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Canadian Housing Starts Continue To Improve

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The Canadian Housing Starts for February have come in nicely ahead of expectations at 192.1k. A figure of 185k had been anticipated. This compares to 180.2k new housing starts in January.

The housing starts figure is very sensitive to the economic cycle and as such provides a valuable insight into the robustness of the Canadian economy.

Canada has recently been battling with it’s unemployment trend. Latest figures show the rate to be 7.0% which compares adequately with that of it’s peers. The problem is that this represents a reversal of a rate which had been falling throughout 2013.

Canadian authorities will be hoping that unemployment stabilizes at this 7.0% level as their ability to deal with it is proving limited in light of the price stability situation.

Currently inflation is running at a comfortable 1.5% but is strongly trending upwards. The Canadian consumer price index has more than doubled in just over four months. The October inflation rate was just 0.7% and this is developing into a worrying trend for the Bank of Canada.

Overall however the Canadian economy is comparatively healthy, authorities are targeting stable GDP growth of 2.5% during 2014. Today’s housing starts figures are a sign that this will be achievable.

Further relief for the Canadian economy has come in the form of a steadily depreciating Canadian Dollar. The currency has fallen almost 10% against the US Dollar over the course of the past 6 months and this is enabling Canadian exports to push the economy forward. Also in the plus column for Canadian trade led growth are rising commodity prices, the recent global price increases are not going to harm Canada’s trade balance figures. In this respect however Canada is somewhat at the mercy of it’s trading partners, concerns over growth in the US and particularly in China will be a decisive factor in Canada’s economic recovery prospects.

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