down foreign takeovers that do not demonstrate significant net benefits to the public interest.
Those measures alone would knock the loonie back substantially, the day they were announced. More importantly, they would re-equip Canada to retake some agency in our own economic development. Instead of seeing our economic destiny determined by global cartels and hyperactive financial traders, we would develop our own resources – and the industries which add value to those resources – in line with our own preferences and interests.
The dollar’s uncontrolled rise is wreaking havoc over vast tracts of Canada’s economic landscape. Policy-makers who claim they can’t do anything about it, are simply passing the buck. It’s time for them to do the jobs they’re paid to do.
As a union leader in the manufacturing sector it is not surprising Hargrove is negative re the rising Canadian dollar. Although Hargrove is no doubt correct in his analysis as far as he goes there are other factors he ignores. It is the US dollar that is sinking perhaps even more than the Canadian dollar rising. That sinking is caused by several factors but among them the credit crunch and doubts about the US economy as well as the balance of payments problems.
A Black Day in Canada’s Economic History
By Buzz Hargrove
Some were popping champagne corks yesterday over the loonie’s attainment of full U.S.-dollar parity. But their celebration was misguided.
Yesterday was a black day in Canada’s economic history. Our dollar’s rise to parity is a symbolic milestone of the triumph of paper mania over economic reality. Far from celebrating, we should be thinking about new ways to stop it, and reverse it.
The loonie’s flight has been driven by a distorted, unbalanced boom in oil exports, and a corresponding surge of foreign takeovers of Canadian resource companies. The appreciation benefits just a small, specialized minority of Canadians: retailers, some investors, and snowbirds. For most of us, the high-flying dollar does much more harm than good. Our wealth comes from what we produce, not from paper. And the dollar’s rise badly undermines what we do.
Yesterday’s events, capping a five-year rise that is one of the most dramatic in global history, should give us pause to reconsider the causes and consequences of these incredible changes.
Some argue the appreciation reflects global market forces. This implies it’s a natural, efficient, and likely inevitable result.
But in fact this record-breaking run-up reflects a series of powerful, wasteful distortions – not efficient market pressures. Our currency is now at least 25 percent higher than any estimate of its real value (based on purchasing power parity, unit labour cost competitiveness, or any other pragmatic measure). That’s clearly a distortion.
It’s been pushed up by incoming flows of hot money, attracted by Canada’s renewed status as resource supplier (especially oil). That in turn reflects world oil prices driven skyward by cartel power, geopolitical instability, and monopoly pricing. More distortions.
Meanwhile, Canadian resource profits are astronomical largely because Canadians receive scandalously low royalties for non-renewable resources that they themselves own. Oil sands royalties (as low as 1 percent) were set when oil cost $20 per barrel, and the technology was unproven. Today oil is $80 per barrel, and the technology is utterly predictable. In that context, a 1 percent royalty is a blatant, distorting subsidy.
That lucre has sparked an unfettered, chaotic boom in northern Alberta – another distortion. Wages and prices rise, pushing up interest rates and reinforcing the dollar’s ascent. The takeover of Canadian resource companies is another distortion: deal-makers scramble to grab virtually any producer with a pulse, at unparalleled premiums, lest they be left behind when the M&A party ends. The fact that
Ottawa demands next-to-nothing of these takeovers in terms of protecting the Canadian public interest, simply throws gasoline on the fire.
The end result of this chain of distortions is that hard-working, productive Canadian manufacturing workers are losing their jobs by the thousand, every day. People who work more diligently and productively than ever before, are told they can no longer compete – all because of a greed-fueled orgy on currency and stock markets that is unsustainable, wasteful, and destructive.
This isn’t inevitable. Policy-makers could immediately release much of the hot air out from the loonie’s bubble. The Bank of Canada could cut interest rates; more importantly, it could announce that future monetary policy will be guided (like the U.S. Fed’s) by a broader view of Canada’s well-being, not solely inflation. The Alberta and federal governments could impose new royalties and taxes (within their respective jurisdictions) to ensure we all get more value from our own resources. Oil sands development could be managed at a more sensible, efficient pace. And Ottawa could turn down foreign takeovers that do not demonstrate significant net benefits to the public interest.
Those measures alone would knock the loonie back substantially, the day they were announced. More importantly, they would re-equip Canada to retake some agency in our own economic development. Instead of seeing our economic destiny determined by global cartels and hyperactive financial traders, we would develop our own resources – and the industries which add value to those resources – in line with our own preferences and interests.
The dollar’s uncontrolled rise is wreaking havoc over vast tracts of Canada’s economic landscape. Policy-makers who claim they can’t do anything about it, are simply passing the buck. It’s time for them to do the jobs they’re paid to do.
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