Stephen Poloz’s dashboard: The latest charts that matter most to the Bank of Canada
Some of Bank of Canada Governor Stephen Poloz’s favourite economic indicators are flashing a warning sign.
A year ago, we built a “dashboard” of the numbers that the Canadian central bank cares about most. The idea was to add texture to the weekly reporting of high-frequency data by pushing beyond the headlines, just like policy makers do. The post-crisis economy doesn’t behave like it did before the Great Recession. Analysis based on superficial readings quite likely will be wrong.
We retained a few of the most popular figures, such as the monthly jobless rate, but opted against incorporating most of them, including the Consumer Price Index, since inflation figures can be easily found at the Bank of Canada’s website. Our dashboard is an assembly of the nontraditional indicators that various Bank of Canada officials have flagged as significant in recent years. It’s not comprehensive, but it’s the richest display of Canadian economic data that won’t cost you hundreds of dollars a month.
Some context first: Canada’s economy is doing OK. Hiring appears to have plateaued, but at a very high level. Full employment is forcing employers to offer higher wages to get the workers they need. The number of active jobseekers without work for a year or more is back at average levels after a post-crisis surge.
But there are some worrisome trends in the data. Business investment in machinery and equipment plunged in the second quarter, offsetting an equally big increase at the start of the year. An engine that the Bank of Canada is counting on to drive growth has turned sluggish.
That has been happening around the world because the trade wars are choking global commerce. Canada is no different. Exports of services, a bright spot that was providing a partial offset to weaker oil prices, have slowed and non-energy merchandise exports plunged in June. Business investment tends to follow exports because strong global demand gives companies a reason to expand. At present, the signal the global economy is sending is to proceed with caution.
Most of the world’s other central banks have responded to that signal by lowering interest rates in recent months. The Bank of Canada resisted the urge, rightfully so given the strength of domestic indicators such as employment. But those also have softened. Household spending increased only 0.1 per cent in the second quarter, despite wage increases and a low jobless rate.
The Bank of Canada may soon follow its peers.
Click on the icon at the end of each chart below to get the latest economic data and why it matters.