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: October 29, 2020
Next update: December 10, 2020

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
CPI Inflation 1.62.21.92.11.80.00.2 0.5 Sep
CPI-trim 2.02.12.02.01.91.61.7 1.8 Sep
CPI-median 1.82.02.02.12.01.91.9 1.9 Sep
CPI-common 1.81.81.81.91.71.41.4 1.5 Sep
Chain price index for GDP 1.21.91.43.21.5-0.8 -0.8 Q2
Chain price index for consumption 1.51.71.61.81.80.4 0.4 Q2

Product market
Selected definitions, graphs and historical data
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
Output gap (Integrated framework) (%)1-0.7-0.4-0.5-0.8-3.2-14.6-6.1 -6.1 Q3
Output gap (Extended multivariate filter) (%)11.21.51.20.9-1.7-13.4-4.9 -4.9 Q3
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)31.042.051.053.046.027.044.0 44.0 Q3
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts0.800.780.780.780.801.00 0.78 Aug
Aggregate stock-to-sales ratio0.7360.7320.7350.7390.7580.861 0.861 Q2
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE120.4120.2120.4119.5116.397.5 97.5 Q2
FAM-IO132.1132.9133.6134.1131.4120.4 120.4 Q2
  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
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
Unemployment rate (%) 5.85.65.65.76.313.010.0 9.0 Sep 
Labour market indicator (LMI) 5.95.86.26.38.013.39.4 8.5 Sep 
Participation rate (%) 65.765.865.765.664.861.764.6 65.0 Sep 
Growth in employment (annualized rate, %) 3.02.61.10.5-5.8-38.439.2 2.1 Sep 2
Labour shortage (% firms, Business Outlook Survey) 19.026.034.031.028.013.025.0 25.0 Q3 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) 16.013.022.025.018.0-41.0-19.0 -19.0 Q3 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
Wage-common2.02.52.62.93.45.5 5.5 Q2
Wage-common inputsLabour Force Survey – Average Hourly Earnings2.23.04.24.24.99.66.2 5.7 Sep
Survey of Employment, Payrolls and Hours – Average Hourly Earnings1.83.22.93.03.15.7 5.9 Jul
Productivity Accounts – Compensation per Hour2.72.83.84.27.720.7 20.7 Q2
National Accounts – Hourly Wages and Salaries1.42.72.63.23.67.0 7.0 Q2
Unit labour costs - Total economy (labour income/GDP at market prices)1.92.43.33.53.96.3 6.3 Q2
Bank of Canada commodity price indexTotal-4.20-10.80-8.004.50-13.80-28.70-4.70 -3.70 Sep
Energy-0.50-9.00-11.306.10-26.30-50.90-23.60 -26.10 Sep
Non-energy-7.90-12.60-4.502.50-0.80-3.6010.70 15.90 Sep

Real estate market
Selected definitions, graphs and historical data
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
New housing price index (year-over-year percentage change)0.00.0-0.30.00.51.12.4 3.2 Sep
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
2.0 2.0 Q4
Offices (%)
Source: Cushman & Wakefield
9.99.89.69.59.39.811.1 11.1 Q3
Industrial market (%)
Source: Cushman & Wakefield
3.12.92.82.82.83.0 3.0 Q2
Housing affordability index0.3500.3360.3390.3460.3480.301 0.301 Q2

Expectations
Selected definitions, graphs and historical data
2019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q4Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less513738335346 46 Q2
2% or less899084826865 65 Q2
3% or less959598947673 73 Q2
more than 3%53261823 23 Q2
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20191.81.82.02.0 2.0 Dec
20202.02.02.01.91.90.80.7 0.7 Sep
2021 2.01.81.7 1.7 Sep
2-3 years1.92.02.01.92.02.12.0 2.0 Q3
6-10 years1.91.91.92.02.02.02.0 2.0 Q3
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%322242512 12 Q3
1-2%64646459533744 44 Q3
2-3%27283230382428 28 Q3
more than 3%34152111 11 Q3
Expectations implicit in real/nominal bond spread1.51.41.31.31.21.01.2 1.3 Sep