Imports and exports of merchandise goods both registered gains in March, halting two months of modest slowdowns. Canada's merchandise trade surplus with the world narrowed sharply as the value of imports rose at three times the pace of exports.


Exports increased 1.1% to $38.3 billion, while imports were up 3.6% to $33.1 billion. As a result, the trade surplus fell from a revised $5.9 billion in February to $5.1 billion in March.

An increase in machinery and equipment, primarily the result of strong aircraft exports, pushed up exports in March. Increases in imports of crude petroleum, machinery and equipment, as well as consumer goods and automotive goods returned imports to near-record levels.

After hitting a record high $41.3 billion in December 2005, exports had declined in January and February as shipments of passenger autos, aircraft and lumber retreated. Falling energy prices also contributed to the decline.

Imports, which rose rapidly last year as business investment boomed, slipped during the first two months of 2006. In March, importers resumed investment, with airlines' fleet expansion fuelling a jump in aircraft imports and continued expansion in the natural resources sector driving up imports of industrial machinery.

Exports to the United States remained flat in March, while Canadian companies imported 2.5% more from south of the border than they did in February. As a result, the trade surplus with the United States narrowed from $9.0 billion to $8.5 billion.

Outbound shipments of machinery and equipment, the biggest export sector, rebounded from two months of decline, surging 8.1% in March to more than $8.2 billion. This returned export values of machinery and equipment to levels of December 2005 when they were the highest since January 2003, a very strong month for aircraft exports.

March's rebound was driven primarily by foreign demand for aircraft, engines and parts (+53.2%). Exports of aircraft have registered an upward trend since early 2005 as increased military activities have fuelled demand for Canadian planes and helicopters. This increase returned aircraft export values to January's levels.

Exports of agricultural and fishing products advanced 3.0% in March. The gain was led by growth in exports of wheat (+18.8%), fish and fish preparations (+5.9%), crude vegetable products (+9.9%), and live animals (+4.5%). March marked the third consecutive increase in wheat exports and the second consecutive month for live animal exports.


Live cattle exports increased by over 20% in March, as a result of an increase in the number of feeder cattle and slaughter steers and heifers flowing to the United States from Canada. Total quantities of live cattle exported in March were comparable to those in recorded for March 2002. This is the first time that export quantities have approached pre-ban levels since the import ban on cattle under the age of 30 months was lifted.

Exports of industrial goods and materials were virtually unchanged at $7.2 billion in March. This occurred in the wake of a two-month decline and a gain of nearly $200 million in December 2005 when these exports hit a record high $7.4 billion. Exports of zinc and copper hit record-high values in March as a result of the continuous climb in price for these commodities. However, gains in metals and other industrial materials were matched by declines in chemicals and nickel ores and other metal ores.

Energy exports remained at $7.4 billion as gains in exports of coal and electricity were matched by a decline in outbound shipments of natural gas. Natural gas exports fell 2.4%, the third consecutive decline, the result of lower prices.

Real exports, or exports adjusted for price, of crude petroleum were up in March. However, a third consecutive drop in crude petroleum export prices offset the gain in volumes, resulting in export values holding at $2.9 billion.

Exports of forestry products slipped a further 0.8% following an 8.6% drop in February. Exports of newsprint and other paper products were up 6.3% after declines in the first two months of 2006; however, shrinking exports of lumber and sawmill products, as well as wood pulp and other products, pushed values down for the month.

Exports of automotive products dropped 2.0% to $7.2 billion in March despite a 3.3% gain in trucks and other motor vehicles and a 3.2% increase in motor vehicle parts. For the second straight month, exports of passenger autos and chassis registered sizable loses, down 6.6%. While production of high-demand models remain strong, there has been a slowdown in motor vehicle production overall in recent months.

Note to readers
Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services.
Balance of payments data are available for the United States, Japan and the United Kingdom. Trade data for all other individual countries are available on a customs basis only.

Revisions

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Customs basis data are revised for the previous data year each quarter.
Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.
Revised data are available in the appropriate CANSIM tables.

The 1990s: A "lost decade"

After leading Canada's economic growth from 1984 to 1990, British Columbia fell behind in the 1990s. Real gross domestic product per capita fell from 8% above the average in the rest of Canada in 1992 to 8% below by 2002, after which it began to recover.

Much of the weakness in the 1990s originated in a prolonged slump in demand for housing. Residential construction fell nearly 25%. The housing slump partly reflected a sharp slowdown in population growth after 1995, as well as a correction from sky-high housing prices. The price of residential construction fell 10% between 1994 and 2000.

As well, business investment was little changed in the years following the Asian crisis in 1997. By 2002, it had increased by less than $1 billion, or under 10%.

Growth rebounds following 2001

In 2001, economic growth in British Columbia hit a low of 0.6%. Since then, however, real gross domestic product has averaged 3.4% a year, surpassing the national average.

The rebound was initially led by housing, which grew at a double-digit rate every year for a total increase of nearly 80% since 2000. This was the fastest gain in Canada, surpassing the nation-wide average that accompanied low interest rates.

Housing prices responded to the surge in demand by recovering their losses in the 1990s. The price of all residential construction has risen 20% since 2000.

Investment began to take off in 2003 when trade with China and corporate profits began to rise rapidly. Investment spending has increased by $4 billion since 2003 to a projected $17.8 billion this year.

Mining, including oil and gas investment surged from $2.4 billion to $4.0 billion last year. While mining companies plan a drop to $3.5 billion in investment this year, the slack will be picked up by transportation and utilities.

Fuelled by investment demand, capital goods industries have led growth in manufacturing shipments in the last two years. After rising about 5% a year from 1999 to 2003, shipments of these goods jumped 33% between 2003 and 2005. This reflects the sudden surge in construction on the West Coast.

While British Columbia's exports have grown slowly so far this decade, their composition has changed markedly. For most of the 1990s, exports of forestry products dwarfed all others. Starting in 2000, however, exports of other goods have surpassed those of forestry products, with energy exports leading the gain.

The shift in the composition of British Columbia's commodity exports parallels a switch in their destination. Since 2001, the US share has fallen from 70.0% to 64.0%, while Asia has jumped from 20.5% to 24.0%. As a result, British Columbia is less dependent on the American market than the rest of Canada. Conversely, its orientation to Asia is nearly five times greater than the 5% in the rest of Canada.

Labour markets tighten

By 2004 and 2005, all sectors of demand were rising in unison. Consumer spending posted its strongest increases in 10 years. Housing was growing at a double-digit rate. Business investment accelerated, while exports snapped out of a three-year slump with a 16% gain in earnings in 2004 and 2005.

The broadly based nature of this growth helps explain the sudden tightening of the labour market over the last two years.

Employment growth picked up after 2001, especially in the last two years. Most of the ebb and flow in job growth occurred outside of Vancouver, which posted steady growth since 1990. Jobs in the rest of the province fell between 1996 and 2001. But since then, they have risen 10.4%, leading British Columbia's revival.

The increase in jobs was dominated by construction and real estate, a reflection of the housing boom that raised starts from 12,000 units in 2000 to 31,000 in 2005.

The heavy reliance of growth on construction and housing is important for a number of reasons. It aggravates bottlenecks by requiring skills that only a small number of people have. This is especially true of jobs in construction and real estate. And relatively few immigrants work in these areas, the one area of the labour force expanding recently.

Starting in 1997, British Columbia's population growth began to slow markedly. The reasons for this slowdown owe more to interprovincial than international movements of people.

The combination of a sudden upturn in employment and lagging population and labour force growth pushed the unemployment rate to a record low. This is most evident outside of Vancouver, where unemployment has fallen from near double-digits in 2002 to 6% last year, less than the previous lows in the early 1990s.

In Vancouver itself, unemployment stood at 5.7% last year, comparable with its low in 2000 but still a marked improvement on its 8% rates during much of the 1990s.

With population and labour force growth in British Columbia lagging behind their peak rates in the 1990s, one possible solution to labour shortages is to use labour more efficiently.

Output per hour worked in British Columbia lagged the rest of Canada in the 1990s, rising less than 1% a year. It has begun to recover recently as investment has picked up, but remains below the national average, partly because of the greater number of part-time jobs in the province. This suggests ample room exists to improve the use of labour.

OTTAWA - The seasonally adjusted annual rate(1) of housing starts was 218,100 units in April, down from 251,700 units in March, according to Canada Mortgage and Housing Corporation (CMHC).

"Multiple starts gave back all the gains registered last month," said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. "In contrast to the volatility in multiple starts, the pace of single starts is slowing consistently as expected."

The seasonally adjusted annual rate of urban starts declined 14.9 per cent to 187,000 units. Urban multiple starts were down 21.5 per cent to 96,500 units comparing April to March, while singles were down 6.4 per cent to 90,500 units.

In April, urban housing starts declined in all regions. Strong declines in multiples pulled down urban starts by 24.7 per cent in Quebec and 20.0 per cent in the Prairies. In Ontario, total urban starts were down 12.2 per cent with single urban starts declining more than multiples. The declines in the Atlantic region and British Columbia were relatively modest at 6.5 per cent and 2.3 per cent respectively.

Rural starts in April were estimated at a seasonally adjusted annual rate of 31,100.

In the first four months of 2006, actual urban starts were up 8.3 per cent when compared to the same period a year earlier. Nationally, year- to-date actual urban multiple starts were up 9.3 per cent and singles were up 7.3 per cent compared to the same period in 2005.

NEW YORK- Amid concern over rising gas prices and interest rates, consumer confidence dropped sharply in May after holding steady in April, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which measured the attitudes of 1,000 Americans this week. Economic attitudes weakened across the board, with consumers increasingly viewing the current economy negatively and displaying growing pessimism about the future. As a result, the RBC CASH Index for May, released today by RBC Financial Group, stands at 67.1, compared to 89.4 in April.

"The collapse in U.S. confidence during May is not surprising, considering that consumers were rocked by multi-year high mortgage rates, gas prices near $3.00 per gallon, a high since just after last year's hurricanes, the immigration debate and demonstrations, and the increasing potential for conflict with Iran," said T. J. Marta, Economic and Senior Currency Strategist for RBC Capital Markets. "For perspective, the current situation and expectations components are both at extremely low levels - near those observed in the two months after last year's hurricanes. Although some of the factors weighing on people could dissipate in coming weeks, the decline in confidence is consistent with our view that U.S. economic growth has peaked for the cycle and will moderate through the remainder of the year."

The RBC CASH Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal financial situations, savings and confidence to make large investments. The Index is composed of four sub-indexes: RBC Current Conditions Index; RBC Expectations Index; RBC Investment Index; and, RBC Jobs Index. The Index is benchmarked to a baseline of 100 assigned at its introduction in January 2002. This month's findings are based on a representative nationwide sample of 1,000 adults polled May 1-3, 2006 by survey-based research company Ipsos Public Affairs. Highlights of the survey results include:

- Consumers' economic outlook has plummeted sharply during the past month, as seen in the RBC Expectations Index, which stood at 6.3 in May, a dramatic drop from April's 56.9. A quarter of Americans (24%) think their local economy will be weaker six months from now, up from 16 per cent last month. Women aged 18-44, Midwesterners, rural residents and those with household incomes of less than $25,000 annually all are more pessimistic than the country as a whole.

- Negative views of the current state of the economy now outweigh positive views, with one in four Americans (25%) rating their local economy as weak, slightly more than the 21 per cent who rate their local economy as strong. The RBC Current Conditions Index dropped to 90.3 in May from 98.0 in April, the second straight month of declining perceptions about the strength of respondents' local economies.

- As Americans' views of both the current economy and their future prospects darken and interest rates increase, they are less confident of their ability to make investments or major purchases. The RBC Investment Index saw its third straight month of decline, dropping to 79.9, down from 86.7 in April and a 16-month high of 101.5 in February 2006. More than half (53%) of all Americans believe the next 30 days will be a bad time to invest in the stock market and a strong majority (60%) believe the next month will be a bad time to buy real estate. Half (51%) of all Americans are less comfortable in making a major purchase such as a house or car and 47 per cent say they are uncomfortable making other household purchases.

- In spite of broader pessimism about the economy, concern over job security is not widespread among Americans. However, early signs of anxiety are becoming visible. The RBC Jobs Index for May 2006 stands at 110.3, a 14 point drop from April's 124.5. However, early signs of anxiety are becoming visible. Confidence about personal job security slipped somewhat, with 45 per cent of Americans saying they are less confident about job security than they were six months ago (versus 39 per cent in April). Moreover, 36 per cent of Americans reported they or someone they know has lost a job due to economic conditions, compared to 30 per cent in April.

The impact of rising gasoline prices on consumer confidence can be seen dramatically in the number of Americans who think the country is on the wrong track. In May, 73 per cent of respondents to the RBC CASH Index survey said they thought "things in this country" are off "on the wrong track" - up from 69 per cent in April, and 59 per cent one year ago in May 2005. In addition, the May 2006 RBC CASH Index survey came during the height of debate over immigration and proposals for granting immigrants guest worker status, which could have increased consumer anxiety.

TORONTO - The resale housing market remained strong in April as 8,361 homes changed hands during the month, Toronto Real Estate Board President John Meehan announced today. The month's results represent the third- best April ever, though activity moderated by five percent compared with April of last year.

Overall year-to-date sales at the end of the month were nearly five per cent ahead of 2005's pace, following a record first-quarter this year. "The year began very strongly," Mr. Meehan said. "The warm weather we experienced early on got activity going sooner than usual, effectively moving the peak spring market forward a few weeks."

Jason Mercer, Senior Market Analyst for the Canadian Mortgage and Housing Corporation, noted that the Toronto Area market is supported by a healthy economic foundation.

"The April sales results point to near-record demand for ownership housing," Mr. Mercer said. "Because of steady job growth and low borrowing costs, consumers remain positive about the purchase of a home."

A number of neighbourhoods consisting largely of detached houses were among the most active in the Toronto Area during the month, compared to April of 2005.

Wilson Heights in North York saw 29 per cent more transactions during the month, in comparison to April of last year.

Etobicoke's South Humber district saw the largest increase in activity compared with April of last year, as 63 per cent more homes changed hands. Outside the city, overall sales activity in the Richmond Hill North area was 35 per cent higher than last April.

"Active listings are up about four percent indicating a slight shift in what has been predominately a seller's market," the TREB President said. "REALTORS(R) who had been employing the marketing strategy of holding off offers to a future date are now encouraging their sellers to entertain the offers as they get registered. With interest rates staying low it's an excellent time to be in the market whether you are moving up, moving down or just getting started."

Toronto REALTORS(R) are passionate about their work. They adhere to a strict code of ethics and share a state-of-the-art Multiple Listing Service. Its 25,245 listings resulted in April's 8,361 sales. Serving over 23,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada's largest real estate board.

Construction still robust

Construction rose 0.6% in February. Residential building construction advanced for a sixth consecutive month, gaining 1.0%. The demand for single-family homes grew substantially in Alberta, British Columbia and Quebec. Non-residential building construction grew by 0.7%. All types of non-residential buildings (industrial, commercial and institutional) advanced. Engineering, repairs and other construction activities (+0.3%) also increased, boosted by activity in Western Canada.

Stock market activity supports growth in the financial sector

On the strength of buoyant stock markets, the financial sector gained 0.4% in February. For the third time in the past four months, stockbrokers' activity grew substantially (+1.8%). Real estate brokers' output grew less, increasing only 0.2%, in line with the home resale market.

Wholesale trade continues to grow

Continuing its surge of the past two months, wholesale trade grew 0.6% in February. Growth was recorded mainly by wholesalers of computers and electronic equipment, and of office equipment, but also by wholesalers of motor vehicles. The main sources of decline came from a steep drop in apparel sales, as well as from a decrease in sales of machinery and equipment.

Unlike in the previous four months, retail trade grew only 0.2% in February. An upswing in sales at supermarkets, gasoline stations and pharmacies was almost entirely offset by sharply reduced results for sporting good stores but more importantly by new car dealers. Excluding motor vehicle sales, overall retail sales advanced 1.1%.

Energy sector rebounds

Following a 3.0% drop resulting from especially mild weather in January, the energy sector grew 1.1% in February. Electric power generation and transmission (+5.1%) and natural gas distribution (+4.6%) contributed much to the sector's rebound, making up most of the ground lost in January.

Oil and natural gas extraction was down (-1.2%) for a second consecutive month, mainly because of unscheduled maintenance both in the Alberta tar sands and on the East Coast. The drop in natural gas extraction was attributable to mild weather conditions, which have kept existing inventories at much higher levels than usual.

Apart from activities related to energy resources, mining was down a substantial 2.1%. Potash producers, who were carrying large inventories and waiting for new supply contracts, cut back their output by nearly 15% for a second consecutive month. Base metal mining declined 2.3%, in turn causing a drop in the non-ferrous metal refining industry (-1.9%). By contrast, the mining of iron ore (+1.1%) and miscellaneous non-metallic minerals (+4.6%) advanced, only partially offsetting the losses in the mining sector.

Industrial production (the output of factories, mines and utilities) remained unchanged in February. The marked drop in mining activity (including oil and gas extraction) and the slowdown in manufacturing output were offset by a strong upswing in utilities. In the United States, industrial production grew 0.5%, with a strong advance in utilities partially offset by a reduction in mining and manufacturing output.

Rebound in motor vehicle output fails to offset drop in output of non-durable goods

Manufacturing output fell 0.4% in February. Of the 21 major groups, 11 registered declines, accounting for 49% of total manufacturing output. The overall output of non-durable goods receded 1.7%. Except for beverages and tobacco products and leather and allied products, all major non-durable groups declined. Durable goods advanced 0.5%, propelled by metal products (+2.0%) and computer products (+1.1%) manufacturing. A rebound in the production of motor vehicles (+4.5%), and increases in the production of motor vehicle bodies and trailers as well as of gasoline engines and engine parts, contributed substantially to the strong showing of durable goods. The manufacture of aerospace products, railroad rolling stock and ship and boat building also contributed to the growth.

Note to readers

The monthly gross domestic product (GDP) by industry data are chained volume estimates with 1997 as their reference year. This means that the estimates for each industry and aggregate are obtained from a chained volume index multiplied by the industry's value added in 1997. For the period 1997 to 2002, the monthly estimates are benchmarked to annually chained Fisher volume indexes of GDP obtained from the constant-price input-output tables. For the period starting with January 2003, the estimates are derived by chaining a fixed-weight Laspeyres volume index to the prior period. The fixed weights are the industry output and input prices of 2002. This makes the monthly GDP by industry estimates more comparable with the expenditure-based GDP data, chained quarterly.

Revisions

With this release of monthly GDP by industry, revisions have been made back to January 2005.
For more information about monthly GDP by industry, see the new National Economic Accounts module (http://www.statcan.ca/nea).

Note to readers

With this release, estimates of labour productivity growth in the business sector between 2004 and 2005 have been adjusted upward relative to the estimates which were originally published on March 10, 2006, and subsequently removed from our Web site. The new statistics incorporate corrections to the estimates of hours worked in 2005. The estimates originally published on March 10 did not properly account for the calendar differences between 2004 and 2005, in particular the fact that 2004 had two more working days than 2005.

This working-day adjustment to the hours worked estimates has an appreciable impact on the estimates of labour productivity and hourly compensation. Statistics Canada regrets any inconvenience this error may have caused.

Minor revisions have also been introduced in the estimates as a result of improvements in the division of hours between business and non-business sectors.

OTTAWA - Non-tariff trade barriers, both interprovincial and international, are making Canada less competitive, according to a Conference Board report released April 25.

"Canada would benefit from a fresh dose of competition," said Paul Darby, Deputy Chief Economist. "Although tariffs on goods are declining, the list of non-tariff barriers is daunting. The primary impact of these barriers is to raise costs, which reduces the competitiveness of Canadian firms. This is not a federal versus provincial issue- all governments are responsible for maintaining barriers."

In a survey of 198 Canadian firms, a majority of respondents said that federal and provincial non-tariff barriers increased their costs and lowered their productivity. Standards and regulations were most commonly cited as barriers, but government procurement policies and restrictions on labour mobility also affect business performance. In addition to compliance costs, respondents said they must also allocate resources to develop strategies to deal with non-tariff barriers.

"The most difficult task facing Canada in lowering barriers to competition is reforming provincial non-tariff barriers. The 1995 Agreement on Internal Trade was a good start, but it hasn't gone far enough," said Darby. <<

Policy recommendations are:

- Free trade should be established as the standard for interprovincial trade, and a strong evidence-based case should be required for specific barriers to be permitted;

- The existing dispute settlement mechanism of the Agreement on Internal Trade needs to be made binding-currently, dispute panel recommendations can be ignored, or circumvented through offsetting local legislation, due to the absence of an enforcement mechanism;

- Bilateral or multilateral agreements among and between provinces to eliminate specific barriers should be encouraged, and would serve as a model for other provinces; and

- Canadian policy-makers should also seek to reduce international tariff and non-tariff barriers, focusing in particular on removing unnecessary regulatory impediments between Canada and the United States.

>> This report breaks new ground by including both tariff and non-tariff barriers in its analysis of the productivity gap between Canada and the United States. The study found that barriers to competition have a negative effect on productivity for a core group of 16 primary and manufacturing sectors in the Canadian economy-leading to higher prices or lower international competitiveness in the tradeable goods sector.

Lowering these barriers could narrow the Canada-U.S. productivity gap. But these 16 industries represent only 20.5 per cent of the economy, so policy-makers must also look at other factors for a complete explanation of the Canada-U.S. productivity gap.

Death by a Thousand Paper Cuts: The Effect of Barriers to Competition on Canadian Productivity, which is publicly available at www.e-library.ca, is published under the banner of the Canada Project. This three-year program of research and facilitated dialogue seeks to help improve our standard of living and position in North America and the world.

"'Inflation and inflationary expectations remain well-contained - although with excess capacity diminishing continued vigilance will be required,' finance ministers on the International Monetary and Financial Committee said in a statement released after their spring meeting. The world economic expansion has become more broad-based, and the outlook for growth 'remains strong in the next couple years,' the ministers said," according to Dow Jones .

"The healthy economy presents an opportunity for much-needed reductions in public budget deficits, they said. Risks to the outlook include 'high and volatile oil prices, the potential for an abrupt shift in global financial market conditions, a rise in protectionism, and a possible avian flu pandemic,' the ministers said. Ever-widening trade imbalances are also a serious threat to financial stability, they said . The IMF said the long-standing strategy for reducing trade imbalances remains

valid: more savings in the US, more currency flexibility in high-surplus countries like China, stronger domestic demand in Europe and Japan, and improved investment climates in oil-exporting countries."

Dow Jones adds that the committee also echoed the Group of Seven 's "call for more action to address capacity constraints in oil production. The ministers also promised to look for ways to promote investment in oil production and to conserve energy. They also urged trade ministers to redouble efforts to reach an agreement to lower trade barriers around the world in the Doha round of trade negotiations."

Agence France Presse further reports that "British Chancellor of the Exchequer Gordon Brown said that when the Organization of Petroleum Exporting Countries (OPEC) holds a ministerial meeting June 1 'it must look at its production quotas and it must look at both how we can increase output and refining capacity.' But on Saturday OPEC representative Adnan Shihab-Eldin, in a statement to IMF policymakers here, bluntly reminded consumers that 'the need for appropriate investment is not confined to the upstream (producing) sector but also extends along the entire supply chain, particularly in the downstream (refining) sector.'

Reuters meanwhile writes "France and Britain on Saturday urged the IMF to take a more active role in monitoring the energy markets and their economic impact . The British and French finance ministers also sought to put energy markets firmly on the IMF's radar at a time when work is underway to establish a new framework for the Washington-based lender's economic surveillance operations. Gordon Brown also stressed the impact of oil prices should be part of the IMF's role . [He] said more efforts were needed to improve the quality and transparency of data on oil to ensure markets were well informed, and said this should include more frequent, more relevant, and more comprehensive data on reserves."

On April 20 Statistics Canada stated that Alberta and British Columbia increasingly dominated economic growth early in 2006. Two-thirds of the 101,000 jobs added in the first three months of the year were in these provinces, all in full-time jobs. British Columbia's unemployment rate fell to a record low of 4.4%.

The booming economy of these two provinces exercised an increasing pull on population, with gains in the last 12 months of 2.9% in Alberta and 1.8% in British Columbia. Ontario and Quebec both posted increases of 1.7%, while in the six smaller provinces, the overall gain was only 0.1%.

Retail sales in British Columbia rose 2.4% in January, their strongest advance in a year, and housing starts jumped by 25% in February. Exports slowed, largely due to copper. This appears to be related to the end of strikes in South America in January.

Shipments continued to increase on the Prairies in January, posting their 12th gain in 13 months. Manitoba registered the most rapid increase (+9.8%). Shipments of non-metallic minerals, the materials most used in construction along with wood, continued to grow steadily, increasing 50% in one year. The same was true in Saskatchewan for electrical products, which have also advanced 50% in the past year. In Alberta, shipments held onto their 4.4% gain in December. Household demand was also strong in Alberta: retail sales surged, while housing starts approached historic highs.

Services and resources continued to propel growth in Quebec. Refineries again boosted manufacturing shipments. The value of gasoline shipments in Quebec exceeded the value in Ontario for the first time. The tourism industry and office tower construction in the Montréal area caused monthly building permits to jump 12% compared with the previous month, and 40% year-over-year. Retail sales rose 0.8%. Trade and construction have dominated employment growth since last fall.

Ontario continued to lag slightly, with shipments down 2.1% owing to weakness in the auto sector. However, new motor vehicle sales started the year on a positive note with a monthly increase of 1.4% in January, their third gain in four months. Retail sales continued to advance strongly despite high gasoline prices. A decline in housing starts was related to a return to more seasonable weather in February.

The 12-month change in the Consumer Price Index (CPI) held steady at 2.2% in March 2006. Excluding energy, the CPI rose 1.7% between March 2005 and March 2006, up slightly from 1.6% in February.

The All-items index excluding the eight volatile components identified by the Bank of Canada rose 1.7% on a 12-month basis, the same increase as in the previous two months.

On a monthly basis, the CPI rose 0.5% between February and March 2006, after decreasing 0.2% in the previous month. This increase was mainly due to rising gasoline prices. Excluding the energy components, the index rose 0.4%.

The All-items index excluding the eight volatile components identified by the Bank of Canada increased 0.4% between February and March, mainly due to price increases for women's clothing.

The 12-month change in the CPI stays the same as last month In March, consumers paid 2.2% more than in March 2005 for the goods and services included in the CPI basket, matching February's increase. Higher prices for gasoline, for the purchase and leasing of automobile vehicles and an increase in homeowners' replacement cost were partly offset by lower prices for computer equipment and supplies, as well as for women's and men's clothing.

Average gasoline prices were 7.4% higher in March compared to the same month a year ago, the same average 12-month increase as in February 2006. Higher prices occurred across the country with increases ranging from 5.7% in Newfoundland and Labrador to 9.1% in Alberta. In March, the average retail price for unleaded gasoline at a self service station in Toronto was 91.1 cents per litre compared to 83.8 cents in March 2005. In Montréal, the average price was 98.2 cents per litre this March compared to 91.4 cents per litre last March. For Vancouver, prices were 97.1 cents per litre compared to 92.0 cents for the same time last year.

The price of the purchase and leasing of automotive vehicles rose 3.5% in March compared to one year ago. All provinces posted increases, with the most modest in Alberta (+3.0%) and the strongest in Manitoba (+5.5%).

Homeowners' replacement cost, which represents the worn out structural portion of housing, and is estimated using new housing prices (excluding land), increased by 6.0% between March 2005 and March 2006. All provinces showed increases with Alberta posting the highest (+20.2%). Since December 2005, the Alberta homeowners' replacement cost index has recorded 12-month increases above 10%, from 11.7% in December 2005 to above 20% in March 2006. Alberta also showed strong numbers for housing permits over the same period.

The index for computer equipment and supplies dropped 16.7% compared to March 2005. This index is at a level of 12.5 (1995=100).

Both women's and men's clothing posted lower prices compared to March 2005. Driven by imported products available to Canadian customers, lower prices for clothing items have been the usual trend over the last few years. The women's clothing index was 3.4% lower in March 2006 compared to March 2005 and the men's clothing index was 3.9% lower.

Six of the eight major components of the CPI showed higher prices in March 2006 than in March 2005. The indexes for shelter (+3.5%), transportation (+3.5%), food (+2.4%) and alcoholic beverages and tobacco products (+2.7%) exerted the strongest upward pressure. The indexes for clothing and footwear (-2.5%), and for recreation, education and reading (-0.2%) exerted downward pressure.

After decreasing in February, the CPI is up in March due to gasoline prices
Between February and March, the CPI rose by 0.5% from a level of 128.6 to 129.3 (1992=100). Increases in the prices of gasoline and women's clothing were offset in part by lower prices for fresh vegetables, for the purchase and leasing of automotive vehicles and for fresh fruits.

Gasoline prices rose by 5.2% between February and March 2006, after having dropped by 6.8% in February. Except for Newfoundland and Labrador, and Prince Edward Island, all provinces recorded increases which ranged from 2.3% in New Brunswick to 8.1% in Manitoba. Crude oil prices fluctuated during the first half of March, but then steadily went up towards the end of the month. Price increases for crude oil and wholesale gasoline lead to higher retail prices paid at the pump in March.

In March, retailers usually introduce their summer collections which lead to higher prices as compared to February. This year, the women's clothing index increased by 6.8% in March compared to a month earlier.

Exerting downward pressure on the All-items CPI, vegetable prices decreased by 6.5% in March. All categories of fresh vegetables posted lower prices but tomatoes and "other fresh vegetables" were the main contributors to the drop.

A 0.3% drop in the price for the purchase and leasing of automotive vehicles was attributable to higher financial incentives offered in March by some automotive vehicle manufacturers.

All categories of fresh fruits recorded price declines in March, leading to a 3.1% fall in the fresh fruit index. This decrease was mainly caused by lower prices for oranges, as well as for "other fresh fruit" imported from South and Central America.

The seasonally adjusted CPI increased between February and March

Seasonally adjusted, the CPI increased by 0.2% between February and March 2006.

Upward pressure came from the indexes for transportation (+1.3%), shelter (+0.2%), clothing and footwear (+0.7%), alcoholic beverages and tobacco products (+0.7%), food (+0.1%), and health and personal care (+0.1%) indexes.

The seasonally adjusted index was pushed down by household operations and furnishings (-0.2%) and recreation, education and reading (-0.1%).

The All-items index excluding the eight volatile components
The All-items index excluding the eight volatile components identified by the Bank of Canada increased by 1.7% between March 2005 and March 2006. The main factors behind this increase were the purchase and leasing of automotive vehicles (+3.5%), homeowners' replacement cost (+6.0%), electricity (+4.8%), and restaurant meals (+3.1%). The increase was moderated by a drop in computer equipment and supplies (-16.7%), women's clothing (-3.4%), men's clothing (-3.9%), and video equipment (-9.1%).

Between February and March 2006, the All-items index excluding the eight volatile components identified by the Bank of Canada increased by 0.4%. The main factors exerting upward pressure were women's clothing (+6.8%), automotive vehicle insurance premiums (+2.0%), and travel tours (+4.9%). Factors pushing the index downward were the purchase and leasing of automotive vehicles (-0.3%), house and yard tools (-2.5%), and fresh or frozen beef (-1.1%).

Energy

After an 8.1% rise between February 2005 and February 2006, the energy index rose 7.4% between March 2005 and March 2006.

Although all components contributed to the increase in the energy index in March 2006, the gasoline index (+7.4%) was again the main factor, followed by natural gas (+14.4%), electricity (+4.8%), fuel oil (+8.0%), and fuel, parts and supplies for recreational vehicles (+6.2%).

The energy index rose by 2.3% on a monthly basis, largely under the influence of gasoline prices (+5.2%). Except for the fuel, parts and supplies for recreational vehicles index, which increased 2.4%, all other indexes fell or were unchanged. The natural gas index and fuel oil index both decreased by 1.2%, while electricity prices were unchanged from last month.

MISSISSAUGA - The full impact of an aging baby boom generation is hitting recreational property markets across the country, according to a report released today by RE/MAX.

The RE/MAX Recreational Property Report, which highlights activity in 40 major Canadian centres, found that older boomers are fueling unprecedented demand for recreational properties in 67 per cent (27) of markets surveyed during the first quarter of 2006. Never before have those aged 50 plus been such a strong segment of the recreational property market.

"Baby boomers have played a key role in real estate markets across North America since the early 1970s," says Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. "In fact, they've influenced everything from education, to politics, to the stock market over the past five decades. It comes as no surprise that boomers have now set their sights on recreational property. Frankly, it makes perfect sense. They believe in real estate as an investment and view recreational property as a relatively safe bet."

Boomer demand has also sparked an upswing in starting prices for three- bedroom, winterized recreational properties on waterfront lots. Virtually every market surveyed reported an increase. Once again, the most expensive markets are found in the West, with Whistler ($1.1 million), Salt Spring Island ($1 million), Shuswap Lake ($1 million), Kelowna (Lake Okanagan - $1 million), Penticton ($800,000 - $1 million), Sylvan Lake ($800,000 - $850,000) and Vernon ($800,000) representing the top seven. Ontario's Bala/Port Carling area in Muskoka ($500,000 - $550,000) is the most expensive recreational property market in Ontario-Atlantic Canada. Some of the most affordable oceanfront properties can be found on Canada's east coast, where starting prices are under $200,000.

"We've been expecting the first-wave of aging boomers for quite some time," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "They've paid their dues, they've contributed to society. These 'seasoned citizens,' the oldest of which turns 60 in 2006, are now looking to enjoy the fruits of their labour. Some are selling houses in major centres and making their way north, south, east, and west for their retirement years but others are keeping their homes and buying vacation properties for themselves, their children, and future generations."

Limited inventory levels have been reported in approximately 50 per cent of markets surveyed. Most markets, however, are reporting recreational property sales for the first quarter of this year on par or ahead of 2005 levels.

Teardown activity is rampant in most areas of the country, as baby boomers construct year-round lakeside dwellings that offer all the comforts of home. Renovation is also occurring at full-tilt in markets across the country. "This is a generation that has had it all," says Polzler. "They've been the major force behind sales of luxury goods since the booming 1980s. Their homes reflect their success, whether they are in the city or the country."

Although aging boomers are leading the charge for recreational properties, younger boomers and Generation X have also bolstered demand for properties from British Columbia to Newfoundland. Many of these purchasers are seeking more affordable properties and are willing to travel a distance to realize their goals and objectives.

"In Alberta, for example, the high cost of recreational property on Sylvan Lake has prompted younger purchasers to look at Gull Lake where waterfront can be bought at a fraction of the cost," says Ash. "The same holds true for British Columbia, where buyers deterred by higher prices on Cultus Lake can travel further north to find more affordable properties on Harrison Lake. Similar examples exist in a growing number of Ontario markets."

Report highlights:

- International purchasers from Europe, Asia, Australia, and New Zealand are fueling demand for big-ticket recreational properties in Salt Spring Island, Whistler, Sylvan Lake, Bala/Port Carling, and Newfoundland.

- Americans, particularly those in the northern U.S. states, continue to play a major role in the sale of recreational properties across the country. The higher Canadian dollar has done little to dissuade buyers as prices for recreational properties in the U.S. reach peak levels.

- Condominium units on the water's edge and the slopes continue to gain in popularity. The promise of a turnkey, low maintenance property, with full-time security has really struck a chord with today's purchasers.

- Affordability is an issue in many recreational property markets. Some purchasers are looking at more reasonably priced back lot properties (some with deeded access to the water), second and third row homes, and raw acreage as an alternative to waterfront. Purchasers willing to make real concessions are considering remote properties on smaller lakes and rivers without hydro.

The housing index rose 2.9%, its largest since last summer. Housing starts led the increase, especially in Alberta and British Columbia. While unusually warm weather helped new home construction in January, building remained strong in March even as temperatures returned to more seasonal norms.

The buoyancy of housing demand was reflected in a 1.8% surge in furniture and appliance sales, its most since June 1991. Demand for other durable goods eked out a small gain after declines in three of the previous four months. Auto sales remained lacklustre, having never returned to their peak rates of increase last summer when discounts proliferated.

The stock market hit another record in March, buoyed by metals whose prices recently replaced energy's as the focus of demand on commodity markets.

Manufacturers continued to struggle with sluggish demand and rising input costs. New orders trended down in March, and shipments followed suit after five months of modest gains. Losses in key export industries such as wood outweighed continued strong gains for investment goods, notably machinery and non-metallic minerals destined for the booming western provinces.

The strength of business spending was reflected in rising demand for business services. Firms responded to the pressure on profits by continuing to rein-in inventories (which fell even faster than shipments) and reducing labour costs by cutting the workweek and payrolls.

The underlying trend of US demand improved, with the US leading indicator growing 0.5%, the most in nearly two years. While housing has softened, solid job growth supported consumer spending while export and business investment demand remained solid.

Leading indicators
	October 2005	November 2005	December 2005	January 2006	February 2006	March 2006	Last month of data available
							% change
Composite leading indicator (1992=100)	208.6	209.2	210.2	211.1	211.8	213.0	0.6
Housing index (1992=100)1	145.4	144.3	143.0	145.6	146.6	150.8	2.9
Business and personal services employment ('000)	2,666	2,673	2,677	2,682	2,682	2,684	0.1
S&P/TSX stock price index (1975=1,000)	10,478	10,662	10,832	11,087	11,223	11,568	3.1
Money supply, M1 ($ millions, 1992)2	137,657	137,875	139,740	141,287	142,883	144,443	1.1
US Conference Board leading indicator (1992=100)3	125.3	125.6	125.8	126.1	126.5	127.1	0.5
Manufacturing
Average workweek (hours)	38.5	38.5	38.5	38.3	38.1	38.0	-0.3
New orders, durables ($ millions, 1992)4	25,962	26,140	26,418	26,575	26,700	26,513	-0.7
Shipments/inventories of finished goods4	1.82	1.82	1.84	1.84	1.86	1.87	0.015
Retail trade
Furniture and appliance sales ($ millions, 1992)4	2,268	2,276	2,300	2,316	2,339	2,382	1.8
Other durable goods sales ($ millions, 1992)4	8,258	8,135	8,138	8,133	8,079	8,090	0.1
Unsmoothed composite leading indicator	209.4	210.0	211.9	213.4	214.2	215.4	0.6
1. Composite index of housing starts (units) and house sales (multiple listing service). 2. Deflated by the Consumer Price Index for all items. 3. The figures in this row reflect data published in the month indicated, but the figures themselves refer to data for the month immediately preceding. 4. The figures in this row reflect data published in the month indicated, but the figures themselves refer to data for the second preceding month. 5. Difference from previous month.

TORONTO- With 3,475 new homes and condos sold in the GTA in 
March, new home sales through the first quarter of 2006 are running ahead
of initial forecasts for the year, Desi Auciello, president of the Greater
Toronto Home Builders' Association said April 18.
    "The market has been a little unpredictable so far this year," noted
Auciello. January and February sales were much stronger than expected while
March was weaker than expected. Taken together, first quarter new home sales
are down a mo