Canada: Focus on national balance sheet accounts – RBC CM

Analysts at RBC Capital Markets suggest that attention on Canada’s national balance sheet accounts release is largely focused on the debt-to-income ratio, which they expect to rise 0.7pp to 167.6% in Q2 as the pace of debt accumulation exceeded the growth in personal disposable income in the quarter.

Key Quotes

“Similarly, we see debt-to-asset and debt-to-net worth ratios edging up to 16.3% and 19.5%, respectively. Discussions on the sustainability of strong household consumption growth (contributing 2.6pp+ in each of Q1 and Q2 and 1.9pp on average in the last four quarters), should come on the back of this, though we would highlight that the national savings rate actually rose to 4.6% in the Q2 National Accounts data. However, that release – and this one – covers the period prior to two 25bp hikes by the BoC in Q3.”