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Howdy, forex buddies! The BOC statement is coming up on Wednesday (January 18, 3:00 pm GMT), and if you’re wondering how Canada’s economy has been faring lately, then today’s Economic Snapshot is just for you.

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.

Growth

  • Canada’s GDP rebounded by 0.9% quarter-on-quarter in Q3 2016 after contracting by 0.3% back in Q2 2016.
  • This is the fastest quarterly expansion in nine quarters.
  • Year-on-year, Canada’s Q2 GDP grew by 1.3%, accelerating from the previous quarter’s 1.1% rate of expansion.
  • According to the GDP report, the quarter-on-quarter reading rebounded in Q3 primarily because of the 2.2% increase in exports (-3.9% previous).
  • Exports plunged in Q2 mainly because the wildfires in Alberta drastically cut down the production of energy products, namely oil.
  • However, exports of energy products grew by 6.1% in Q3.
  • Exports of consumer goods also rose by 3.6%, after contracting by 6.4% in Q2.
  • Aside from the recovery in exports, the faster bigger increase in household spending (+0.6% vs. +0.5% previous) helped with the rebound as well.
  • The main drag, meanwhile, came from the 0.5% fall in business investment (-0.1% previous).
  • Business investment has been contracting for eight consecutive quarters already as of Q3 2016.
  • As for the faster annual reading, that was due to the softer fall in business investment (-2.8% vs. -3.5% previous), as well as the weaker decline in exports (-0.3% vs. -1.0% previous).

Employment

  • The Canadian economy generated net increase of 53.7K jobs in December, which is more than the 10.7K jobs generated in November.
  • December’s reading also happens to be a three-month high.
  • Looking at the details of the jobs report, the net increase in jobs was due to the 81.3K increase in full-time jobs, which was partially offset by the loss of 27.6K part-time jobs.
  • This is largest decrease in part-time jobs in seven months, as well as the first net loss of part time jobs in four months.
  • But on a more upbeat note, the increase in full-time jobs is the first in three months, and full-time jobs generally offer better pay and security.
  • Even better, the increase in full-time jobs in December is the best reading in 43 months.
  • Moving on, Canada’s jobless rate deteriorated, climbing from 6.8% to 6.9%.
  • However, the climb was widely expected.
  • Moreover, the climb was due to the participation rate jumping from 65.6% to 65.8%, as the labor force increased by 68.5K while the working-age population only increased by 17.4K.
  • The number of unemployed people, meanwhile, only increased by 14.7K.
  • This means that the Canadian economy was able to absorb a substantial portion of the people who joined or rejoing the labor force.

Inflation

  • Canada’s headline CPI fell by 0.4% month-on-month in November, ending two months of increases.
  • This is the worst monthly reading in 11 months.
  • The CPI report reveals that the fall in CPI was broad-based, with only food, shelter, and the health and personal care components showing increases among the major components.
  • The main drag was the 1.2% fall in transportation costs (+1.0% previous).
  • And the fall in transportation costs, in turn, was mainly due to the 4.3% slump in gasoline prices.
  • Gasoline prices surged by 3.7% in the previous month.
  • Year-on-year, headline CPI increased by 1.2% in November, slower than October’s +1.5%.
  • This effectively puts an end to two consecutive months of ever faster annual increases.
  • The slower increase was due mainly to the 1.2% drop in the price of clothing and footwear (-0.2% previous) and the weaker increase in transportation costs (+1.4% vs. 3.0 previous).
  • Transportation costs were weighed down by the 1.7% year-on-year fall in the price of gasoline (+2.5% previous).
  • Gasoline is stripped from the core reading, but the drop in prices for clothing and footwear are not, which is the main reason why the core reading deteriorated from 1.7% to 1.5%.
  • This is a 31-month low.
  • Other components that helped pull down the core reading include the weaker increase in electricity costs (+3.5% vs. +5.3% previous) and the weaker increase in health and personal care costs (+1.1% vs. +1.7% previous).

Business Conditions & Sentiment

  • The RBC-Markit manufacturing PMI reading for December climbed from 51.5 to a four-month high of 51.8.
  • The PMI reading has been above the 50.0 stagnation level for ten consecutive months now.
  • Also, this marks the third consecutive month of ever higher readings.
  • Commentary from the PMI report noted that the higher reading was “led by the fastest upturn in incoming new work for two years.”
  • Moving on, the comprehensive Ivey PMI for December jumped from 56.8 to 60.8, an 11-month high.
  • The jump in the headline reading was apparently due to the surge in the prices index (73.8 vs. 60.5 previous) and the rise in the inventories index (54.1 vs. 47.2 previous).
  • The prices index is an 11-month high, and could mean higher inflation in December.
  • Meanwhile, the employment index fell from 58.0 to 51.7, which means weaker employment growth in December.
  • This obviously contradicts how the actual employment numbers turned out.
  • As for the deliveries index, it fell from 50.1 to 45.9, which means that supplier delivery times were slower.

Consumer Spending

  • The headline value of retail sales jumped by 1.1% month-on-month in October after already jumping by 0.8% in September.
  • This is the monthly best reading in 9 months.
  • On a monthly basis, retail sales have been in positive territory for three straight months already.
  • In addition, retail sales have been increasing at a faster rate for two consecutive months.
  • The jump in retail sales was also pretty broad-based, with 9 of the 11 sub-sectors reporting increases.
  • In terms of volume, retail sales also increased by 0.6% month-on-month.
  • The main contributors to the faster increase were food and beverage stores (+1.1% vs. -0.6% previous), gasoline stations (+3.8% vs. +1.7% previous), and general merchandise stores (+1.9% vs. +0.5% previous).
  • Meanwhile, motor vehicle and parts sales account reported stagnant sales levels.
  • Sales from motor vehicle and parts dealers are stripped from the core reading, which is why the core reading printed a drastic improvement (+1.4% vs. +0.3% previous).
  • Year-on-year, headline retail sales increased by 3.8%.
  • This is the best reading in six months.
  • Furthermore, the annual reading has been trending higher for two consecutive months already.
  • The faster year-on-year reading was also mainly due to higher sales from food and beverage stores (+3.1% vs. +1.0% expected), gasoline stations (+2.4% vs. -2.0% previous), and general merchandise stores (+4.6% vs. +3.0% previous).

Housing

  • The total value of building permits issued in November was $7.8 billion, which is 0.1% lower% when compared to the previous month.
  • Single-family dwellings, in particular, printed a 2.0% slump, which is the hardest ever drop on record.
  • The decline came mainly from the oil-rich province of Alberta, with the report noting that “the decline in Alberta was large enough to offset gains in seven provinces.
  • The value of industrial building permits, meanwhile, reported a 10.1% increase to $404 million, the second consecutive month of increase.
  • As for commercial building permits, that fell by 6.1% to $1.5 billion.
  • Looking forward, the number of housing starts in December was 207.9K units, which is more than the previous month’s 187.3K increase.
  • Canada’s new housing price index (HPI), meanwhile, continued to trend higher.
  • HPI for July increased by 0.2% to 117.4, which is a new record high.
  • HPI has been trending higher since 2009.

Trade

  • Canada printed a $526.5 million trade surplus in November.
  • That’s in Canadian dollars or Loonies, by the way.
  • This is the first ever trade surplus since September 2014.
  • The larger deficit was due to exports soaring by 4.29% to a 10-month high of $45,614.4 million.
  • Imports, meanwhile, only marginally increased by 0.73% to $45,087.9 million.
  • According to the trade report, there was a “widespread” increase in exports, with 10 of the 11 sections reporting increases.
  • The last time this happened was back in May 2014.
  • In terms of export destinations, the U.S., Canada’s main export market, saw a 2.5% increase, up from 1.7% previously.
  • Better still, the trade report also noted that “Exports to countries other than the United States rose 9.5% to a record $12.0 billion in November, surpassing the previous record set in December 2011.”

Canadian Economy: Growth

Canadian Economy: Employment

Canadian Economy: Inflation

Canadian Economy: Business Conditions & Sentiment

Canadian Economy: Consumer Spending

Canadian Economy: Housing

Canadian Economy: Trade

Putting it all together

As the BOC forecasted in its October Monetary Policy Report, GDP growth rebounded in Q3, thanks mainly to the improvement in exports. However, the BOC warned during the December BOC statement that “more moderate growth is anticipated in the fourth quarter.”

But looking at the available economic reports, it looks like Q4 is gonna be a good quarter. For one, retail sales was very good in October, which is a big plus for consumer spending. And things could get better, since full-time jobs reported the largest increase in 43 months during the December period. PMI readings also improved overall during the Q4 months. And best of all, Canada finally reported a trade surplus in November after printing deficits since September 2014.

Moving on to inflation, inflation took a hit in November. However the year-on-year headline reading is still within the BOC’s 1-3% target range. Although the 1.2% reading means that it is about to scrape the bottom of the range. Just as bad is that it’s veering away from the BOC’s projection that headline annual CPI would print a 1.7% increase by Q4 2016. Annual core inflation is also some distance away from the BOC’s projection of +1.9% by the end of Q4 2016. But on a more upbeat note, Ivey’s prices index did rise to an 11-month high of 73.8. A rebound in December is therefore still not out of the question.