Looking back at the Colliers Year-End National Outlook, the economic environment through the first quarter of 2014 is continuing to look steady.
Our neighbours to the south are showing promise in terms of economic growth, but the elongated winter and “Polar Vortex” in the East have impacted some of the forecasts. That being said, TD Economics emphasizes that due to steady employment growth, low interest rates and a positive outlook for Canadian exports, the economy is forecast to grow from 2.0% in 2013 to 2.3% in 2014 and 2.5% in 20151.
In the short term, one key trend to keep your eye on is the increasing value of the Canadian dollar against the U.S. dollar through Q1. In the Bank of Canada’s (BoC) January 2014 Monetary Policy Report (MPR), it is noted that the “…greater demand and higher prices for the commodities that Canada exports have supported the value of the Canadian dollar. Despite depreciating in recent months, the Canadian dollar remains strong and will continue to pose competitiveness challenges for Canada’s non-commodity exports2.” Looking forward, Scotia Bank Economics doesn’t expect the BoC to support a strong dollar, as it is their “implicit goal” to depreciate the currency3.
Key Highlights Q1 2014:
Steady as she goes: the Canadian industrial sector is looking strong. Cheap capital, a rebounding United States economy and a (still) competitive Canadian dollar are the drivers for most of the steady and growing industrial activity in the major markets across Canada. TD Economics suggest that the U.S. economy will expand from 1.9% in 2013 to 2.7% in 20144, which is a positive sign for from Canada’s largest trading partner. The West is fueled off of the growing primary and energy sector, as well as the global demand for exports, while the Eastern markets are benefiting off large public and private projects in infrastructure and major developments.
The sentiment in most of the major markets regarding office activity is still cautiously optimistic with the inevitable millions of square feet in high quality office space are slated to grow the sector in major cities such as Calgary, Toronto and Vancouver. Notably, the recent provincial elections in Quebec have surfaced a new majority government in the Liberal party. This is a positive result for the private sector and shows potential for expansion in the financial, insurance and real estate (FIRE) sector, as well as the ever-growing information, culture and technology (ICT) industry.
1 TD Quarterly Economic Forecast
2 Bank of Canada Monetary Policy Report
3 Scotiabank Global Economics Report (email commentary)
4 See footnote: 1