Indicators of Capacity and Inflation Pressures for Canada

The Bank of Canada monitors a wide range of indicators in assessing the extent of pressures on capacity and inflation. The Bank's conventional estimate of the output gap provides an overall assessment of the degree of slack in the economy, but this estimate is subject to considerable uncertainty. This uncertainty is addressed by considering a wide range of indicators in various markets. Many of these indicators are derived from data published by Statistics Canada, but some reflect information gathered by the Bank's regional representatives as well as by various outside sources. For further discussion of uncertainty as well as the information and analysis used to inform monetary policy decisions at the Bank of Canada, see Jenkins and Longworth1 (2002) and Macklem2 (2002).

1. Jenkins, Paul and David Longworth, "Monetary Policy and Uncertainty."Bank of Canada Review, Summer 2002: 3-10.
2. Macklem, Tiff, "Information and Analysis for Monetary Policy: Coming to a Decision." Bank of Canada Review, Summer 2002: 11-18.

(Sources)

Note: The following tables are updated one day after the Bank's most recent announcement date for the target overnight rate, based on information available up to that date. When the fixed announcement date is accompanied by a quarterly Monetary Policy Report, the tables will be updated on the day of release.

Updated: March 5, 2020
Next update: April 15, 2020

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
CPI Inflation 2.72.11.62.21.92.1 2.4 Jan
CPI-trim 2.12.02.02.12.12.1 2.1 Jan
CPI-median 2.02.02.02.22.22.2 2.2 Jan
CPI-common 1.91.91.81.81.91.9 1.8 Jan
Chain price index for GDP 2.60.41.11.91.43.3 3.3 Q4
Chain price index for consumption 2.21.71.51.81.61.9 1.9 Q4

Product market
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
Output gap (Integrated framework) (%)1-0.1-0.3-0.6-0.3-0.4-0.8 -0.8 Q4
Output gap (Extended multivariate filter) (%)10.60.30.00.2-0.1-0.6 -0.6 Q4
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)56.056.031.042.050.053.0 53.0 Q4
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts0.770.800.800.780.780.79 0.79 Dec
Aggregate stock-to-sales ratio0.7100.7360.7380.7320.7320.738 0.738 Q4
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE118.2119.6119.3119.1119.3 119.3 Q3
FAM-IO130.5131.3132.1132.8133.4 133.4 Q3
  1. 1. As of the most recent Monetary Policy Report. Learn more on the extended multivariate filter and integrated framework.[]

Labour market
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
Unemployment rate (%) 5.95.75.85.65.65.7 5.5 Jan 
Labour market indicator (LMI) 6.15.95.95.65.55.6 5.4 Jan 
Participation rate (%) 65.465.465.765.865.765.6 65.4 Jan 
Growth in employment (annualized rate, %) 1.52.33.02.61.10.5 0.2 Jan 2
Labour shortage (% firms, Business Outlook Survey) 37.037.019.026.034.031.0 31.0 Q4 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) 50.043.016.013.022.025.0 25.0 Q4 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
Wage-common2.22.12.02.62.83.0 3.0 Q4
Wage-common inputsLabour Force Survey – Average Hourly Earnings2.82.02.23.04.24.2 4.2 Jan
Survey of Employment, Payrolls and Hours – Average Hourly Earnings2.62.91.93.23.02.9 2.3 Dec
Productivity Accounts – Compensation per Hour2.11.62.52.94.04.2 4.2 Q4
National Accounts – Hourly Wages and Salaries2.12.11.32.52.52.9 2.9 Q4
Unit labour costs - Total economy (labour income/GDP at market prices)2.01.92.02.43.33.4 3.4 Q4
Bank of Canada commodity price indexTotal13.50-8.50-3.30-10.10-7.506.50 -9.50 Feb
Energy24.30-9.800.40-7.40-9.509.90 -15.30 Feb
Non-energy2.30-6.80-7.90-13.50-5.402.00 -1.30 Feb

Real estate market
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
New housing price index (year-over-year percentage change)0.40.00.00.0-0.30.0 0.2 Jan
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
2.2 2.0 2.0 Q4
Offices (%)
Source: Cushman & Wakefield
10.710.19.99.89.69.5 9.5 Q4
Industrial market (%)
Source: Cushman & Wakefield
3.23.13.12.92.82.8 2.8 Q4
Housing affordability index0.3520.3560.3500.3360.3400.348 0.348 Q4

Expectations
Selected definitions, graphs and historical data
2018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q2Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less202751373833 33 Q4
2% or less797289908482 82 Q4
3% or less939295959894 94 Q4
more than 3%775326 Q4
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20182.32.3 2.3 Dec
20192.12.01.81.82.02.0 2.0 Dec
2020 2.02.02.01.9 1.9 Jan
2-3 years1.91.92.02.01.92.0 2.0 Q4
6-10 years2.01.91.91.92.02.0 2.0 Q4
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%203222 Q4
1-2%363564646459 59 Q4
2-3%565427283230 30 Q4
more than 3%683415 Q4
Expectations implicit in real/nominal bond spread1.71.61.51.41.31.3 1.3 Feb