Canada household debt at record as factory sales lag

Fri Jun 15, 2012 1:00pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Despite warnings from the central bank, Canadians are continuing to pile up debt at a record pace, figures showed on Friday, while manufacturing data signaled softness in the economy.

A report that showed a decline in existing-home sales in May added a further dimension to the Canadian economic picture, showing a cooling of what has been the economy's hottest sector since the 2008-09 financial crisis.

On household debt: Statistics Canada reported that the ratio of household debt to income rose in the first quarter to a record 152.0 percent from 150.6 percent in the fourth quarter of 2011.

The Bank of Canada said on Thursday that the high household-debt level continued to present the greatest danger to financial stability in Canada.

The bank said the fourth-quarter ratio of household debt to income was already higher than in the United States and Britain, and it predicted further rises in the Canadian ratio over the medium term.

On factory sales: the statistics agency reported a 0.8 percent decline in manufacturing sales in April from March.

Much of the drop was explained by fluctuations in the volatile aerospace industry and by temporary oil refinery shutdowns, but it still marked a weak start to the second quarter at a time when Europe's debt problems are shaking the global economy.

On home resales: The Canadian Real Estate Association (CREA) said on Friday that sales in May slowed by 3.1 percent from April and that the average price fell on a year-on-year basis for only the second time in the past 1-1/2 years, retreating 0.3 percent to C$375,605 ($368,240).   Continued...