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U.S. and Canadian economies to avoid double dip recessions: CIBC World Markets Inc.

TORONTO, Ontario, July 27, 2010 — The U.S. and Canadian economies will see growth slow over the next six months but are unlikely to experience a double-dip recession, finds CIBC's Recession Probability Index.

The Index, which has a strong track record of forecasting recessions, finds the odds of another U.S. recession occurring in the next six months are very low. The CIBC RPI measures the probability of a recession by examining trends in a number of indicators, including credit spreads, interest rates, and the Philadelphia Federal Reserve Board's ADS Index (which includes weekly U.S. unemployment benefit claims).

"We're not in material danger of a rude double dip in the next two quarters," says Avery Shenfeld, Chief Economist at CIBC. "The probability estimate is likely more consistent with a slowdown rather than a true double-dip recession. But, given the uncertainties, fiscal tightening ahead and the potential for a slow economy to be vulnerable to shocks, we will keep an eye on our new indicator nevertheless."

In his latest Economic Insights report, Mr. Shenfeld notes that consumers and investors alike are starting to fret over the possibility of a double-dip recession, but he says in the modern era, double dips are more often feared than reality. "A double dip is to be avoided at all costs when holding a potato chip at the buffet line, and less trivially, when steering economic policy.

"Indeed, if one defines a double dip as a downturn after an expansion lasting less than two years, the only post-WWII U.S. twin dives were the recessions of 1980 and 1981-82. Double dips have also been rare in other major economies of late, although Japan fell into recession in 2000 only a year after it emerged from the "Asian crisis" recession."

He cites a number of factors that he expects will keep the American economy from hitting a double-dip. First, he expects that the U.S. government will back away from shutting off the stimulus taps too aggressively in the face of lagging job growth. But since U.S. President Barrack Obama's gradualist approach to deficit reduction will still be a negative for growth, monetary policy will have to remain very stimulative. As a result, even a modest tightening by the U.S. Federal Reserve Board in the second half of next year now looks premature. Best bets are that Ben Bernanke's team will seek no exit from low rates until 2012.

"Fiscal policy might move off its tightening war-path. Congress already backed away from an earlier posture that would have let extended unemployment benefits lapse, and legislators now talking like tigers on deficits could become pussycats favouring stimulus in the face of continued high joblessness in 2011."

Other factors Mr. Shenfeld sees that suggests the U.S. economy, and by extension Canada's, will avoid a second recession:

• Healthy corporate profits. These typically presage both hiring and capital spending and will likely benefit further from continued government stimulus.
• Strong market liquidity. A recent study in the Journal of Finance found that a drying up in market liquidity is often a telling sign of economic trouble ahead. Liquidity plummeted at a pace not seen in more than 20 years ahead of the recent downturn. At present, market liquidity isn't sending out the same sort of warning signal.
• Steep bond market curves. The US Treasuries curve is much steeper today than it typically is when a recession is coming up in the next few quarters. Although, with short rates near zero, curve inversions can't occur.
• Tight corporate spreads. Ahead of a recession, spreads tend to widen sharply as investors anticipate credit defaults. Spreads remain quite tight by the standards leading up to recent recessions, and don't show the sharp upward trend typically seen ahead of a downturn. It's clear that investors are far from pricing in a recession.

"Certainly, there are reasons for concern," adds Mr. Shenfeld. "The U.S. economy has been propped up by fiscal stimulus that is now winding down. Job growth has lacked its typical post-recession vigour, leaving a household sector swamped with bad mortgages having few reasons to accelerate spending. But there is still a base of ongoing support coming from healthy corporate profits and a wide-open tap on monetary stimulus. That has us projecting a sharp deceleration in U.S. growth, but not an outright recession, with a similar fate in store for Canada."

The complete CIBC World Markets Inc. report is available at:

http://research.cibcwm.com/economic_public/download/sjul10.pdf.

CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.

Archive: /mortgage-news/archive/2010/2010-07-27_CIBC-u.s._canadian_economies_avoid.stm
News source: CIBC

Release of The Fiscal Monitor - April and May 2010

OTTAWA, Ontario, July 23, 2010 — For the first two months of the 2010-11 fiscal year (April and May), there was a budgetary deficit of $4.4 billion, compared to a deficit of $7.5 billion reported in the same period last year. Close to $1.8 billion of the $4.4-billion deficit was attributable to actions taken under Canada’s Economic Action Plan. By month, there was a deficit of $2.4 billion in April and a deficit of $2.0 billion in May.

For the two months together, revenues increased by $2.4 billion, or 7.0 per cent. This gain reflected higher goods and services tax (GST) revenues, personal income tax revenues and other revenues, partially offset by lower corporate and non-resident income tax revenues. Program expenses were down $0.5 billion, or 1.4 per cent, mainly reflecting lower transfer payments. Public debt charges declined by $0.2 billion due to a decrease in the average effective interest rate on the stock of interest bearing debt.

Archive: /mortgage-news/archive/2010/2010-07-23_FINANCE-release_fiscal_monitor_april_may.stm
News source: Department of Finance

Bank of Canada raises interest rates further

OTTAWA, Ontario, July 22, 2010 — The Bank of Canada increased the target for its trend-setting overnight lending rate on July 20, 2010, raising it by a quarter of a percentage point to 0.75 per cent. The increase follows on the heels of an equal interest rate increase in June 2010, when it was raised for the first time since 2007. The Bank rate now stands at one per cent.

In its most recent interest rate announcement, the Bank marked down its outlook for economic growth globally, emphasizing the uneven economic recovery in the U.S., and weakening prospects for European economic growth.

In the Bank’s view, Canada’s domestic economy is evolving largely as expected in recent months, but trimmed its forecast for economic growth this year and next by 0.2 per cent to 3.5 per cent in 2010 and 2.9 per cent in 2011. While the Bank raised its forecast for Canadian economic to 2.2 per cent in 2012, it nonetheless left the easing trend for growth intact.

The Bank indicated, “[this] revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.
Where the domestic recovery had previously been led by housing and consumer spending it is now guided more by government stimulus.”

The Bank also reaffirmed its view that housing activity and household expenditures were pulled forward into the first half of 2010, which is expected to cause them to soften in the second half. It also recognized that business investment has been weaker than it previously expected, “held back by global uncertainties.” The Bank anticipates “that business investment and net exports will make a relatively larger contribution to growth” over its forecast horizon.

As of July 20th, the advertised five-year conventional mortgage rate of 5.79 per cent was down 0.06 per cent from one year earlier, and 0.2 per cent below where it stood when Bank made its previous interest rate announcement on June 1, 2010. However, it is 0.3 percentage points higher than it was at the beginning of the year.

The Bank has signaled to financial markets that it is leaving its options wide open as to whether it will raise interest rates further when it makes its next rate announcement on September 8th.

“As it did with its previous announcement in June, the Bank messaged financial markets that further interest rate increases are not pre-ordained,” said CREA Chief Economist Gregory Klump. “The strength of recent economic indicators have prompted the Bank to raise interest rates, but the Bank has signaled that it may keep rates on hold should the economic recovery begin to show signs of loosing steam.”

The Bank will make its next scheduled rate announcement on September 8th.

Archive: /mortgage-news/archive/2010/2010-07-22_CREA-bank_canada_raises_interest_rates.stm
News source: The Canadian Real Estate Association (CREA)

Bank of Canada increases overnight rate target to 3/4 per cent

OTTAWA, Ontario, July 20, 2010 — The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.

The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank's outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven.

Economic activity in Canada is unfolding largely as expected, led by government and consumer spending. Housing activity is declining markedly from high levels, consistent with the Bank's view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010. While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession.

The Bank expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.

Inflation in Canada has been broadly in line with the Bank's April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period. The Bank will look through the transitory effects on inflation of changes to provincial indirect taxes.

Reflecting all of these factors, the Bank has decided to raise the target for the overnight rate to 3/4 per cent. This decision leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending, and the uneven global recovery.

Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.

Information note:
A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 July 2010. The next scheduled date for announcing the overnight rate target is 8 September 2010.

Archive: /mortgage-news/archive/2010/2010-07-20_BOC-bank_canada_increases_overnight.stm
News source: Bank of Canada

Canada's growing popularity with foreign investors has

Strategic advantages over many advanced economies increasingly well recognized

TORONTO, Ontario, July 14, 2010 — Canada's outperformance versus many advanced economies is creating "staying power" for the country's growing popularity with foreign investors, notes a new report from CIBC World Markets Inc.

"Canada is increasingly on the lips and minds of international investors," says Warren Lovely, government strategist with CIBC's Macro Strategy group, fresh back from meetings with investors across the U.S. and Asia. "Those we've talked to are getting religion on Canada's potential outperformance versus a growing list of advanced economies. Indeed, it's hard to recall a time when the country possessed such relative, if not absolute, strength."

In CIBC's latest Global Positioning Strategy report, Mr. Lovely identifies a growing list of "strategic advantages" that are boosting interest in Canada and its weighting in global investment portfolios.

Central to Canada's strong story is its fiscal advantage, says Mr. Lovely. He points first to Canada's much smaller need for fiscal adjustments to stabilize debt ratios. "Canada's provinces are not feeling the same heat as some U.S. states, are less prone to severe program cuts or increased revenue measures, and are therefore putting their regional economies at less risk."

In addition, the revenue picture for Canada's federal and provincial governments is also "brightening materially" with $15 billion in extra revenue projected for the year.

Mr. Lovely says the fiscal improvement will serve to reduce borrowing requirements and protect federal and provincial credit ratings. It also means less bond issuance from Ottawa which will "leave plenty of room in the long end for provincial and corporate issuers."

Other distinguishing advantages for Canada noted in the report include the following:

• Years of fiscal outperformance and surpluses in Canada have created budgetary room to slash corporate taxes. This result combined with important tax reforms have given Canada a growing advantage over competing tax jurisdictions.
• Canada has emerged as a growth leader in the developed world, with the IMF the latest forecaster to see the country leading the G7 in terms of average real GDP growth during 2010-11. While Canada's growth rate is only modestly above that of the U.S., its indicators of domestic economic health, such as employment, are substantially brighter.
• Canada has a well-capitalized banking sector with a less dramatic adjustment to regulation in store.
• Canadian exporters have limited direct exposure to slow-growing Europe and at the same time have had success in increasing exports to the faster-growing BRIC region.
• Healthy international and interprovincial migration, particularly in western Canada has created less onerous demographic pressures which in turn support a faster potential economic growth rate.

• But Mr. Lovely also sees some challenges to Canada's continuing outperformance. He notes that three quarters of Canada's exports go south of the border, meaning a "U.S. slowdown will leave its mark on Canada."

  "Canadian and U.S. real GDP growth has never been more tightly correlated than during the past five years. So the end of an American inventory rebuilding process will sap demand for Canadian wares," adds Mr. Lovely.

  Other risks to Canada's economic prospects include the impact of a continuing strong Canadian dollar on manufacturing, an overheated housing market and highly indebted household sector.

  "Notwithstanding these challenges, Canadian governments are courting international investors from a position of strength, hardly beholden to foreign capital, but happy to take full advantage of a healthy appetite for Canadian fixed income product," says Mr. Lovely. "The message is getting through, and there's every reason to believe that today's strong foreign investor interest in Canada will have staying power."

  The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_jul10.pdf

  CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.

Archive: /mortgage-news/archive/2010/2010-07-14_LEPAGE-canadas_growing_popularity_foreign.stm
News source: Royal LePage

Government Acts To Secure Jobs and Economic Growth

OTTAWA, Ontario, July 13, 2010 — Today, the Honourable Jim Flaherty, Minister of Finance, welcomed last night’s Senate passage and Royal Assent of the Jobs and Economic Growth Act, legislation that will help secure Canada’s economic recovery, encourage growth and create jobs.

The Act allows for the implementation of important elements of Budget 2010. Key elements of the legislation include measures that restrain and focus spending, create a more competitive environment for business and help ensure tax fairness for Canadians.

“Canada’s Economic Action Plan has worked well and is continuing to stimulate the Canadian economy to the end of the fiscal year,” said Minister Flaherty. “At that point, we have an exit strategy and a plan to return to budget balance over the medium term by restraining the growth of program spending.”

The key measures included in the Jobs and Economic Growth Act will:

• eliminate tariffs on manufacturing inputs and machinery and equipment;
• eliminate the need for tax reporting under section 116 of the Income Tax Act for many investments by narrowing the definition of taxable Canadian property;
• implement important changes to strengthen federally regulated private pension plans;
• implement the one-time transfer protection payment to Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and Saskatchewan announced in December 2009;
• regulate national payment card networks and their operators, if necessary;
• enable credit unions to incorporate federally and operate as banks;
• streamline environmental assessments for infrastructure projects;
• increase competition in telecommunications by removing existing restrictions on foreign ownership of Canadian satellites;
• stimulate the mining industry by extending the Mineral Exploration Tax Credit for one year;
• create greater tax fairness between single- and two-parent families with respect to the Universal Child Care Benefit;
• implement an enhanced stamping regime for tobacco products to deter contraband; and
• ensure fairness for Canadian taxpayers by closing tax loopholes.

The Act also helps restrain and focus spending by:

• freezing salaries for parliamentarians; and
• reducing Governor in Council positions to federal institutions.

More details about these and other measures from Budget 2010 are available at www.budget.gc.ca.

Archive: /mortgage-news/archive/2010/2010-07-13_FINANCE-government_acts_secure_jobs_economic.stm
News source: Department of Finance

June Housing Starts

OTTAWA, Ontario, July 09, 2010 — The seasonally adjusted annual rate¹ of housing starts was 189,300 units in June, according to Canada Mortgage and Housing Corporation (CMHC).

Seasonally adjusted annual rate estimates of housing start activity were also revised up for April and May². This resulted in a month-over-month gain of 3.7 per cent in April (205,900 units), a 5.1 per cent decline in May (195,300 units), and a decrease of 3.1 per cent in June.

“Housing starts decreased during June, largely due to the multiple starts segment in Ontario. The single starts segment was largely unchanged Canada-wide.” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “After a robust start to 2010, we expect the pace of housing start activity to moderate and total 182,000 units by year-end.”

The seasonally adjusted annual rate of urban starts decreased by 2.6 per cent to 167,000 units in June. Urban multiple starts decreased by 5.8 per cent to 89,200 units, while single urban starts edged higher by 1.4 per cent to 77,800 units.

June’s seasonally adjusted annual rate of urban starts decreased 19.8 per cent in Atlantic Canada and 17.4 per cent in Ontario. Urban starts increased 11.6 per cent in Quebec, 8.6 per cent in the Prairie Region, and 6.3 per cent in British Columbia.

Rural starts³ were estimated at a seasonally adjusted annual rate of 22,300 units in June.

As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.

For more information, call 1-800-668-2642.

¹ All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment makes it possible to highlight the fundamental trends of a series. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

² The revision reflects new survey data collected for centres with a population of 10,000 to 49,999. CMHC estimates the level of starts in those centres at the beginning of each month. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimates. Revisions also stem from seasonal adjustment factors which are revised as new data are collected.

³ CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimate.

Source: CMHC
*Seasonally adjusted annual rates
**Urban centres with a population of 10,000 and over.
    Detailed data available upon request.

Archive: /mortgage-news/archive/2010/2010-07-09_CMHC-june_housing_starts.stm
News source: Canada Mortgage and Housing Corporation (CMHC)

Canada's Real Estate Market to Cool Slightly after Strong First Half

Typical annual market cycle was front-loaded in Q1 and Q2 but increasing supply of homes for sale will bring average Canadian home prices down in third and fourth quarters

TORONTO, Ontario, July 07, 2010 — Canada’s residential real estate market will start to slow in the second half of 2010 after two quarters of strong price appreciation and sales activity, according to the Royal LePage House Price Survey and Market Survey Forecast released today. While market fundamentals remain strong across most major centres in Canada, sales activity was overly ‘front-loaded’ in the first half of the year and is expected to cool off for the third and fourth quarters. Prices are also expected to steady in the second half of the year.

In the second quarter, the average price of a detached bungalow in Canada was up 9 percent to $331,868, compared to a year ago. Over the same period, standard two-storey homes rose 8.7 percent to $367,835 while standard condominiums rose 7.3 percent to $230,014. Royal LePage is forecasting that by the end of 2010, home price appreciation will average 6.8 percent year-over-year, while home sales will increase by just over one percent compared to  2009.

“We have seen an unusual pattern of activity in the housing market over the past 12 months, with the market experiencing a surge of activity and price increases that peaked in the fall of 2009 rather than spring.  Early 2010 has followed a more typical seasonal pattern with prices and activity peaking in the second quarter,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “An expected increase in the supply of homes on the market will now bring stabilization in prices and in some cities we will see both prices and unit sales decline towards the end of the year. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”

The surge of activity in the first and second quarters of 2010 corresponds to a number of significant regulatory and financial industry changes that affected home buyers over the same period, including an increase in interest rates in the spring, tightening of mortgage lending rules for first time homebuyers and investors, and the lead up to the introduction of the HST in British Columbia and Ontario.

“Anecdotal evidence suggests that these factors may have prompted an increase in housing market activity in early 2010, as people sought to get out ahead of the changes,” Soper said. “Moving into the next six months, key economic indicators such as employment growth will continue to bolster consumer confidence and help to ensure a fundamentally healthy housing market. Home prices will remain flat or decline slightly in most cities, but will be more likely to hold their value or increase in energy-producing economies such as Alberta.”

Among the regions that posted year-over-year price increases in the second quarter, Canada’s two biggest markets posted some of the largest.  Average prices in Vancouver were up 16.6 to 19.1 per cent while prices in Toronto rose by an average of 7.7 to 11.4 per cent.  In recent years these markets, however, have tended to react much more aggressively to external stimulus and affordability is expected to erode after the sharp price increases posted in Q2.  As a result, downward pressure on prices is expected for the remainder of the year.

Similarly, the country’s sharpest price increases occurred in St. John’s, NL, with prices up an average of 18.4 to 19.6 per cent.  A strong local economy driven by the oil sector combined with low inventory led to the robust increases, but eroding affordability and interest rates that are expected to rise will likely lead to more moderate  price appreciation in the second half of the year.

REGIONAL MARKET SUMMARIES

The residential real estate in market in Halifax saw year-over-year price gains across all three housing types surveyed for the second quarter of this year. Higher prices were supported by a nearly 20 per cent drop in inventory levels over the previous year and by buyers looking to finalize sales prior to interest rate and tax hikes.

Montreal saw consistent year-over-year price appreciation across all housing types surveyed in the second quarter. While first-time homebuyers were active at the beginning of the year, the last two months of this quarter saw a shift in activity to second and third-time buyers as affordability eroded. Activity may slow down in July but will increase in September as first-time homebuyers return to the market.

The real estate market in Ottawa has remained strong as prices increased across all housing types this quarter over the second quarter of 2009. The market continues to benefit from strong immigration and steady employment in the public sector. Prices are expected to soften later this year as inventory levels start to build.

Toronto house prices are higher this quarter than prices seen in the same period last year. The market strength continued from the last half of 2009 as buyers were motivated by low interest rates and a desire to beat the HST. The Toronto market is expected to experience a modest decline in prices in the second half of the year.

Detached bungalows, standard two-storey homes, and standard condominiums in Winnipeg all saw price gains this quarter as compared to the second quarter of 2009. Price increases were also seen across almost all neighbourhoods in the city though market activity is expected to slow as the year continues.

Inventory levels in Regina are currently at 25 per cent above historical levels, contributing to a more modest year-over-year price increase this quarter compared to other parts of the country. Rising interest rates and growing inventory are offset by low vacancy rates and strong employment levels. Homes are often selling below asking price, and people may be slower to trade up to more expensive homes, which will likely lead to a relaxed market for the remainder of 2010.

The real estate market in Calgary is beginning to lean in favour of the buyer. Price levels for detached bungalows and standard two-storey homes are moderately higher in the second quarter of 2010 compared to last year, but average prices for standard condominiums have dropped slightly over the same period. Inventory levels have been high and price increases are expected to remain nominal for the remainder of 2010.

Prices for detached bungalows and standard two-storey homes in Edmonton increased modestly over second quarter levels of 2009, while standard condominium prices have dropped. As markets continue to stabilize and inventory levels return to normal, prices are expected to decrease slightly over the rest of this year.

Despite inventory levels rising by 30 per cent, pending HST implementation and anticipated increases in interest rates have driven demand in Vancouver’s housing market. The average prices for all three housing types surveyed rose between 16.6 and 19.1 per cent in year-over-year analysis for this quarter. Continued high inventory levels are, however, expected to put downward pressure on prices during the second half of 2010.

Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart (.PDF).

About the Royal LePage House Price Survey

The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast.  This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country.  A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca.  Current figures will be updated following the complete tabulation of the data for the second quarter. A printable version of the second quarter 2010 survey will be available online on August 6th, 2010.

Housing values in the Royal LePage House Price Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.  Historical data is available for some areas back to the early 1970s.

Archive: /mortgage-news/archive/2010/2010-07-07_LEPAGE-canadas_real_estate_market_cool.stm
News source: Royal LePage

Economic confidence growing: RBC Canadian Consumer Outlook Index

Two thirds concerned about rising interest rates

TORONTO, Ontario, July 02, 2010 — Optimism is on the upswing across the country with a majority of Canadians (67 per cent) believing the overall outlook for the economy is good (up from 54 per cent last quarter) and fewer experiencing job anxiety (20 per cent, down seven points from its height last November), according to the June RBC Canadian Consumer Outlook Index. Looking ahead, 55 per cent of Canadians believe the national economy will improve over the next 12 months. This is down by two points from March as a result of four regional decreases slightly bucking the overall trend, suggesting that some pockets of concern may linger over the sustainability of the recovery.

The increasing comfort level with the country's economy is just starting to carry over to the home front with marginal improvements in a number of areas. Almost four-in-ten Canadians (37 per cent) indicate they have less money left over after all their bills are paid compared to three months ago (a decline of four points from March) and looking ahead to the next three months, 20 per cent remain concerned that this situation will worsen. In addition, 34 per cent of Canadians feel their own ability to save money for things like retirement or education is slightly better than it was three months ago (down five points from last quarter).

Two-in-three Canadians (67 per cent) indicate they are concerned about rising interest rates and 84 per cent expect to see increases over the next six months (a 15 percentage point increase from March). Overall, the June RBC Canadian Consumer Outlook Index remained flat at 108 points from last quarter.

"It's great to see Canadians' confidence in the economy rebounding and certainly economic forecasts support that trend," said Lee Anne Davies, head, Retirement Strategies, RBC. "Increasing interest rates affect all of us through our savings, investments and debt. This is an opportunity to review your financial situation to determine if things have changed and make any adjustments to ensure you are on track."

Other national highlights include:

• Job Anxiety: There is a slight decline in job anxiety with one-in-five Canadians (20 per cent) saying that a member of their household is worried about losing their job or being laid off, down from 22 per cent in March. Job anxiety levels decreased across a majority of regions, with the biggest drop in Atlantic Canada (13 per cent, down 11 percentage points from March). The only increases were in Manitoba and Saskatchewan (16 per cent, up five percentage points) and Ontario (22 per cent, up two percentage points).
• Personal Financial Situation (Overall): The percentage of Canadians who think that their personal financial situation will improve in the next three months has dropped to 27 per cent in June, compared to 33 per cent in March. Looking ahead, 42 per cent of Canadians expect their personal economic situation to improve over the next year, slightly lower than the previous measure (44 per cent).

With increases in consumer, housing and government spending, Canada's economy is on track for solid GDP growth of 3.6 per cent in 2010," said Paul Ferley, assistant chief economist, RBC. "Looking ahead, continued strong domestic demand and positive signs in the job market indicate that the recovery will continue in the near term."

Whether Canadians want to borrow with confidence, get more from their everyday banking, protect what's important, save and invest or take care of their businesses, the RBC Advice Centre www.rbcadvicecentre.com can help answer their questions. Advice videos are updated regularly to reflect current trends and to answer the questions that are top of mind with Canadians. Interactive tools and calculators provide customized information covering many facets of personal finance. With the guidance of RBC advisors who are available to chat live, Canadians have access to free, no-obligation professional advice about RBC products and services and personalized one-on-one service.

About The RBC Canadian Consumer Outlook Index
The RBC Canadian Consumer Outlook Index, benchmarked as of November 2009, is conducted online via Ipsos Reid's national I-Say Consumer Panel to 3,229 Canadians (499 British Columbia, 450 Alberta, 453 Saskatchewan/Manitoba, 827 Ontario, 544 Quebec, 455 Atlantic Canada). This data represents the most timely and comprehensive snapshot of consumer attitudes regarding their finances and the economy in Canada. Weighting was then employed to balance demographics and ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. Data collection was June 1-8, 2010. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of ±1.7 percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been polled.

Archive: /mortgage-news/archive/2010/2010-07-02_RBC-economic_confidence_growing_rbc.stm
News source: Royal Bank of Canada