This week’s top stories include how Canada’s latest job numbers are puzzling to most, how the hot global housing rebound has finally begun to show signs of slowing, how new home prices rose in some area’s of Canada in the month of June, how housing starts dipped in the month of July, how Canadian exports declined in the month of June, how the U.S. Federal Reserve is watching deflation closely and how U.S. foreclosures were up for yet another month.
Job numbers perplexing
It seems that the job market in Canada has finally hit a brick wall after seeing all the jobs lost during the recession come back to life within a year. This is the latest news from Statistics Canada that was released in a report on Friday of last week.
Employers cut 139 000 full time jobs in the month of July and added roughly 130 000 part time jobs. This caused the unemployment rate to make its way back to 8%. The perplexing loss of jobs marks the labour markets first decline this year. The jobless rate reached 7.9% in June, which was the first time it had gone below 8% since early in 2009.
Peter Hall, chief economist at Export Development Canada commented by saying, “Until that economy (the U.S. economy) finds its feet, anybody on the Canadian side who’s concerned about exports has to be worried. The entire world is still in this middle zone between the end of the recession and the beginning of a real recovery.” Analysts are saying that the U.S. labour market could take dozens of years to recover the 8.4 million jobs that were lost during the recession. What do you think? Please comment below.
Housing rebound slows
The global real estate rebound seems to be losing steam as housing demand and prices both declined during the second quarter of this year. The market is currently being side swiped by moderating global growth, weak job creation and volatility in the financial markets.
Adrienne Warne from the Bank of Nova Scotia commented, “Global real estate markets entered 2010 with a renewed sense of optimism, piggybacking on the broader economic recovery under way. Housing demand and pricing improved in the first quarter of the year in the majority of the advanced nations we track, benefiting from ultra low interest rates, improved affordability, and in some cases, government purchase incentives.”
It seems that the recent slowdown has been the most dramatic in Canada with average home prices up just 6.8% year over year in the second quarter, compared to 16.6% year over year in the first quarter. Sales are still at a high level but are slowly decreasing. Is this the end of the heated real estate market? What do you think? Please comment below.
New home prices rise
The most recent report from Statistics Canada states that the New Housing Price Index was up 0.1% in the month of June after seeing a 0.3% increase during the month of May. Prices were down in 7 of the 21 metropolitan areas, with the highest decreases being posted in Regina and Charlottetown.
Toronto and Oshawa both saw price increases of 0.3% and Montreal was up 0.2% Builders in Toronto, Ottawa and Oshawa have reported strong market conditions while builders in Vancouver lowered their prices to help generate new sales. Vancouver’s New Housing Price Index was down 0.2%.
Housing starts dip in July
Canada Mortgage and Housing Corporation (CMHC) released a report outlining that the annual rate of housing starts across Canada had fallen to just 189 200 during the month of July. The 1.6% decline was reported following a upwards revised rate in June to 192 300 starts.
The decline is being attributed to a decrease in urban single starts and a reduction in rural starts across Canada. The drop was offset by multiple starts. Urban starts were up 1.9% to 169 300 units in the month of July. Urban multiple starts were also up 13.4% to 101 400 units with single urban starts down 11.3% to 67 900 units.
Exports down in June
Statistics Canada reported this week that exports had declined by almost a billion dollars to $33.5 billion from the $34.4 billion the previous month. Merchandise exports were down 2.5% in June and was attributed to a significant drop in industrial goods and materials. Imports were also down 1.2% attributed to a decline in energy products.
Canada’s trade deficit with the rest of the world expanded to $1.1 billion in June, up from the $695 million posted during the month of May. After seeing a strong month in May, imports were down from $35 billion to $34.6 billion in June. Canada’s trade deficit with countries other than the U.S. was at $4.2 billion in June from $4.1 billion in the month of May.
Feds watching threat
There is heightened risk that the world’s largest economy could slump back into a recession, which has caused the U.S. Federal Reserve to keep an eye on deflation. With more and more signs that the economic recovery is beginning to lose steam, the Feds have announced that they will keep the taps of monetary stimulus open for the foreseeable future.
With the recovery faltering and financial markets in a volatile state, Mr. Bernanke the Fed chairman was under pressure to do something to restore confidence in the economy. On Tuesday the Fed announced that it would continue to roll over its Treasury holdings, rather than let them lapse. It also plans to use the principal on its holdings of Fannie Mae and Freddie Mac debt, along with mortgage backed securities, to reinvest in Treasuries with terms of 2 to 10 years.
The Federal Open Market Committee (FOMC) commented by saying, “Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer term inflation expectations stable, inflation is likely to be subdued for some time.” What do you think? Is this the beginning of the double dip that everyone is talking about? Please comment below.
U.S. foreclosures rise
U.S. home foreclosures were up in the month of July up 6% from the end of June and up 9% from the beginning of June. This is from the latest report released from foreclosure listing firm RealtyTrac Inc.
92 858 properties were repossessed last month as banks and mortgage lenders struggle to clear out the backlog of bad loans on their books. July was the eighth consecutive month where home foreclosures have increased on an annual basis.
RealtyTrac anticipates that over a million American homes will be lost to foreclosure this year. Mortgage lenders are scrambling to come up with programs to aid in clients keeping their homes but have had varying results. Is this signs that the market is going to spiral again? After all, there were still 325 299 foreclosure related warnings last month. What do you think? Please comment below.
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