The economic recovery underway in Canada will be stronger in the near-term than expected a few months ago, according to a Reuters poll of economists who said a resurgence in coronavirus infections and high unemployment were the two biggest risks.
Like many other countries, the Canadian government imposed strict lockdowns to quell the spread of the novel coronavirus, forcing businesses to close and citizens to stay home, bringing swathes of the economy to a standstill.
Canada, with a population of around 38 million, has recorded over 100,000 cases. Infections are still rising, but at a much slower pace than its closest neighbour and largest trading partner, the United States.
The July 6-9 Reuters poll of 32 economists showed the economy rebounding by an annualized 30% in the current July-September quarter, a sharp upgrade from the 19% forecast in the last Reuters poll taken in April.
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Still, the quarter through June was predicted to look a bit worse, shrinking 40% compared with 37.5% predicted in a poll taken two months back. If realized, that would be the deepest contraction since comparable records began six decades ago.
“In the very near-term, economic activity has not been as bad as we were expecting, but still there are a lot of concerns going forward around how much the economy can recover without prompting another resurgence in the virus spread,” said Nathan Janzen, senior economist at RBC.
“Absorbing the remaining amount of economic slack leftover at the end of this year will be a much slower and gradual process than the initial bounce-back we are probably going to see in the third quarter as containment measures ease.”
Indeed, Canada’s economy was expected to contract 6.8% this year as a whole, worse than the 5.7% contraction predicted in April. The rebound expected in 2021 was only slightly higher, 5.2% from 4.5% previously.
Nearly two-thirds of economists, or 11 of 17, who replied to a separate question said the recovery outlook has either remained the same or worsened over the past month.
14:21 Canada’s fiscal snapshot: One-on-one with Finance Minister Bill Morneau
Canada’s fiscal snapshot: One-on-one with Finance Minister Bill Morneau
“Overall, while the economy is on the mend, it’s still early days and both businesses and consumers will continue to grapple with uncertainty over the foreseeable future,” said Ksenia Bushmeneva, an economist at TD Economics.
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Asked what were the top downside risks to the economy this year, nearly all economists chose a resurgence of coronavirus cases and about half said high unemployment.
One-third said limited or slow reopening of the economy and one-quarter said lower oil prices. Crude oil is one of Canada’s top exports.
The Bank of Canada has slashed its key interest rate by 150 basis points to 0.25% this year and made its first foray into bond buying on the open market. But borrowing costs were expected to be left unchanged through to end-2022 at least.
In the meantime, Finance Minister Bill Morneau said this week the federal government has spent more than C$212 billion in direct COVID-19 support.
Inflation forecasts were cut, with the rate now expected to hover around 0.5% until Q2 2021, well below the central bank’s target range of 1-3%.
(Reporting by Mumal Rathore and Indradip Ghosh; Polling by Nagamani Lingappa; Editing by Ross Finley and Bernadette Baum)
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.
