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: June 1, 2022
Next update: July 13, 2022

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
CPI Inflation 0.20.71.53.44.14.75.8 6.8 Apr
CPI-trim 1.81.92.02.63.33.64.4 5.1 Apr
CPI-median 2.02.12.12.42.83.03.7 4.4 Apr
CPI-common 1.41.41.42.02.12.22.8 3.2 Apr
Chain price index for GDP 1.31.75.99.28.28.98.7 8.7 Q1
Chain price index for consumption 0.50.51.12.83.13.94.8 4.8 Q1

Product market
Selected definitions, graphs and historical data
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
Output gap (Integrated framework) (%)1-6.5-4.7-3.7-4.8-3.8-2.6-2.3 -2.3 Q1
Output gap (Extended multivariate filter) (%)1-4.2-2.5-1.7-2.9-2.1-1.1-1.0 -1.0 Q1
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)44.057.046.061.065.078.081.0 81.0 Q1
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts0.850.840.850.860.880.850.85 0.85 Mar
Aggregate stock-to-sales ratio0.7190.7030.6710.6870.6800.6780.678 0.678 Q1
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE104.8110.1112.3114.6114.6117.0 117.0 Q4
FAM-IO129.6132.0134.7137.0138.2139.6 139.6 Q4
  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
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
Unemployment rate (%) 10.18.98.47.97.26.35.8 5.2 Apr 
Labour market indicator (LMI) 9.68.97.87.06.76.25.5 5.2 Apr 
Participation rate (%) 64.665.264.964.865.265.365.3 65.3 Apr 
Growth in employment (annualized rate, %) 37.710.01.52.56.86.23.2 0.1 Apr 2
Labour shortage (% firms, Business Outlook Survey) 25.033.022.023.036.041.040.0 40.0 Q1 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) -19.0-4.0-1.030.064.074.062.0 62.0 Q1 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
Wage-common4.53.73.51.22.02.4 2.4 Q4
Wage-common inputsLabour Force Survey – Average Hourly Earnings6.15.34.4-1.21.22.53.0 3.3 Apr
Survey of Employment, Payrolls and Hours – Average Hourly Earnings5.04.24.80.72.12.23.2 4.8 Mar
Productivity Accounts – Compensation per Hour9.16.51.2-10.20.41.2 1.2 Q4
National Accounts – Hourly Wages and Salaries6.54.65.20.41.62.53.3 3.3 Q1
Unit labour costs - Total economy (labour income/GDP at market prices)4.03.33.32.85.55.57.5 7.5 Q1
Bank of Canada commodity price indexTotal-2.73.841.790.143.448.447.4 41.3 May
Energy-25.0-16.745.0141.582.986.368.2 83.4 May
Non-energy14.517.531.753.916.021.629.6 8.9 May

Real estate market
Selected definitions, graphs and historical data
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
New housing price index (year-over-year percentage change)2.44.46.811.011.811.611.3 9.4 Apr
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
3.2 3.2 3.2 Q4
Offices (%)
Source: Cushman & Wakefield
11.112.213.513.914.414.815.0 15.0 Q1
Industrial market (%)
Source: Cushman & Wakefield
2.52.52.21.91.61.41.3 1.3 Q1
Housing affordability index0.3190.3420.3470.3670.3790.3970.428 0.428 Q1

Expectations
Selected definitions, graphs and historical data
2020Q32020Q42021Q12021Q22021Q32021Q42022Q12022Q2Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less4524147510 Q1
2% or less666539221397 Q1
3% or less78806660332318 18 Q1
more than 3%22203440677782 82 Q1
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20211.71.61.82.42.93.3 3.4 Dec
2022 1.92.12.43.04.0 5.2 Apr
2023 2.4 2.5 Apr
2-3 years2.02.12.02.02.12.22.12.2 2.2 Q2
6-10 years2.02.02.02.02.02.02.02.0 2.0 Q2
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%12720000 Q1
1-2%44603581021 Q1
2-3%28214251423026 26 Q1
more than 3%1181335456770 70 Q1
Expectations implicit in real/nominal bond spread1.21.51.71.81.71.81.8 1.8 May