Connect with us

Economy

Canadian economic recovery hits snag in April amid COVID-19 surge

Published

 on

Canada‘s economy likely contracted in April, the first decline in a year, due to widespread lockdowns amid a third wave of coronavirus infections, slowing the country’s march toward recovery, data showed on Tuesday.

In a preliminary estimate, Statistics Canada said the economy contracted 0.8% in April. By contrast, real GDP had grown 11 months in a row through March, when it grew 1.1%.

Economists said the April decline was largely expected and is unlikely to change the Bank of Canada‘s outlook for interest rate hikes.

“They were talking about the output gap and inflation getting back to target by late 2022. That’s still a long way from here,” said Doug Porter, chief economist at BMO Capital Markets.

The Bank of Canada last month signaled rates could begin to rise in 2022, noting the economy had rebounded more quickly than it had expected.

The Canadian economy grew 5.6% on an annualized basis in the first quarter, as restrictions were eased between the second and third waves of COVID-19, and buoyed by strong housing investment and more mortgage debt. The gain missed analyst expectations of 6.7%.

Still, the economy is in a good position to hit the Bank of Canada‘s GDP forecast of 6.5% for the year, said economists, meaning it will likely ease some stimulus this year.

“I think the Bank of Canada is going to regard this as roughly in line with their forecast,” said Andrew Kelvin, chief Canada strategist at TD Securities.

“It’s going to leave us on track for more tapering in July, and in October, and ultimately going to no more QE (quantitative easing) once we get to 2022.”

Many Canadian provinces imposed strict public health measures and closed many non-essential business in April amid a harsh third wave of COVID-19 infections. With April’s contraction, economic activity was likely about 2% below pre-pandemic levels, Statscan said.

The Canadian dollar steadied at about near 1.2030 per U.S. dollar, or 83.13 U.S. cents, up 0.3% on the day.

 

(Reporting by Julie Gordon in Ottawa; additional reporting by David Ljunggren and Steve Scherer in Ottawa, Maiya Keidan and Fergal Smith in Toronto; Editing by Nick Macfie and Jonathan Oatis)

Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

Published

 on

december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

Continue Reading

Economy

Canadian dollar notches a 6-day high

Published

 on

Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

Continue Reading

Economy

Toronto Stock Exchange higher at open as energy stocks gain

Published

 on

Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

Continue Reading

Trending