Latest news with #AndrewGrantham
Yahoo
3 days ago
- Business
- Yahoo
Canada's economy charged ahead in the first quarter of 2025 as exporters sought to get ahead of tariffs
Canada's economy grew 2.2 per cent in the first quarter of 2025, Statistics Canada said on Friday. That maintained the pace recorded in the final quarter of last year and significantly exceeded estimates. In a note following the data release, CIBC economist Andrew Grantham cautioned that while real gross domestic product (GDP) growth was "solid," the number was "flattered by a surge in exports as companies looked to front-run potential US tariffs." Economists had expected the economy to grow 1.5 per cent on an annualized basis in the first quarter, according to consensus estimates published by RBC Economics. Grantham noted "weak" domestic demand in the quarter, with "only slight upward momentum heading into Q2." Real gross domestic product (GDP) increased 0.1 per cent in March, matching expectations. The quarterly growth came in above the Bank of Canada's forecasts. The central bank expected real GDP to grow 1.8 per cent on a quarterly annualized basis, according to its latest Monetary Policy Report (MPR). The Friday data also include a revision to fourth quarter 2024 growth, which at the time came in above expectations, adjusting the figure from 2.6 per cent to 2.1 per cent. This story will be updated. John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android.
Reuters
23-05-2025
- Business
- Reuters
Canada March retail sales rise 0.8%; seen up 0.5% in April
OTTAWA, May 23 (Reuters) - Canadian retail sales grew by 0.8% in March from February, more than analysts had forecast, and looked set to have increased by 0.5% in April, Statistics Canada data indicated on Friday. The largest increase was the 4.8% gain posted by motor vehicle and parts dealers, the first rise in three months. Analysts suggested one reason was consumers rushing to buy cars before U.S. tariffs took effect in April. Analysts had expected a 0.7% increase in March. "Canadian consumers haven't tightened the purse strings much it seems in the face of tariff uncertainty," said Andrew Grantham, senior economist at CIBC Capital Markets. In March, sales were up in six of nine subsectors, representing 58.9% of retail trade. In volume terms, retail sales increased by 0.9%. Bank of Canada Governor Tiff Macklem said on Thursday he expected second-quarter growth to be "quite a bit weaker" than the first quarter, and that it could be worse in subsequent quarters if the uncertainty around tariffs continued. Currency swap market bets show odds of a 25 basis point rate cut in June at 32%, unchanged from before the data release. "We still judge that the Bank will cut following the recent declines in private sector employment, but it will be a close call," said Stephen Brown, deputy chief North America economist at Capital Economics. The central bank last month forecast annualized first-quarter GDP would be 1.8% but did not give any other projections, citing uncertainty over tariffs. Statistics Canada is due to issue first-quarter GDP data on May 30.
Yahoo
23-05-2025
- Business
- Yahoo
Canada March retail sales rise 0.8%; seen up 0.5% in April
OTTAWA (Reuters) -Canadian retail sales grew by 0.8% in March from February, more than analysts had forecast, and looked set to have increased by 0.5% in April, Statistics Canada data indicated on Friday. The largest increase was the 4.8% gain posted by motor vehicle and parts dealers, the first rise in three months. Analysts suggested one reason was consumers rushing to buy cars before U.S. tariffs took effect in April. Analysts had expected a 0.7% increase in March. "Canadian consumers haven't tightened the purse strings much it seems in the face of tariff uncertainty," said Andrew Grantham, senior economist at CIBC Capital Markets. In March, sales were up in six of nine subsectors, representing 58.9% of retail trade. In volume terms, retail sales increased by 0.9%. Bank of Canada Governor Tiff Macklem said on Thursday he expected second-quarter growth to be "quite a bit weaker" than the first quarter, and that it could be worse in subsequent quarters if the uncertainty around tariffs continued. Currency swap market bets show odds of a 25 basis point rate cut in June at 32%, unchanged from before the data release. "We still judge that the Bank will cut following the recent declines in private sector employment, but it will be a close call," said Stephen Brown, deputy chief North America economist at Capital Economics. The central bank last month forecast annualized first-quarter GDP would be 1.8% but did not give any other projections, citing uncertainty over tariffs. Statistics Canada is due to issue first-quarter GDP data on May 30.
Canada Standard
23-05-2025
- Business
- Canada Standard
Mixed inflation signals complicate Bank of Canada's outlook
OTTAWA, Canada: Canada's inflation picture became more complicated in April, with headline inflation easing but core measures ticking higher—posing a challenge for the Bank of Canada ahead of its next policy decision. Statistics Canada reported this week that annual inflation slowed to 1.7 percent in May, down from 2.3 percent in March, primarily due to falling energy prices and the removal of a federal carbon tax. The reading was slightly above analyst expectations of 1.6 percent and the Bank of Canada's forecast of 1.5 percent. But underlying inflation told a different story. The CPI median, which strips out extreme price movements, rose to 3.2 percent, while the CPI trim measure increased to 3.1 percent—both at 13-month highs. The central bank closely monitors these core metrics as they offer a clearer view of inflation trends unaffected by volatile categories like fuel. "Signs of renewed weakening in the economy on the one hand... but stronger core inflation on the other makes for a tough decision for the Bank of Canada," said Andrew Grantham, senior economist at CIBC Capital Markets. Markets responded quickly: the odds of a rate cut at the bank's June 4 meeting fell from 65 percent to 40 percent, according to swaps market data. Energy prices were the main drag on the headline rate, with gasoline down 18.1 percent and natural gas prices dropping 14.1 percent compared to a year ago. But grocery prices climbed 3.8 percent, up from 3.2 percent in March, and travel tour prices rose 6.7 percent year-on-year. On a month-to-month basis, overall inflation dipped by 0.1 percent, defying forecasts for a 0.2 percent decline. Despite mounting pressure from volatile global trade conditions, analysts like TD Securities' Andrew Kelvin say the central bank may remain cautious. "The data doesn't scream for a rate cut," Kelvin said, "but trade-related uncertainty could tilt the balance." The Canadian dollar firmed slightly to C$1.3930 against the U.S. dollar following the report. With just one key data point—Q1 GDP due May 30—remaining before the Bank of Canada's following announcement, the central bank faces a tricky path as it weighs conflicting signals from the economy.
Yahoo
20-05-2025
- Business
- Yahoo
End of carbon tax slows Canada's headline inflation rate but hides 'much less friendly' core data
Canada's inflation rate fell in April, with the Consumer Price Index (CPI) pulling back to 1.7 per cent annually from 2.3 per cent the month before, according to Statistics Canada data released Tuesday. Lower energy costs, with the removal of the carbon tax in many provinces and falling crude oil prices, were a main driver. Core measures of inflation, however, rose in April, leading economists to scale back expectations for a Bank of Canada (BoC) interest rate cut at its next meeting on June 4. The core indicators, favoured by the BoC, leave out the effect of indirect taxes and thus weren't affected by the carbon tax removal, CIBC economist Andrew Grantham said in a note published shortly after the data were released. "Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other makes for a tough decision for the Bank of Canada at its early June meeting," Grantham wrote. April employment figures were essentially flat, with unemployment jumping to 6.9 per cent. Economists had expected the core inflation figures, CPI-median and CPI-trim, to hold steady at 2.9 per cent and 2.8 per cent respectively, according to consensus estimates published by CIBC Economics. CPI-median rose 3.2 per cent year-over-year in April, and CPI-trim rose 3.1 per cent. The core measures "are now running at their fastest pace in a year — i.e., back before [the BoC] began cutting rates," wrote BMO chief economist Douglas Porter, who said those numbers revealed a "much less friendly" inflation picture. "After a weak jobs report handed the Bank a good reason to cut, this back-up in core above three per cent pretty much washes that away." The core numbers can also be "impacted by broad changes in food prices given their heavy weight in the overall basket," CIBC's Grantham said. Grocery prices and the cost of travel tours rose. The price of groceries has been rising faster than overall inflation for three straight months, up 3.8 per cent annually in April. Rising grocery prices, as well as a jump in vehicle prices, which have gone up close to 3.0 per cent since last year, "appears related to the simmering trade war," Porter said. In a statement sent to Yahoo Finance Canada, Jules Boudreau, a senior economist at Mackenzie Investments, argued that uncertainty on the new federal government's fiscal plans might also cause the BoC to hold in June. "Higher federal government spending will boost growth and inflation in Canada," Boudreau said. "And with the federal government deciding not to publish a budget this spring, the Bank of Canada won't want to get aggressive with rate cuts before it gets clarity on deficits." The BoC "will clearly be concerned" about the core inflation data, wrote Desjardins Group economist Royce Mendes, but he noted that the effects of lower energy prices could "further affect price dynamics in a positive way." Gasoline is among the goods that "tend to form the basis of inflation expectations," Mendes said, and Desjardins therefore expects "a sharp reversal of the spike" in those expectations in the BoC's most recent surveys. The change in energy prices in April was significant — gasoline prices dropped over 10 per cent from March and fell 18.1 per cent from a year ago. Natural gas costs were down 18.9 per cent on the month and 14.1 per cent on the year. The BoC's decision-makers "should have an early internal indication of inflation expectations" before their next decision, Mendes said. "With the economy clearly weakening in recent months, lower inflation expectations should keep central bankers on track to cut rates 25 basis points in June," Mendes wrote. Economists had expected the carbon tax removal to drive a significant slowdown in overall prices in April, with expectations the annual rate would fall to 1.6 per cent, according to the consensus estimates published by CIBC. The April CPI data follow March figures that slowed unexpectedly to 2.3 per cent from 2.6 per cent in February, as gasoline and travel costs dropped. John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android.
