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Economic Indicators For Canada

Wednesday, February 18, 2015 > 13:19:02

Economic Indicators For Canada By Elvis Picardo, CFA

The economic indicators used to gauge the performance of an economy and its future outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming – or slumping), and the bodies or organizations that compile and disseminate these indicators in each nation.

Here are the 12 key economic indicators for Canada, the world’s 11th-largest economy:

  1. GDP growth: Statistics Canada, Canada’s national statistical agency, produces growth statistics on the Canadian economy on a monthly and quarterly basis. The report shows real gross domestic product (GDP) for the overall economy and by industry. It is an accurate snapshot of the monthly performance of the Canadian economy, and how each industry is doing within it.

  2. Employment change and unemployment rate: Key data on the Canadian employment market, such as the net change in employment, unemployment rate, and participation rate, is contained in the monthly Labor Force Survey released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.

  3. Consumer Price Index: Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing the changes over time of a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.

  4. International Merchandise Trade: This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that from the preceding month. Exports and imports are shown by product category, and also for Canada’s top ten trading partners.

  5. Teranet – National Bank House Price Index: This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada, and represents average home prices in Canada’s six biggest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 biggest metropolitan areas.

  6. RBC Manufacturing Purchasing Managers' Index (PMI): Released on the first business day of each month, this indicator of trends in the Canadian manufacturing sector was launched in June 2011 by Royal Bank of Canada, in association with Markit and the Purchasing Management Association of Canada. Index readings above 50 of the RBCPMI signal expansion from the previous month, while readings below 50 signal contraction. The monthly survey also tracks other information pertinent to the manufacturing sector, such as changes in output, new orders, employment, inventories, prices, and supplier delivery times.

  7. Conference Board’s Consumer Confidence Index: The Conference Board of Canada's Index of Consumer Confidence measures consumers' levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as the outlook for the broad economy, since consumer demand comprises such as a significant part of it. The index is developed from the responses of a random sample of Canadian households to four questions. Survey participants are asked how they view their households' current and expected financial positions, their short-term employment outlook, and if it is a good time to make a major purchase.

  8. Ivey Purchasing Managers Index (PMI): An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity as indicated by a panel of purchasing managers across Canada. It is based on responses of these purchasing managers to a single question: "Were your purchases last month in dollars higher, the same, or lower than the previous month?" An index reading below 50 shows a decrease, while above 50 shows an increase. Panel members indicate the change in their organization's activity in five broad categories: purchases, employment, inventories, supplier deliveries, and prices.

  9. Housing Starts: Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month's new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator is an important gauge of the state of the Canadian housing market.

  10. Home Sales: This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information such as the percentage change in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, change in the MLS Home Price Index, and the national average price for homes sold in the month.

  11. Retail Sales: Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on a month-over-month and year-over-year basis. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.

  12. Building Permits: The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator to assess the state of the construction industry.

The Bottom Line

The 12 economic indicators briefly described above show the health of key aspects of the economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Together, they provide a comprehensive picture of the state of the Canadian economy

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