“The best thing about the past year is that it’s over, and the year ahead could be one of the best since the start of the century,” BMO said in its report.
“More fiscal juice should push the economy over the second-wave hump, while the vaccine rollout will speed up the recovery, though labour markets will take much longer to heal.”
In the short term, however, BMO is projecting pain.
Amid tougher public health restrictions in certain regions, including Ontario, Quebec and Manitoba, “GDP growth will likely slow to a crawl in Q1,” the report said.
But after a rough winter, BMO expects the economy to rebound by 8% annualized in the second quarter.
“Although some hard-hit services industries will struggle until most of the population is inoculated (likely in the summer), the goods-producing sector will continue to expand,” the report said.
“Recent double-digit gains in house prices and record equity markets will support household wealth and spending.”
The resource sector is expected to help drive growth in the new year amid stronger commodity prices.
“Most importantly, it’s all guns blazing for fiscal policy,” BMO said, noting that Canada has led major countries in providing fiscal stimulus to its economy, and is expected to provide continued support over the next couple of years.
Throughout the recovery, interest rates are expected to stay at near zero, BMO noted, as unemployment remains elevated.
The Bank of Canada will “use forward guidance and bond purchases to limit upward pressure on long-term rates,” BMO said. “We expect the 10-year bond yield to rise about 40 basis points to 1.1% by year-end.”
As for the Canadian dollar, which gained about 2% in 2020, BMO said it’s expected to “strengthen modestly to $1.25 (or 80¢ US) by late 2021” — driven by higher oil prices and reduced demand for the U.S. dollar as a safe haven.
“This is near purchasing power parity, limiting its impact on the economic recovery though keeping the trade deficit large,” BMO said.
Amid the rosy forecast, BMO noted that uncertainty remains substantial.
“Major downside risks include a possible glitch in vaccine rollout (say due to safety concerns), a more adverse mutation of the virus, and the unwinding of fiscal stimulus later this year,” the report said.
Additionally, a drop in asset prices could slow spending.
For a change, there’s also upside risk for the economy: “A smoother rollout of vaccines could lead to early herd immunity,” the report said. “As well, flush with savings, consumers could ‘let loose’ after spending a year in Covid prison.”
A Democrat win in two Senate runoff seats could also boost fiscal support in the U.S., enabling “a wave of new spending on infrastructure, education, housing, child care and the environment, with some offset from higher corporate income taxes and tighter regulations.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
