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: April 21, 2021
Next update: June 10, 2021

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
CPI Inflation 1.92.11.80.00.20.7 1.1 Feb
CPI-trim 2.02.01.91.71.71.9 1.9 Feb
CPI-median 2.02.02.01.91.92.0 2.0 Feb
CPI-common 1.81.91.71.41.41.4 1.3 Feb
Chain price index for GDP 1.03.30.6-0.71.51.7 1.7 Q4
Chain price index for consumption 1.51.81.70.20.90.9 0.9 Q4

Product market
Selected definitions, graphs and historical data
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
Output gap (Integrated framework) (%)1-0.4-0.6-2.8-14.2-6.8-4.9-3.4 -3.4 Q1
Output gap (Extended multivariate filter) (%)11.00.5-0.7-12.3-4.9-3.1-1.8 -1.8 Q1
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)51.053.046.027.044.057.046.0 46.0 Q1
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts0.770.780.801.000.770.77 0.79 Feb
Aggregate stock-to-sales ratio0.7470.7550.7700.8750.7260.716 0.716 Q4
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE116.3116.6110.391.3103.7110.7 110.7 Q4
FAM-IO133.7134.1131.5120.6130.0132.3 132.3 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
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
Unemployment rate (%) 5.75.76.413.110.18.88.4 7.5 Mar 
Labour market indicator (LMI) 6.26.38.113.39.58.77.6 6.8 Mar 
Participation rate (%) 65.665.564.961.864.765.164.9 65.2 Mar 
Growth in employment (annualized rate, %) 1.10.6-5.5-38.238.59.91.0 1.6 Mar 2
Labour shortage (% firms, Business Outlook Survey) 34.031.028.013.025.033.022.0 22.0 Q1 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) 22.025.018.0-41.0-19.0-4.0-1.0 -1.0 Q1 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
Wage-common2.72.93.35.34.53.6 3.6 Q4
Wage-common inputsLabour Force Survey – Average Hourly Earnings4.24.35.09.56.05.34.4 2.1 Mar
Survey of Employment, Payrolls and Hours – Average Hourly Earnings3.03.03.15.95.14.2 5.8 Jan
Productivity Accounts – Compensation per Hour4.04.58.824.910.16.9 6.9 Q4
National Accounts – Hourly Wages and Salaries2.53.03.47.46.24.2 4.2 Q4
Unit labour costs - Total economy (labour income/GDP at market prices)2.83.13.16.14.13.1 3.1 Q4
Bank of Canada commodity price indexTotal-8.304.10-13.00-27.40-3.802.9036.00 70.20 Mar
Energy-11.905.40-25.50-49.80-22.40-13.5040.70 121.40 Mar
Non-energy-4.502.50-0.90-3.7010.5013.9028.00 35.80 Mar

Real estate market
Selected definitions, graphs and historical data
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
New housing price index (year-over-year percentage change)-0.30.00.51.12.44.4 7.0 Feb
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
2.0 3.2 3.2 Q4
Offices (%)
Source: Cushman & Wakefield
9.69.59.39.811.112.213.5 13.5 Q1
Industrial market (%)
Source: Cushman & Wakefield
2.82.82.82.92.52.52.2 2.2 Q1
Housing affordability index0.3440.3510.3540.3040.3160.338 0.338 Q4

Expectations
Selected definitions, graphs and historical data
2019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q2Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less383353464524 24 Q4
2% or less848268656665 65 Q4
3% or less989476737880 80 Q4
more than 3%2618232018 18 Q4
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20202.01.91.90.80.70.7 0.7 Dec
2021 2.01.81.71.61.8 2.1 Mar
2022 1.9 1.9 Mar
2-3 years2.01.92.02.12.02.12.0 2.0 Q1
6-10 years1.92.02.02.02.02.02.0 2.0 Q1
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%224251272 Q1
1-2%64595337446035 35 Q1
2-3%32303824282142 42 Q1
more than 3%152111813 13 Q1
Expectations implicit in real/nominal bond spread1.31.31.21.01.21.41.6 1.7 Mar