These are stories Report on Business is following Friday, Nov. 14, 2014.
Canada's economy is hardly firing on all cylinders, Bank of Montreal's chief economist says, but there's a lot to like.
Despite what the Bank of Canada tells us.
"By many metrics, Canada has long since returned to normal," Douglas Porter says in a report released today.
"In fact, we may look back on current conditions as the good old days."
Mr. Porter cites 10 reasons to "appreciate" the current economic climate:
1. At 6.5 per cent, the jobless rate is at its lowest level in 40 years, but for a "three-year slice of Nirvana" from late 2005 to when the recession whacked the country and the commodity boom was ending.
2. Consumers have "barely blinked." Note that car and truck sales are "easily on track" to best last year's record.
3. The housing market is "unstoppable." In Toronto, Vancouver and Calgary, anyway. But "that doesn't detract from the broader picture that housing has surprised – yet again – to the upside this year." Canadian home prices should rise 5 per cent this year.
4. Okay, household debt is at about record levels, but so is net worth when measured against disposable income, or $5.40 in assets for each $1 of debt.
5. The federal government is on track to slay the deficit. Many of the provinces, not so much.
6. Much of the developed world is struggling with inflation "that's too low for comfort," but in Canada it's bang on the 2-per-cent target.
7. Canada appears headed to bounce back to a trade surplus this year.
8. Financial conditions are "close to the strongest" in 15 years thanks to low interest rates, tight bond spreads, the sinking Canadian dollar, solid house prices and lending conditions.
9. Business sector labour productivity is up by 3.3 per cent, the best showing since "the heady days of the tech boom."
10. Not only that, but there's labour-management peace. In the last four years, days lost to labour disputes has been running at the lowest since the Beatles topped the charts. (That would be the mid-1960s.)
Having said all that, Mr. Porter notes that the economy is hardly "blemish-free."
Canada needs more full-time jobs, higher pay increases, a smaller current account deficit and a better showing from the provinces on balancing their books.
Add to that sinking prices for oil and metals that are hitting the Canadian dollar and the economy in general.
"But, it is to suggest that this cycle is a lot more mature than many give it credit for (including, it seems, the Bank of Canada), and we shouldn't overlook the many economic positives that are already staring us straight in the face."
- David Parkinson in ROB Insight (for subscribers): Healthy GDP doesn't mean a health economy
- The problem with Ottawa's 'live long and prosper' message
And then there's Europe …
And if that doesn't do it for you, compare Canada to Europe.
As our European correspondent Eric Reguly reports today, the latest numbers show the euro zone's economy expanded in the third quarter by 0.2 per cent, meaning it skirted a recession.
Across the wider European Union, according to the Eurostat agency, the economy grew by 0.3 per cent.
Notable were the showings of Germany and France, which had everyone worried but whose economies expanded by 0.1 per cent and 0.3 per cent, respectively.
Italy, though, sank back into recession as gross domestic product contracted by 0.1 per cent.
Of note, too, was Greece bouncing back into the black, with growth of 0.7 per cent after a six-year slump that highlighted the troubles of the region.
For the euro zone as a whole, of course, growth of 0.2 per cent is really nothing to cheer.
"The reality is that the growth rates we're seeing in the euro zone right now are woeful and none of the data we're seeing suggests there's going to be any improvement," said market analyst Craig Erlam of Alpari in London.
"On top of that, the low level of inflation in the region is not going to support growth going forward and despite the [European Central Bank's] best efforts, the latest CPI reading remained at 0.4 per cent, which is dangerously close to deflation territory," he added.
"The ECB has a massive job on its hands and appears to still be in denial."
- Eric Reguly: Euro zone skirts recession but weak growth leaves questions for ECB
- Brian Milner in ROB Insight (for subscribers): Deflation looms over Britain, Japan
House backs Keystone
The Republican-dominated House of Representatives passed a bill today that would approve construction of the Keystone XL pipeline, as Congress readies a bipartisan effort to force President Barack Obama to approve TransCanada Corp.'s project, The Globe and Mail's Paul Koring reports.
Mr. Obama, who has repeatedly delayed deciding about Keystone XL made clear he sees little value for the United States and will veto any effort by Congress to take control of the approval process.
Keystone XL just gets Canadian oil to world markets, it doesn't help the U.S. consumer, the President said in Burma earlier on Friday.
Republicans, emboldened by big gains in last week's midterm elections, have chosen to make Keystone XL into the first battle of wills with a lame-duck president.
Factory sales rise
Canada's factories continue to pump it out.
Manufacturing sales climbed 2.1 per cent in September, to $53-billion, to mark the eighth increase in nine months, Statistics Canada said today.
That also marked a rebound from August's loss of 3.5 per cent.
September's gains were driven largely by the transportation equipment sector, without which factory shipments would have been up just 0.6 per cent.
Inventories dipped 0.5 per cent, the inventory-to-sales ratio slipped to 1.34 per cent, unfilled orders rose by 1.2 per cent, and new orders climbed by 4.6 per cent.
"September's shipments were much better than expected," noted senior economist Krishen Rangasamy of National Bank.
"The increase in real factory volumes, will give a boost to September GDP," he added.
"The quarterly picture is also good with the 8.6-per-cent annualized increase in real shipments in Q3 (after an 11-per-cent advance in the prior quarter)."
Streetwise (for subscribers)
Rob Insight (for subscribers)