Trade, and the Many Effects of the C$
bmonesbittburns.com
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Canada's Fourth Qtr Current-Account Surplus Narrows
quote.bloomberg.com
Feb. 26 (Bloomberg) -- Canada's current-account surplus narrowed to C$6.65 billion ($4.96 billion) in the fourth quarter as exports fell and residents earned less on investments abroad.
Analysts surveyed by Bloomberg News predicted the surplus would be C$6.8 billion, the median of 20 estimates. Ottawa-based Statistics Canada raised its third-quarter surplus estimate from C$7.32 billion to C$7.85 billion, the biggest figure since the second quarter of 2001.
Exports fell 0.5 percent between October and December, leaving them at a four-year low of C$98.2 billion. The profits Canadians earned on ``direct'' investments abroad, such as owning companies, fell C$620 million to C$3.71 billion.
The current account is a broad measure of trade in goods, services and investment. Canada's surplus rose to C$25.8 billion last year from C$23.4 billion in 2002 as imports fell faster than exports and a rising Canadian dollar allowed companies to spend less local currency to make payments on debt denominated in U.S. dollars.
The Canadian dollar fell to 74.26 U.S. cents at 8:48 a.m. in Toronto from yesterday's 74.98 cents, leaving it 12 percent higher than it was a year ago.
Lower energy prices caused a C$1.7 billion drop in the value of exports in the fourth quarter, StatsCan said. Shipments abroad of industrial goods rose C$1.1 billion, the first gain in five quarters.
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Cdn Retail Sales - No Holiday Cheer
bmonesbittburns.com
Canadian retail sales were quite disappointing in December, falling by a greater-than-expected 1.2% - the weakest reading since September 2001. Autos were definitely a drag, falling 4.4%, and January's auto sales numbers suggest that there is more pain in store. However, even ex.-auto sales were considerably below expectations, dropping by 0.1%, far short of the 0.4% consensus gain anticipated. On a year-over-year basis, sales slowed to just 0.6%. The volume of sales was almost as weak, dropping 1.1%. The downbeat tone of retail activity comes as somewhat of a surprise, given reports that holiday sales were solid.
The details of the report do little to offset the impact of the headline number. General merchandise was off 2.6% and clothing sales were down 1.6%, with both men's and women's clothing stores off sharply. Despite all the gloom, there were a few pieces of good news in the report. Furniture sales remain robust, owing to the ongoing strength in the housing market, and there were some slight upward revisions to November's numbers.
In a separate release, wholesale trade for December rose 0.8%, rebounding from November's 0.1% drop.
The Bottom Line: The sluggish pace of retail activity in December poses a major challenge for tomorrow's monthly GDP number to achieve the consensus 0.3% gain. A more modest 0.1%-to-0.2% increase seems likely. With Q4 GDP now looking to come in well below 4%, the Bank of Canada is already fully expected to cut rates on March 2, and another rate cut by June is now almost fully priced into the market.
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Let Canada lead the way!
Maybe Europe will follow suit
Mish |
