Issue - June, 2006


Jayson Myers

Economic growth in developed countries
In the final quarter of 2005, the Canadian economy grew in real terms (after discounting for price changes) by 2.9% on a year-over-year basis. The Economist magazine's poll of forecasters indicates economic growth will strengthen to 3.2% in 2006. While lagging the US, Canada's economic prospects are significantly better than those of other major industrial economies over the coming year.

Industrial production in developed countries
Industrial production in Canada expanded by 2% in 2005. Industrial output grew by around 3.4% in both the US and Italy, and by 3.1% in Germany. Output fell by 2.7% in Britain and by 0.4% in France in 2005.

Economic and industrial growth in emerging economies
The world's economy expanded by about 4.5% in 2005. China and Argentina led the world in economic growth, while China and Hungary led in industrial expansion. Mexico, Brazil and Poland were the only major emerging economies to lag behind the global average.

Manufacturers' selling prices and industrial wage rates
Manufacturers' selling prices in Canada increased by an average of 2.2% over the past year, one of the slowest rates of increase of any major industrial economy. Average industrial wage rates in Canada are up by 1.5% on a year-over-year basis--close to Japan's rate of wage growth and slightly ahead of Germany's. In contrast, selling prices in the US are up by an average 5.7% and industrial wage rates by 3.3 per cent.

Exchange rates
The Canadian dollar has been the strongest performing currency over the past year. On a trade-weighted basis, the loonie has appreciated by 11% against other currencies. It rose by 5.4%, as other currencies fell in value, against the US dollar. As of the end of February, Canadian dollar exchange rates were 19.5% higher against the Euro, 19.4% higher against the yen and 18.5% higher against the pound sterling than a year previously.

Trends information is provided by Plant, Canada’s Industrial Newspaper. Source: Jayson Myers, chief economist with Canadian Manufacturers & Exporters. Purchasing b2b and Plant are both published by Rogers Media.