Provincial economies face a widespread hit from the coronavirus outbreak and the oil price crash, says TD Economics. It is slashing its growth forecasts for the provinces in 2020 by 1.2 percentage points on average, with most regions approaching zero.
The impacts will vary across the country. B.C. and the Atlantic provinces are most vulnerable to a decline in tourism, while Ontario faces supply-chain disruptions to manufacturing and the blow to the financial markets. Quebec and PEI are in a better position because they started the year with strong momentum.
TD sees a contraction in real GDP in 2020 for four provinces: Newfoundland (-1.6%), Alberta (-1.1%), Saskatchewan (-0.4%) and Nova Scotia (-0.4%).
Alberta has been struggling to climb out of recession since 2015-16; now it faces its second oil shock in five years, one that will very likely send its economy back into a downturn, said TD. Hit by a global price war and plunging demand from the coronavirus shutdown, oil prices have plunged close to US$20 and Canadian crude fell to just above $7, a historic low. Canadian oil companies are already slashing spending.
TD, however, does not think the impact will be as bad as it was in 2016, mainly because the industry is much less “frothy” than five years ago when investment was at its peak. Alberta has not seen a major new project since 2014.
Newfoundland & Labrador, where the Hebron oilfield was key to driving the economy’s growth this year, is in a similar situation. But unlike other oil-producing provinces, Newfoundland & Labrador has little capacity to ramp up deficit spending because of its already high net debt to GDP ratio, said TD.
Ontario’s growth is expected to slow to 0.5% for 2020 as the spread of the coronavirus shuts down or curtails key industries over the next few months. TD expects activity to pick up by the end of the second quarter, but doesn’t see a full recovery until well into the second half. Highly indebted households make this province especially vulnerable heading into the coronavirus crisis because confidence and spending will further plummet as incomes are disrupted by temporary layoffs and stock portfolios lose value.
The good news is that TD sees a solid rebound in growth across most provinces in 2021, (though right now that seems a long way away) as trade and travel restrictions are lifted. The big uncertainty remaining though is how long the oil price crash will last.
Here’s what you need to know this morning:
Vancouver City council holds a meeting by electronic means to consider whether to declare a local state of emergency because of COVID-19.
Notable Earnings: Accenture Plc
Today’s Data: Canadian new housing price index, U.S. current account, leading indicators
To say the oilpatch had a bad day Wednesday is a gross understatement. Western Canadian Select crude dropped as much as 37% to its lowest price in history, hit by the double whammy of plummeting demand brought on by coronavirus shutdowns and Saudi Arabia and Russia flooding the oil market in a fierce price war. When the dust settled Wednesday, WCS was trading at $7.47. Canadian oil producers plunged in tandem, most of them falling by the double digits. Canadian Natural Resources Ltd. was down 17.5% to $10.69, Suncor was down 17% to $14.93 and Cenovus Energy Inc. fell 20% to $2.21. Moreover, analysts say the worst is yet to come. “The last two price collapses both never hit prices we’re seeing today,” said Kevin Birn, an oil sector analyst at IHS Markit, adding, “I don’t think we’ve seen the full brunt of what may come — overall, global demand is still probably going to fall.”
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.
