Economics Newsletter – Dec 1, 2023

New UWES articles, CPI data, and more!

Written By: Benjamin Pipicelli, Lexx Thomson, Dorje Gyaltsen, & Gordon Huynh

Economics Newsletter – Dec 1st, 2023

Canada’s Economy at a Glance


Author’s Commentary

Canada’s Labour Productivity 

The week ahead’s report on Canada’s Q3 GDP, which we expect will show minuscule growth, risks being a second consecutive slight negative. That wouldn’t yet be a recession, which requires material declines in output, employment, and other activity measures. But even if it’s not a negative quarter for output, the GDP data are likely to imply a negative growth rate for another key indicator: labour productivity. Gains in output per hour are central to increases in living standards, and Canada’s poor trend growth on that measure has now given way to outright declines. Once again, we have a quarter in which total hours worked were advancing, but without much output to show for it. That has been a feature of this recovery, leaving Canadian GDP still anemic relative to the pre-pandemic trend level. That’s a sharp contrast to the US, which has made up all the lost ground and returned to its prior trend for real GDP.

News and Noteworthy


Canadians can expect ‘lots of bargain options’ for winter travel, says WestJet CEO

WestJet’s chief executive officer Alexis von Hoensbroech says Canadian flyers can expect more deals on airfares this winter and next summer, as pent-up travel demand moderates and productivity improves in the airline industry. “There are markets that have seen strong pent-up demand that drove pricing because there was an imbalance between supply and demand, the most prominent being on (transatlantic routes) over the summer.” Read more.

Gas prices fell across most Canadian cities this week 

Gas prices fell across most Canadian cities this week, with Vancouver booking one of the largest declines at the pumps over the past seven days. British Columbia’s largest city saw the price for a litre of regular gasoline fall 6.4 cents between Nov. 16 and Nov. 23 to $1.777 per litre. Abbotsford, B.C. led this week’s declines with an 8.6 cent drop. The average price nationwide fell nearly a cent to $1.538 per litre. The lowest price at the pump in Canada, of more than 70 cities compiled by data firm Kalibrate, was found in Calgary at $1.27 per litre. Read more.

TSX rebound delayed until 2024, according to Bank of Montreal

Canada’s main stock index will hit a new all-time high in 2024 if investors can reject “paralyzing pessimism” not seen in decades. That’s the latest forecast from BMO Capital Markets chief market strategist Brian Belski. Last year, he called for Canada’s S&P/TSX Composite Index (^GSPTSE) to outperform the S&P 500 (^GSPC) in 2023. That hasn’t panned out in a year marked by rising borrowing costs, high inflation, and escalating violence in the Middle East. Read more.

BofA bullish on Canadian energy stocks ahead of ‘challenging’ 2024

Canadian oil and gas could be a bright spot for energy investors in 2024, according to Bank of America Securities analysts eyeing a challenging year ahead for the sector south of the border. BofA’s recent 2023 Global Energy Conference in Houston, TX saw the highest-ever attendance from Canadian companies, analysts led by Doug Leggate noted in research published on Monday. Read more.

Canada’s inflation rate cools, opens door to interest rate cut ‘as early as Q2’ 2024

Canada’s annual inflation rate slowed to 3.1 percent in October as gas prices fell, reinforcing expectations that the Bank of Canada is done hiking interest rates. Analysts had expected the Consumer Price Index (CPI) to cool to 3.2 percent, according to Reuters, following an increase of 3.8 percent in September. Statistics Canada said on Tuesday that the annual deceleration was largely the result of lower gas prices, as Canadians paid 7.8 percent less for gas compared to last year, due in part to base-year effects. Read more.

Economics Society News, Events, and Articles

– Keep an eye out on our Instagram page @uweconsoc for updates regarding future events

– Our weekly Economics Study Lounge has begun! Come to HH2034 Project Cube every Thursday from 6:30-7:30 pm!

– Check out our most recent original article, “What’s at Stake Between Canada and India”, written by Finn O’Connor

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