Partner Center Find a Broker

Howdy, forex buddies! Pip Diddy noted in his latest Top Forex Market Movers of the Week that the Loonie, got slapped about despite higher oil prices while Forex Ninja observed in his (or her?) most recent write-up that the positive correlation between oil and the Loonie seems to be breaking. And if that made you wanna see a “bigger picture” of the Canadian economy, especially since the BOC will be announcing its monetary policy decision this coming Wednesday (May 25, 2:00 pm GMT), then this economic snapshot will help you out.

Note: As with all of my other Economic Snapshots, there are nifty tables at the bottom, so you can skip to those if you’re a forex trader who’s in a hurry. The bullet points provided highlight the underlying details and trends that give the numbers their proper context, however.


  • Canada’s Q4 2015 GDP grew by 0.2% quarter-on-quarter, which is slower than Q3’s growth pace of 0.6%.
  • Year-on-year, Canada’s Q4 2015 GDP only grew by 0.5%, which is a disappointment when compared to the previous quarter’s 1.1% annual growth.
  • The year-on-year reading for GDP growth has been trending lower after peaking at 3.1% back in Q4 2013.
  • The current year-on-year reading is also the slowest on record since Q4 2009 when GDP was in negative territory. That’s a heck of a long time.
  • The slower quarter-on-quarter GDP growth was mainly due to a 1.7% slump in business investments (-1.3% previous) and a 0.6% decline in exports (+2.6% previous).
  • Business investments have been been in decline for four consecutive quarters now, with the main drag being the “non-residential structures, machinery and equipment” component.
  • The continuing decline in the aforementioned component is a bad sign for Canada’s economy since that the decline may mean that investors are not investing in other industries or that the unwinding of investments on the energy sector is outpacing investments in other sectors.
  • In terms of output, good-producing industries were in the red during Q4 2015, with agriculture being the only exception since it was up by 2.3% (2.4% previous).
  • Mining, quarrying, and oil and gas extraction was down by 2.1% after a 4.8% rise back in Q3.
  • Construction was down by 1.4% (-0.7% previous). Construction has been declining for four consecutive quarters now.
  • Manufacturing was down by 0.3% after advancing by 0.8% previously.
  • The service sector, which account for a large chunk of Canada’s GDP in term of output, grew by 0.5% (0.3% previous).
  • Canada’s monthly GDP reports showed a 0.6% expansion in January, followed by a 0.1% contraction in February.


  • The Canadian economy had a net loss of around 2.0K jobs in April after a substantial net gain of 40.6K jobs back in February.
  • Looking at the details of the jobs report, the small net loss in jobs was due to full-time employment getting reduced by 2.4K while being partially offset by a measly 0.4K increase in part-time jobs.
  • The goods-producing sector saw a net loss of 37.1K jobs (-34.1K previous), which was partially offset by the service sector’s net employment gain of 35.0K (+74.7K previous).
  • All of the goods-producing sub-sectors suffered job losses, but the manufacturing sector was hit the hardest, losing 16.5K jobs (-31.8K previous).
  • For the services-producing sector, the trade industry contributed the most to employment (+26.8K vs. +2.4K previous), followed by the accommodation and food services industry (21.9K vs. 17.7K previous).
  • Looking at specific provinces, job losses were reported in oil-rich Alberta and agricultural Manitoba.
  • Despite the net loss of jobs in April, Canada’s jobless rate managed to hold steady at 7.1%.
  • However, a closer look at the jobs report shows that the labor force participation rate actually fell to a five-month low of 65.8%.
  • This is bad since it means that some Canadians got discouraged and decided to drop out of the workforce.


  • Canada’s headline CPI advanced by 0.3% month-on-month in April, which is a bit slower than the 0.6% registered back in March.
  • However, headline CPI increase by 1.7% year-on-year , recovering from March’s five-month low of 1.3% and breaking two straight months of deteriorating readings.
  • The core reading, meanwhile increased by 2.2%, which is a nine-month high.
  • This also marks the second consecutive month that the core reading increased at a faster pace.
  • The higher year-on-year headline reading was due to higher prices for food and shelter, which is also why the core reading climbed higher as well.
  • Another major factor for the higher headline reading was the energy component being less of a drag because of the slower fall in gasoline prices (-5.8% vs. -13.6 previous).
  • Month-on-month, the slower increase was due to a faster fall in food prices (-0.5% vs. -0.3% previous) and stagnant prices for clothing and footwear (+4.2% previous).

Business Conditions & Sentiment

  • As of April, the RBC-Markit manufacturing PMI reading has been above the 50.0 stagnation level for two straight months and even improved further from 51.5 to 52.2.
  • This is also highest reading ever since December 2014.
  • Commentary from the PMI report noted that the higher reading in April reflected a “a rebound in output, new business and employment growth.”
  • Also, new business orders grew at the fastest pace in almost a year-and-a-half, thanks to stronger domestic demand, as well as foreign demand.
  • The PMI report noted that payroll numbers increased for the second consecutive month in April, but this contradicts the government numbers since manufacturing has been shedding jobs for two months running.
  • Factory gate prices decreased in April, which lines up with the government’s own inflation numbers.
  • Moving on, the comprehensive Ivey PMI for April climbed higher to 53.4 from 50.1.
  • Sub-indices were actually mixed, but it seems like the jump from 48.6 to 52.3 in the inventories index was the main driver for the higher headline Ivey PMI reading.
  • Whether this was due to oversupply or anticipation of higher demand is not clear.
  • The prices index dipped from 58.5 to 53.9, but at least it’s still above the 50.0 level.
  • The employment index was pushed lower to 49.9, which is the first contractionary reading since October 2015.
  • Incidentally, the lower employment index for February corresponds to the weak jobs data, and the same can be said for the prices index and inflation.

Consumer Spending

  • The headline value of retail sales fell by 1% month-on-month in March, ending two months of gains.
  • Sales declines were reported by 6 of the 11 sub-sectors.
  • In terms of volume, retail sales decline by 1.3% month-on-month.
  • The largest decline (in terms of value) was from the 2.9% fall reported by motor vehicle and parts dealers.
  • Sales at furniture and home furnishing stores also fell by 3.7% while sales at food and beverage stores was down by 0.4%, which is why the core reading also took a hit (-0.3% vs. 0.2% previous).
  • Year-on-year, headline retail sales increased by 3.2%, but it’s lower than the previous month’s 5.6% increase.
  • The lower year-on-year reading was due mainly to lower sales for motor vehicles and parts dealers (10.3% vs. 15.3% previous).
  • Most provinces reported month-on-month decreases in retail sales, but only Alberta and Saskatchewan were in the red on a year-on-year basis.


  • Canada’s trade deficit widened for the second straight month to $3,414 million in March. That’s in Canadian dollars or Loonies, by the way.
  • This is the biggest trade gap ever on record since records began in the 1970’s.
  • The large trade deficits during the Q1 months does not bode well for Q1 GDP.
  • The wider trade deficit in March was due to exports contracting for the second consecutive month (-4.79% vs. -6.59% previous).
  • Imports, meanwhile, have also been contracting for two straight months (-2.45% vs. -2.65% previous).
  • The slide in exports during March was primarily because of the 6.3% slump in exports to the U.S., Canada’s main trading partner.
  • Exports to countries other than the U.S., meanwhile, declined by 0.2%.
  • The deterioration in exports was felt in 10 of the 11 sub-components, with motor vehicles and parts, consumer goods, and metal and non-metallic mineral products getting the worst of it.
  • As for the decrease in imports, consumer goods suffered the most, which implies either weaker domestic demand or that Canadians are buying more of the domestic stuff.

Canadian Economy: Growth

Canadian Economy: Employment

Canadian Economy: Inflation

Canadian Economy: Business Conditions & Sentiment

Canadian Economy: Consumer Spending

Canadian Economy: Trade

Putting it all together

Canada’s GDP growth slowed back in Q4 2015, but business conditions and sentiment are still upbeat overall and monthly GDP readings for January and February are hinting that GDP will continue to grow in Q1 (maybe even at a faster rate).

However, the GDP reading for March is not out yet, and trade and consumer spending both got hit hard in March. The trade deficit for March, in particular, was the widest ever on record since the 1970’s. And Q2 likely won’t be very pretty because economists are already saying that the devastation brought about by the wildfires that have been raging in Canada, particularly in oil-rich Alberta, is really big. This is also what Pip Diddy touched upon in his weekly write-up, since he’s attributing the Loonie’s weakness despite higher oil prices to the economic damage by the wildfires.