CANADA: The Teranet–National Bank Composite House Price IndexTM rose 0.5% in the first month of the year, matching the largest January increase in the 18-year history of the index. Prices were up in Hamilton (+1.1%), Toronto (+0.8%), Montreal (+0.8%), Vancouver (+0.3%), Victoria (+0.2%), Calgary (+0.1%) and Quebec City (+0.1%). Prices were flat in Halifax and down in Winnipeg (-0.7%), Ottawa- Gatineau (-0.7%) and Edmonton (-0.1%). On a year-over-year basis, the national index was up 13.0%, the largest 12-month gain since January 2007. This surge was driven almost entirely by four markets: Toronto (+20.9%), Hamilton (+17.6%), Victoria (+17.1%) and Vancouver (+16.4%). Elsewhere prices registered a more subdued increase over the past 12 months or declined, as was the case in Quebec City (-0.2%). In Toronto, nearby Hamilton, and Victoria, house prices, like the Composite Index, have reached record levels. In Toronto, prices are currently growing at the highest 12-month rate since the index’s inception. This is due mostly to dwellings other than condos, a segment where supply is notoriously tight.
Manufacturing shipments surged 2.3% in December after a similar increase the prior month. Interestingly, sales rose in just 8 of the 21 broad industries in December. There was an 11.6% increase for petroleum and coal products and a 7.4% gain for transportation equipment (both autos and aerospace), which more than offset declines in several categories. In real terms, shipments jumped 2.3% while inventories fell 0.8%. As a result, the inventory-to-sales ratio edged down to a six-year low of 1.32. For Q4 as a whole, real factory shipments jumped 2.3%, contributing to economic growth during the quarter. In light of the upgrades to prior factory sales and December’s consensus-topping numbers, we have raised our Q4 GDP growth forecast for Canada to 1.8% annualized.
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