This weeks top stories include how there was a rise in the U.S. manufacturing sector, how Canada is easing off exports to the United States, the real story with Canada’s housing market and how Toronto leads the North American condo market in development.
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U.S. manufacturing factory activity increased at a fast then expected pace in the month of September as production and hiring both saw an increase. This is the latest sign that manufacturing is gaining head way despite a lack of economic growth south of the border.
The Institute for Supply Management noted on Monday that its index of national factory activity was up to 51.6 last month from 50.6 in the month of August. September was noted to be the 26th consecutive month of expansion in the sector. Economists had expected the index to decline by 0.1 to 50.5. Any reading above 50 indicates an expansion in the manufacturing sector. A measure of factory employment also saw an increase to 53.8 last month from 51.8 in the month of August with production rising to 51.2 from 48.6
According to a new report released by CIBC World Markets this week, Canadian companies are now 30% less dependent on U.S. exports than they were 10 years ago. The report also noted that if Canada’s economy wants to avoid a U.S. recession, we are better off keeping that trend going.
Canadian exports to the U.S. have fallen to pre-NAFTA levels as emerging markets pick up the slack. Benjamin Tal, deputy chief economist with CIBC World Markets commented by stating, “You’re a Canadian company stuck with capacity that used to go to the U.S., but you still have to do something with it. The key message for Canadian CEOs is this is now a necessity, not just a nice-to-have. In the past diversifying into emerging markets was a bonus but now it’s a matter of survival.”
This also leans towards the theory that Canadian corporate balance sheets have become less effected by U.S. exports, which may work well for Canada’s ability to get past what looks like a second recession, taking effect in the United States. Currently, 75% of our exports go to the U.S. but this could drop to 60% by 2020 as emerging markets would account for 90% of the gain on the other end. What do you think? Please comment below.
Royal LePage released their House Price Survey on Wednesday of this week and it showed that home prices were up again during the third quarter of this year. The survey stated that the average price of a home in Canada had rose by 5.7% – 7.8% in Q3 of 2011 when compared to the same time last year.
The average price of a standard condominium had reached $239 300, a standard two-storey home had reached $388 218 and the average price of a detached bungalow had reached $349 974. The rise in priced has surpassed expectations of a stagnant raise in prices and suggests that low interest rates combined with a stable Canadian economy has increased consumer confidence, which leads to more homes being purchased.
There are some discrepancies that should be accounted for including that Q3 of last year was a low period for housing prices, which is making the increases of this year seem greater than they actually are. There is also a chance that the remainder of this year will be quite weak and that home prices may decline in the near future. Phil Soper, president and chief of Royal LePage Real Estate Services stated, “The strength in Canada’s national housing market conceals signs of predictable softening in some regions. A broader slowdown is expected in the months ahead, but fears of a U.S.-style correction are completely unfounded.” What do you think? Please comment below.
The latest statistics show that Toronto’s condo boom is not showing a sign of slowing as it is noted to be the city building more high rises than anywhere else in North America. There are currently 132 high-rise buildings under construction in Toronto leading the way for condo development.
Mexico City ranks a distant second with 88 high-rise buildings under construction and then New York City with 86 high-rise buildings under construction. Chicago is next in line but nowhere near the first three ranked cities with only 17 high-rise buildings under construction and Miami rounds out the top five spots with 16 high-rise buildings under construction. A high-rise building is noted to be between 35 and 100 metres high or 12 to 40 floors. Anything higher than 40 floors is considered to be a skyscraper.
Toronto has the second highest number of completed high-rises and skyscrapers in North America already with 1875 and is only second to New York City. Matthew Slutsky, founder and president of BuzzBuzzHome, which notes new residential projects in Canada, commented by saying, “Provincial and municipal land intensification policies, such as Ontario’s Greenbelt, have led to a shift away from low-rise development in the city. If you combine the construction with low-rises, the overall building is about average for Toronto.”
High-rise units account for 60% of new home sales across the GTA, compared with only 25% in 2000. The figures do not distinguish between residential and office developments so the numbers include more than just condo’s and tend to be skewed a bit. There is continual concern that construction in Toronto is outpacing demand for units as speculative buyers enter the market looking to flip condos before registration. What do you think? Please comment below.
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