A study released by the financial think tank yesterday ranks Canada 11th among the world’s 17 wealthiest nations for 2008, falling behind Norway, Switzerland, the Netherlands and Austria but ahead of Belgium, Germany and Japan.

Canada scored good grades for inflation and gross domestic product growth, but earned mediocre Cs in other key areas such as labour productivity, income per capita and unemployment.

‘NOT BAD NEWS’

“Given the current context, it’s not bad news,” said Glen Hodgson, senior vice-president and chief economist for the board. “In the short term it’s not bad, but don’t be complacent.

“We shouldn’t be satisfied to see our economy crawl back to 2% growth next year. There’s more we can do to create wealth in Canada rather than relying on a cheap dollar or rising commodity prices.”

Hodgson said Canada’s standing is based not on its ties to the U.S., but on domestic policy on productivity, labour markets and foreign investments. Canada could boost its showing with a national productivity strategy to become a more innovative economy, he said.

Norway rose to the top from third spot in the international report card, leading the group in income per capita and employment. Ireland took a big tumble, falling to the bottom from its previous top spot as it reels from a meltdown in the construction sector and real estate market.

Hodgson said the federal government helped buoy the economy with billions of dollars in stimulus spending, but called for a concrete plan to climb out of deficit as soon as the economy rebounds.

Alberta and the western provinces will clear the red ink relatively fast, but Ontario will find it tougher to balance the books and could grapple with a structural, long-term deficit, he predicted.

http://www.winnipegsun.com/news/canada/2009/07/07/10046156-sun.html

reviewed by Moishe Alexander, CFC Canadian Funding Corp CEO

The Canadian construction industry may have been the engine of economic growth for much of this decade, but recent figures show that it hasn’t been firing on all cylinders. Canadian housing starts cratered by a much-greater-than-expected 19.9 per cent to 117,400 annualized units in April compared with March, the slowest pace of residential construction activity since 1996, according to figures released by the Canada Mortgage and Housing Corporation yesterday.

“Overall, the construction downturn continues to have a coast-to-coast footprint, with Western Canada and Ontario faring worst,” said BMO Capital Markets economist Robert Kavic. Much of that decrease was recorded in Toronto, where the volatile multiple starts segment, which includes condominium buildings, brought down the overall national average.

The seasonally adjusted and annualized rate of starts fell for the first time in three months in the Toronto market to 16,300 units, representing a 55 per cent drop from the prior month. The condominium segment fell by 65 per cent, while single-detached housing fell by 3.5 per cent.

“The economic fundamentals continue to point to further weakness in Canadian housing activity,” said Ian Pollick, economics strategist for TD Securities in a research note. “The housing sector is likely to remain a drag on Canadian economic activity.” One silver lining might be that a decrease in activity will finally chip away at the prior six years of overbuilding, economist Kavic said.

It was a point echoed by other economists, including Pollick. “We cannot ignore the fact that the reduction in starts is likely to keep inventories contained, which is a good thing during a recession.”

The CMHC points out that a high number of condominium sales in the Toronto market in the first half of last year will likely result in an increase in starts in the second half of this year.

But some of those projects may not proceed, since some builders have had trouble meeting the 60 to 75 per cent sales threshold banks require before loaning money.

For the first quarter of 2009 new home sales are 60 per cent lower than in 2008, and 75 per cent lower than in 2007.

Meanwhile, the Ontario Home Builders’ Association reported yesterday it was seeing increased traffic during the spring market after “an extremely slow period of activity in the winter.”

But the province’s proposed harmonized sales tax, which is expected to be implemented next year, remains a sore point.

“Just as builders were starting to see signs of life in sales offices in the early spring selling season, the province announced plans to increase the costs of new homes with a harmonized sales tax,” the builders’ association said.

Source: Tony Wong in the Toronto Star

http://toreal.blogs.com/toronto/2009/05/housing-starts-at-lowest-level-since-1996.html