Major Economic Indicators for Canada

Canada
IndicatorRelease dates
BOC Monetary Policy8 times a year
Gross Domestic Product (GDP)quarterly
Ivey Purchasing Managers Indexat the beginning of each month
Consumer Price Indexaround the 20th of each month
Housing Startsthe 9th business day of each month
Unemployment Ratethe first Friday of each month
Employment Changethe first Friday of each month
International Merchandise Tradearound the 10th of each month
Retail Salesthe 9th business day of each month
Name of Indicator
BOC Monetary Policy
Release Date
8 times a year
Characteristics of Indicators

The BOC Monetary Policy is released 8 times per year by Canada’s central bank, the Bank of Canada (BOC). The central bank is responsible for keeping the inflation target at 1%~3% and it sets the policy interest rate. When the inflation rate is high, the Bank of Canada raises policy interest rate. On the other hand, the policy interest rate is lowered by the BOC when inflation rate drops. Thus, this indicator is very sensitive to inflation.

It is necessary to keep in mind that, when the policy interest rate is raised, the Canadian dollar will go up, and when the interest rate is lowered due to low inflation rate, the Canadian dollar will fall.

In the BOC monetary policy, the interest rate is set according to the economic performance and prices of commodities. When the interest rate is set in opposition to the estimates, it is very likely that volatility in exchange rate will occur. Thus, it is very important to pay attention to this economic indicator.

Name of Indicator
Gross Domestic Product (GDP)
Release Date
quarterly
Characteristics of Indicators

Gross domestic product (GDP) is the sum of the gross value added of domestic production of goods and services within a specific period of time. It is considered as an important indicator of economic growth and production activity in long-term trends. The advanced GDP estimates, as well as the preliminary and final GDP estimates, are released at the end of the month after each quarter ends. It draws the attention of investors as it is the broadest indicator of economic activities and it measures the overall economic performance of the country.

Compared with the previous data, we examine whether there is an increase or decrease in the GDP growth rate to evaluate the economic performance of the country. Investors are more focused on advanced estimates and they examine the personal consumption expenditures, residential investment, fixed investment, inventory investment, and government consumption expenditures and gross investment. As it is a comprehensive indication of the overall growth rate of a country, it is very important for investors to pay attention to this economic indicator.

There are two measures of GDP: nominal gross domestic product (nominal GDP) and real gross domestic product (real GDP). The real GDP is different from the nominal GDP as it accounts for price changes due to inflation.

Name of Indicator
Ivey Purchasing Managers Index
Release Date
at the beginning of each month
Characteristics of Indicators

The Ivey purchasing managers index is an economic indicator that measures the monthly changes in the purchases made by purchasing managers from a range of sectors in Canada. It is an important indicator for investors to keep track of the overall economic conditions in Canada and it is peculiar to Canada.

There are five categories in the index: purchases, employment, inventories, supplier deliveries and prices. The data are compared with the previous month to check whether they are increased or decreased. The dividing value is 50. If the value is above 50, it may indicate that the economy is growing. On the other hand, if the value is below 50, it may indicate a decline in economic growth.

Name of Indicator
Consumer Price Index
Release Date
around the 20th of each month
Characteristics of Indicators

Consumer price index is an economic indicator that measures the changes in the retail prices of consumer goods and services actually purchased by consumers. Since it is an important indicator that is closed correlated with the inflation rate, many countries, such as the United States, EU, Japan, China, Australia and emerging countries, pay special attention to this index in the market.

To put it simply, consumer price index indicates price inflation and deflation. If the consumer price index increased dramatically, it is most likely that interest rates will be raised in order to keep the rate of inflation low. As this economic indicator is closely related to the exchange rate volatility, it is necessary to look at the consumer price index while trading.

The Bank of Canada, which is Canada’s central bank, has set the inflation-control target at 1%~3%. In order to keep inflation low and stable and achieve economic stability, the central bank keeps inflation at 2%, the midpoint of a control range of 1%~3%.

Name of Indicator
Unemployment Rate
Release Date
the first Friday of each month
Characteristics of Indicators

Unemployment rate is an indicator that shows the percentage of unemployed people in the labor force. The definition of “unemployed people” varies from one country to another. By looking at unemployment rate, one can keep track of the employment situation of the country. It is thus the most important economic indicator that draws the attention of investors. To rank the developed countries in the order of unemployment rate, it is as follows: EU, United States and Japan. Similar to inflation rates, unemployment rate is closely correlated with people’s daily life. It is thus sometimes used for political purposes.

While examining the unemployment rate, there are three statistics that an investor needs to pay attention to: the statistics of the previous month, market forecast prior to the release of unemployment rate, and officially released unemployment rate. Especially, one should look at the market forecast and officially released unemployment rate. If there is a big difference between the released unemployment rate and the market forecast, it is very likely that large movements in the market will occur.

This data is also an important indicator of the performance of a company and sometimes it can influence the monetary policy. In particular, during economic downturns, monetary easing is likely to be carried out immediately after the release of unemployment rate.

Name of Indicator
Retail Sales
Release Date
the 9th business day of each month
Characteristics of Indicators

Retail sales are defined as the sum of retail sales of commodities sold by domestic producers. It is considered as an economic indicator that helps investors to keep track of movements in consumer spending. It also draws the attention of market participants as it is used to compute GDP. In addition, it is adopted by the FRB to predict economic trends. The monthly retail sales can be revised substantially. Therefore, in addition to the latest data, it is also important to examine the release in the previous month.

To put it simply, retail sales are an indicator that shows how much consumers are spending on goods. Investors pay attention to this indicator in order to have a sense of the economic performance of the country. Because the data are collected on a monthly basis, it is necessary to compare with the data released in the previous month and examine monthly percent changes. This is important for investors to forecast trends in exchange rate.

Name of Indicator
Housing Starts
Release Date
the 9th business day of each month
Characteristics of Indicators

Housing Starts are released by Statistics Canada to show the number of new residential units. If the rate of housing starts rises, it indicates an increase in the number of people who can afford mortgage loans. It also indicates that there are an increasing number of people who have a bright future. As the economy is growing, it can be expected that people are going to buy more furniture and household appliances. Housing starts are thus considered as an important economic indicator as it signals the economic performance.

However, it is necessary to note that investors usually pay less attention to the housing starts in Canada than that of the United States, where people are moving frequently.

Name of Indicator
Employment Change
Release Date
the first Friday of each month
Characteristics of Indicators

Employment change is one of the employment statistics that is released, together with unemployment rate, by the Statistics Canada. The indicator measures the changes in the number of employed people and it is calculated based on more than 300,000 non-farm payrolls of businesses. It takes into consideration workers who receive payments and does not include managers and self-employed workers.

The calculation of employment change is similar to that of unemployment rate. However, the unemployment rate is based on household surveys and employment change is based on surveys of businesses. In addition, it should be noted that targets of the two investigations are sometimes switched.

Canada’s economic performance tends to be positively evaluated. Because the youth unemployment rate is high, the unemployment rate in Canada has remained at a high level after the collapse of Lehman Brothers in 2008. However, it is said that Canada’s economy is recovering as the unemployment rate was recorded at around 7% in 2013. It is expected that a figure of 5~6% can be reached in the near future.

Name of Indicator
International Merchandise Trade
Release Date
around the 10th of each month
Characteristics of Indicators

International merchandise trade provides statistics about payments for imports and exports and it is released by the Statistics Canada on a monthly basis. A positive number shows a trade surplus and a negative number shows a trade deficit. If a positive balance is reported, it denotes good economic condition. On the other hand, if a negative balance is observed, it indicates unfavorable balance of trade.

There is not a large trade surplus or trade deficit in Canada. A trade deficit was observed during the period of 2012~2013. However, there is a tendency to swing from a trade deficit to a trade surplus in 2014.

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