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Briefing highlights

  • Who owns what in Canada
  • Markets, loonie at a glance
  • Housing markets stabilizing
  • China’s economic growth slows
  • What to watch for this week
  • U.S. takes Canada, others to WTO
  • Bank of America tops estimates
  • China takes U.S. to WTO
  • U.S. retail sales rise in June

Who owns what

Inequality may be more extreme in the United States and other countries than it is here, but an OECD working paper sheds new light on wealth and income distribution in Canada.

The broad view shows that across the countries that make up the Organization for Economic Co-operation and Development, the top 10 per cent of households own 52 per cent of wealth. In terms of income, the top group accounts for 24 per cent.

On the lower rungs of the ladder, 60 per cent hold about 12 per cent of household wealth.

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“In addition, some countries feature large shares of households with high levels of debt relative to both their incomes and the assets that they hold; this potentially exposes such households to significant risks in the event of changes in asset prices or falls of their income,” said Carlotta Balestra and Richard Tonkin of the OECD’s statistics and data directorate.

And, “more than one in three people are economically vulnerable, as they lack liquid financial assets to maintain a poverty-level living standard for at least three months.”

At the country level, here’s a look at the various groups at the top from Ms. Balestra and Mr. Tonkin, based on the latest numbers:

Source: OECD

And here’s what Ms. Balestra and Mr. Tonkin found among the less fortunate in 28 countries:

Source: OECD

Among their other findings:

Households at the bottom of the wealth ladder are more likely to suffer low incomes, and vice versa.

“However, this relationship is far from perfect,” Ms. Balestra and Mr. Tonkin said.

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“Households in the bottom quintile of the wealth distribution are most likely to also have low incomes in Canada, Luxembourg, Austria and Belgium [...] while the proportion of households in the top wealth quintile also having high incomes is highest in United States, France, Italy and Canada.”

But there are other countries where the connection is not as strong.

Also at play are inheritances.

“According to these data, members of one in three households have received some form of gift or bequest by the time they were interviewed, ranging from 25 per cent of households in Latvia and 26 per cent in Canada, to 43 per cent in France and 47 per cent in Finland,” Ms. Balestra and Mr. Tonkin said.

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Markets, loonie at a glance

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Housing more stable

Canada’s housing market appears to be stabilizing, with sales up 4 per cent in June from May and down just 10.7 per cent from a year earlier.

That looks like a marked plunge from last year, and it is, but it’s not as bad as earlier showings that were driven down by provincial measures in Ontario and B.C., and new regulatory mortgage rules at the federal level.

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The national average sale price slipped 1.3 per cent in June from a year earlier, while the MLS home price index, which is considered a better measure, rose 0.9 per cent.

“While this marks the first substantive month-over-month increase this y ear, sales remain well down from monthly levels recorded over the past five years,” the Canadian Real Estate Association said in releasing the numbers.

“More than 60 per cent of all local housing markets reported increased sales activity in June compared to May, led by the Greater Toronto Area,” it added.

“By contrast, sales in British Columbia continue to moderate.”

The June showing indicates the fallout from the new mortgage-qualification rules from the federal bank regulator “may be starting to life,” said the group’s president, Barb Sukkau.

“The extent to which the stress test continues to sideline home buyers varies by housing market and price range.”

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CREA chief economist Gregory Klump agreed the markets may be starting to turn.

“Even so, the number of homes trading hands has a long way to go before it returns to levels posted in recent years,” he said.

“Looking ahead, home sales activity and price gains will likely be held in check by higher interest rates.”

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What to watch for this week


Federal Reserve chair Jerome Powell kicks off two days of testimony to Washington committees. Markets will be watching, but the central bank has already had ample opportunity to fill investors in on the outlook.

“We are most interested in understanding how Powell will assess whether policy rates have reached neutral, but given Powell’s interest in reducing forward guidance, we do not expect to learn much on this front,” said Citigroup strategist Andrew Hollenhorst.

“Rather, Powell will probably recapitulate his recent talking points: The economy is in a ‘good place,’ trade issues present downside risk and for now gradual rate hikes remain appropriate.”

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Federal Reserve chair Jerome Powell

Yuri Gripas/Reuters

Watch, too, for what the central banker says about the Trump administration’s protectionist agenda.

“Powell will presumably temper his criticism of Trump a little, but is sure to repeat the warning included in the minutes of the last [Fed] meeting that trade uncertainty could already be weighing on investment,” said Paul Ashworth of Capital Economics.

Tuesday also brings Statistics Canada’s monthly report on manufacturing sales, which Toronto-Dominion Bank economists expect to show a gain of 0.5 per cent in May, buoyed by a pickup in the energy industry but held back by an auto sector that suffered supply problems.

“Outside these two industries we look for a broad advance in activity, consistent with robust survey data,” they said.

“However, real manufacturing sales should see little change after accounting for the rise in factory prices.”

On the corporate front, watch for results from Goldman Sachs Group Inc., Johnson & Johnson, and Charles Schwab Corp.

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Some big earnings on tap, including those from Alcoa Corp., American Express Co., Canadian Pacific Railway Ltd., IBM, Kinder Morgan Inc. and its Canadian arm, Morgan Stanley and U.S. Bancorp.


U.S. Commerce Secretary Wilbur Ross starts two days of hearings on potential auto tariffs, which should get Canada’s blood boiling given Ontario’s reliance on the sector.

Earnings: Microsoft Corp., Rogers Communications Inc. and West Fraser Timber Co., among others.


Observers expect Statistics Canada to report that retail sales climbed by between 0.7 and 1.2 per cent in May, and that consumer prices rose by up to 2.5 per cent in June from a year earlier.

“After harsh weather conditions kept shoppers away in April, early indications suggest that the following month saw sales speed ahead, led by a strong rebound in car purchases,” said Royce Mendes of CIBC.

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