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Bank of Canada

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Rates and Statistics

Monetary Policy Indicators

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) (Printer-friendly tables)

Note: The following tables are updated two days after the Bank's most recent announcement date for the target overnight rate, based on information available up to that date. When there is a Monetary Policy Report, the tables are updated on the release date of the Report, again based on information available up to the last fixed announcement date.

Updated: 19 October 2006
Next update: 7 December 2006

Inflation (year-over-year percentage change)
Selected definitions, graphs
and historical data 		2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 Latest data
Core inflation 1.61.81.61.61.61.71.8  2.0Aug
CPI excluding food, energy, and the effect of changes in indirect taxes 1.11.41.21.41.41.41.6  1.9Aug
CPIW 1.81.71.71.91.81.81.8  1.5Aug
Weighted median 1.81.91.72.22.12.52.1  2.2Aug
CPI Inflation 2.32.11.92.62.32.42.6  2.1Aug
Chain price index for GDP 3.63.02.33.44.13.72.8  2.8Q2
Chain price index for consumption 2.01.71.41.91.71.81.7  1.7Q2
Chain price index for consumption excluding food and energy 1.10.90.81.01.00.90.8  0.8Q2


Product market
Selected definitions, graphs
and historical data 		2004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q4Latest data
Output gap (Bank of Canada's conventional measure) 0.4 (R)0.3 (R)0.4 (R)0.5 (R)0.4 (R)0.6 (R)0.4 (R)0.2 (R)   0.2 (R)T3 *
Capacity utilization rate Non-farm goods (%) (1987-2001 avg. = 83.35) 86.386.386.086.386.085.785.5  85.5Q2
Manufacturing (%) (1987-2001 avg. = 81.80) 84.584.984.284.384.283.783.1  83.1Q2
Bank of Canada Regional Office Survey Difficulty meeting and unanticipated increase in demand/sales (% firms) 45.037.043.045.549.644.647.646.6 46.6Q3
Unfilled orders/shipments - Manufacturing excluding aerospace products and parts 0.500.530.540.560.560.580.58  0.55Aug
Aggregate stock-to-sales ratio 0.6300.6300.6300.6190.6130.6220.632  0.632Q2
* As shown in the most recent issue of the Monetary Policy Report.
R = revised


Labour market
Selected definitions, graphs
and historical data 		2004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q4Latest data
Unemployment rate (%) 7.17.06.86.86.56.46.26.4 6.4Sep
Participation rate (%) 67.567.367.267.167.167.167.267.2 67.1Sep
Growth in employment (annualized rate, %) 1.40.91.71.52.41.63.10.4 0.1Sep (1)
Skilled labour shortage (% firms) - Manufacturing (Statscan survey) 7.05.07.08.09.06.08.09.0 9.0Q3
Labour shortage (% firms) - All sectors (Bank of Canada Regional Office Survey) 36.033.036.051.049.044.027.037.0 37.0Q3
1. Percentage change at monthly rate.


Wages and costs (year-over-year percentage change)
Selected definitions, graphs
and historical data 		2004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q4Latest data
Labour Force Survey - average hourly earnings (unweighted) All employees 2.32.72.73.63.93.43.43.5 3.0Sep
Permanent employees 2.72.92.83.43.63.23.63.8 3.4Sep
Wage settlements - Private sector 2.72.32.72.72.12.52.2  2.8Aug
Compensation per hour - Business sector 3.03.54.95.25.45.14.0  4.0Q2
Unit labour costs - Total economy (labour income/GDP at market prices) 1.31.82.13.03.33.92.9  2.9Q2
Unit labour costs - Business sector 1.61.71.82.63.13.02.6  2.6Q2
Bank of Canada commodity price index Total 24.217.514.727.831.517.116.13.2 -10.9Sep
Energy 39.227.230.662.857.327.914.1-12.6 -33.0Sep
Non-energy 12.49.61.6-1.46.36.918.124.9 23.8Sep


Real estate market (year-over-year percentage change)
Selected definitions, graphs
and historical data 		2004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q4Latest data
New-housing price index 5.45.14.74.75.67.09.1  12.1Aug
Resale-housing prices: www.royallepage.com 5.76.26.66.87.38.39.6  9.6Q2
Vacancy rate apartments (%) 2.7   2.7    2.7Oct
offices (%) 10.610.39.58.98.27.47.1  7.1Q2
industrial market (%) 4.94.54.54.64.44.34.3  4.3Q2


Expectations (year-over-year percentage change)
Selected definitions and graphs 		2004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q4Latest data
www.conferenceboard.ca
Percentage of firms expecting price increases over the next six months of:		 1% or less 1422107891313 13Q3
2% or less 7457653749525863 63Q3
3% or less 9692938488959395 95Q3
more than 3% 4751612455 5Q3
www.consensuseconomics.com
CPI inflation: Consensus Forecasts		 2006  1.91.92.12.32.02.02.1 2.2Sep
2007      1.81.81.8 1.9Sep
2-3 years 1.9 1.9 2.0 2.0  2.0Apr
6-10 years 2.0 2.0 2.0 2.0  2.0Apr
Bank of Canada Regional Office Survey — Percentage of firms expecting CPI inflation over the next two years to be: Less than 1% 00100200 0Q3
1-2% 2933181014151515 15Q3
2-3% 5660686061636163 63Q3
more than 3% 12472719182220 20Q3
Expectations implicit in real/nominal bond spread 2.72.72.62.42.62.72.72.62.42.4Oct