Eagle Vision Quarterly Newsletter

March 2011

Richard L. Simms
President, Black Eagle Executive Search

These are interesting times in the Canadian economy!  We are certainly getting mixed messages.


Statistics Canada reported employment figures for February 2011:

“Employment edged up in February (+15,000), bringing total gains over the past three months to 115,000. The unemployment rate remained unchanged at 7.8%. Over the past 12 months, employment has risen by 1.9% (+322,000). There were small gains spread across a number of industries in February, led by health care and social assistance, and accommodation and food services. At the same time, there were declines in business, building and other support services and in public administration.” 


You will note the declines in the building industry which seems to be largely the case in the Canadian home improvement industry in the first quarter of 2011. Probing with selected industry sources, reasons for lower 1st quarter sales in 2011 compared to 1st quarter 2010 seemed to be related to extraneous factors in 2010 that boosted the first quarter: consumers rushing to take advantage of the Home Renovation Tax Credit; government infrastructure projects; and consumers selling/buying homes before the introduction of the HST in July 1, 2010. In the first quarter of 2011, none of these incentives were available and will also not be present in the 2nd quarter of 2011. 


In the 3rd and 4th quarters of 2011, however, economic conditions and lack of incentives will be largely the same as in 2010 so it is assumed the building materials’ demand will return to more traditional patterns.

Other factors that are creating consumer uncertainty in the Canadian and U.S. economy are surging oil prices precipitated by political upheaval in the Middle East, the nuclear disaster caused by earthquakes in Japan, and being in the midst of a Canadian federal election.

On the positive side, Canada Mortgage and Housing Corporation (CMHC) reported that the seasonally adjusted annual rate of housing starts was 181,900 units in February – up 6.5% from 170,600 units in January. The rise was due primarily to increased activity in multi-family housing starts in Ontario and the Prairies.

Good news from the U.S. as well - employment increased by 216,000 in March 2011 in the United States surpassing economist’s expectations and bringing unemployment to a 2-year low of 8.8%, the fourth monthly decline from a rate of 9.8% in November 2010.  Also the Dow Jones industrial average reached its highest points since the summer of 2008. Factories are driving employment as they take advantage of a weaker dollar to gain a bigger share of booming overseas demand in countries such as China and Brazil. (Globe and Mail, April 2, 2011).

So overall, there are signs of recovery in both Canada and the U.S., but there is still lingering uncertainty in terms of rapidly changing economic and political events around the world.



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