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: January 26, 2022
Next update: March 3, 2022

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
CPI Inflation 0.00.20.71.53.44.14.7 4.8 Dec
CPI-trim 1.71.71.81.92.53.33.5 3.7 Dec
CPI-median 1.91.81.92.02.42.82.9 3.0 Dec
CPI-common 1.51.41.41.41.81.82.0 2.1 Dec
Chain price index for GDP -0.91.31.76.09.37.7 7.7 Q3
Chain price index for consumption 0.00.50.51.22.73.0 3.0 Q3

Product market
Selected definitions, graphs and historical data
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
Output gap (Integrated framework) (%)1-14.0-6.6-4.7-3.8-4.8-3.8-2.7 -2.7 Q4
Output gap (Extended multivariate filter) (%)1-12.0-4.4-2.7-1.9-3.0-2.2-1.5 -1.5 Q4
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)27.044.057.046.061.065.078.0 78.0 Q4
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts1.100.850.840.850.860.89 0.87 Nov
Aggregate stock-to-sales ratio0.8640.7190.7030.6730.6890.683 0.683 Q3
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE90.3104.8110.2112.4114.9115.8 115.8 Q3
FAM-IO120.3129.6132.0134.7137.0138.1 138.1 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
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
Unemployment rate (%) 12.910.18.98.47.97.26.3 6.0 Dec 
Labour market indicator (LMI) 13.29.68.97.77.06.76.1 6.1 Dec 
Participation rate (%) 61.764.665.264.964.865.265.3 65.4 Dec 
Growth in employment (annualized rate, %) -38.137.710.01.52.56.86.2 0.4 Dec 2
Labour shortage (% firms, Business Outlook Survey) 13.025.033.022.023.036.041.0 41.0 Q4 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) -41.0-19.0-4.0-1.030.064.074.0 74.0 Q4 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
Wage-common5.44.63.83.41.22.0 2.0 Q3
Wage-common inputsLabour Force Survey – Average Hourly Earnings9.56.05.34.4-1.21.22.5 2.7 Dec
Survey of Employment, Payrolls and Hours – Average Hourly Earnings5.95.14.24.80.62.2 3.0 Oct
Productivity Accounts – Compensation per Hour23.39.46.61.3-10.00.5 0.5 Q3
National Accounts – Hourly Wages and Salaries7.76.54.65.10.41.6 1.6 Q3
Unit labour costs - Total economy (labour income/GDP at market prices)6.24.03.33.12.75.4 5.4 Q3
Bank of Canada commodity price indexTotal-28.80-3.103.4040.5089.0042.9048.00 37.50 Dec
Energy-52.60-25.40-17.0042.10136.7079.4082.80 55.60 Dec
Non-energy-3.4014.2017.2031.6054.4016.4022.10 22.40 Dec

Real estate market
Selected definitions, graphs and historical data
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
New housing price index (year-over-year percentage change)1.12.44.46.811.011.811.6 11.6 Dec
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
3.2 3.2 Q4
Offices (%)
Source: Cushman & Wakefield
9.811.112.213.513.914.414.8 14.8 Q4
Industrial market (%)
Source: Cushman & Wakefield
2.92.52.52.21.91.61.4 1.4 Q4
Housing affordability index0.3020.3190.3420.3490.3680.371 0.371 Q3

Expectations
Selected definitions, graphs and historical data
2020Q22020Q32020Q42021Q12021Q22021Q32021Q42022Q1Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less4645241475 Q3
2% or less656665392213 13 Q3
3% or less737880666033 33 Q3
more than 3%272220344067 67 Q3
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20200.80.70.7 0.7 Dec
20211.81.71.61.82.42.93.3 3.4 Dec
2022 1.92.12.43.0 3.3 Dec
2-3 years2.12.02.12.02.02.12.2 2.2 Q4
6-10 years2.02.02.02.02.02.02.0 2.0 Q4
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%251272000 Q4
1-2%374460358102 Q4
2-3%24282142514230 30 Q4
more than 3%111813354567 67 Q4
Expectations implicit in real/nominal bond spread1.01.21.51.71.81.71.8 1.8 Dec