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: September 9, 2021
Next update: October 27, 2021

Inflation (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
CPI Inflation 1.80.00.20.71.53.4 3.7 Jul
CPI-trim 1.81.61.71.92.02.6 3.1 Jul
CPI-median 1.81.91.92.01.92.3 2.6 Jul
CPI-common 1.71.41.41.41.41.7 1.7 Jul
Chain price index for GDP 0.5-0.81.41.86.19.2 9.2 Q2
Chain price index for consumption 1.50.10.80.71.32.6 2.6 Q2

Product market
Selected definitions, graphs and historical data
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
Output gap (Integrated framework) (%)1-2.8-14.0-6.5-4.6-3.6-3.4 -3.4 Q2
Output gap (Extended multivariate filter) (%)1-1.3-12.8-5.2-3.5-2.6-2.6 -2.6 Q2
Business Outlook SurveyDifficulty meeting an unanticipated increase in demand/sales (% firms)46.027.044.057.046.061.0 61.0 Q2
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts0.881.100.850.840.850.87 0.89 Jun
Aggregate stock-to-sales ratio0.7700.8710.7230.7100.6790.689 0.689 Q2
Foreign demand for Canadian non-commodity exports (2007=100)1GRACE109.390.9103.2110.0111.4 111.4 Q1
FAM-IO131.6120.6130.0132.4135.0 135.0 Q1
  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
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
Unemployment rate (%) 6.413.110.18.88.48.0 7.5 Jul 
Labour market indicator (LMI) 8.013.39.68.87.77.1 6.8 Jul 
Participation rate (%) 64.961.864.765.164.964.9 65.2 Jul 
Growth in employment (annualized rate, %) -5.5-38.238.59.91.02.5 0.5 Jul 2
Labour shortage (% firms, Business Outlook Survey) 28.013.025.033.022.023.0 23.0 Q2 
Intensity of labour shortages (balance of opinion, Business Outlook Survey) 18.0-41.0-19.0-4.0-1.030.0 30.0 Q2 
  1. 2. Percentage change at monthly rate.[]

Wages and costs (year-over-year percentage change)
Selected definitions, graphs and historical data
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
Wage-common3.35.24.43.63.41.2 1.2 Q2
Wage-common inputsLabour Force Survey – Average Hourly Earnings5.09.56.05.34.4-1.2 0.4 Jul
Survey of Employment, Payrolls and Hours – Average Hourly Earnings3.15.95.14.24.80.8 1.5 Jun
Productivity Accounts – Compensation per Hour7.423.18.85.80.9-10.4 -10.4 Q2
National Accounts – Hourly Wages and Salaries3.37.26.14.25.00.3 0.3 Q2
Unit labour costs - Total economy (labour income/GDP at market prices)3.15.93.82.92.91.6 1.6 Q2
Bank of Canada commodity price indexTotal-13.60-28.80-3.103.4040.5088.90 34.50 Aug
Energy-27.00-52.60-25.40-17.0042.70137.90 65.10 Aug
Non-energy-0.70-3.4014.2017.2031.6054.10 12.60 Aug

Real estate market
Selected definitions, graphs and historical data
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
New housing price index (year-over-year percentage change)0.51.12.44.46.811.0 11.9 Jul
Vacancy rateApartments (%)
Source: Canada Mortgage and Housing Corporation
3.2 3.2 Q4
Offices (%)
Source: Cushman & Wakefield
9.39.811.112.213.513.9 13.9 Q2
Industrial market (%)
Source: Cushman & Wakefield
2.82.92.52.52.21.9 1.9 Q2
Housing affordability index0.3540.3000.3150.3370.3470.363 0.363 Q2

Expectations
Selected definitions, graphs and historical data
2020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4Latest data
Percentage of firms expecting price increases over the next six months of:
Source: The Conference Board of Canada
1% or less53464524147 Q2
2% or less686566653922 22 Q2
3% or less767378806660 60 Q2
more than 3%182320183139 39 Q2
CPI inflation: Consensus Forecasts (year-over-year percentage change)
Source: Consensus Economics
20201.90.80.70.7 0.7 Dec
20212.01.81.71.61.82.4 2.8 Jul
2022 1.92.1 2.4 Jul
2-3 years2.02.12.02.12.02.02.1 2.1 Q3
6-10 years2.02.02.02.02.02.02.0 2.0 Q3
Percentage of firms expecting CPI inflation over the next two years to be:
Source: Business Outlook Survey
Less than 1%42512720 Q2
1-2%53374460358 Q2
2-3%382428214251 51 Q2
more than 3%211181335 35 Q2
Expectations implicit in real/nominal bond spread1.21.01.21.51.71.8 1.7 Aug