Canada: Focus on the housing and labour productivity data – BMO CM

Research Team at BMO Capital Markets expects that today’s focus will be on the release of housing starts, building permits and labour productivity as far as Canadian markets are concerned.

Key Quotes

“Building permits are expected to climb 3% in January. Residential permits should continue to retrace October’s surge to a record high, while non-residential permits look to perk up after a soft December.”

“Meantime, mild weather in February likely kept housing starts buoyant around 200,000 units annualized. Starts continue to run hotter than demographic needs—around 190,000—which will only lead to trouble if it persists for too long. Lastly, new home prices are expected to rise 0.1% in January, keeping the annual increase at 3%.”

“Labour Productivity: Labour productivity likely rose 0.4% in Q4, a second consecutive quarter of good gains. Productivity has been sluggish over the past couple of years, not surprising given the softness in underlying growth. Our call would lift the yearly gain in productivity to 1.5%, the best pace since 2015Q1. Early data suggest productivity accelerated further in Q1, with hours tracking lower and GDP growth expected to remain firm.”