The Canadian economy appears to have bounced back after its worst two-month stretch since the start of the pandemic, eking out a gain in June and growth in the second quarter of the year.
Statistics Canada said its preliminary estimate is that real gross domestic product grew at an annualized rate of 2.5 per cent between April and June, buttressed by a 0.7 per cent rise in June as pandemic restrictions eased following declines of 0.5 per cent in April and 0.3 per cent in May.
The decline in May put total economic activity about two per cent below pre-pandemic levels seen in February 2020. The agency said that with growth in June, total economic activity was about one per cent below pre-pandemic levels.
Getting through the last one per cent may not take much longer, even though some sectors have longer to go than others, said Desjardins chief economist Jimmy Jean.
Restrictions are rolling back in much of the country as vaccination rates rise, and with early indications suggesting a boost in activity, the country should see a pretty strong rebound in the third quarter absent any hiccups, Jean said.
“I think we will also be talking about the Canadian economy having fully recuperated its pre-pandemic losses,” he said.
“That’s an important milestone, but I think we also have to remember that we’re still not quite there when it comes to the labour market. That’s where there’s still quite some ways to go.”
The uneven recovery in sectors prompted the federal government on Friday to announce it was extending aid to businesses and workers until Oct. 23, and freezing benefits at current rates.
Speaking in Hamilton, Ont., Finance Minister Chrystia Freeland said the government wanted to ensure small businesses in particular have the support they need so the country can have a full and robust recovery.
The GDP figures Friday outpaced the Bank of Canada’s forecast earlier this month that the economy would grow at an annualized rate of two per cent in the second quarter. The central bank expects the economy to grow at an annualized rate of 7.3 per cent this quarter.
“Spring lockdowns in much of the country triggered the first monthly GDP declines in a year, but those setbacks are expected to be reversed in relatively short order, with June’s rebound alone almost doing the job,” said BMO chief economist Douglas Porter.
For May, Statistics Canada said retail declined by 2.7 per cent after a drop of 5.7 per cent in April as the sector was weighed down by restrictions on in-person shopping meant to combat the third wave of COVID-19.
The accommodation and food services sector was similarly affected by restrictions and declined by 2.4 per cent in May, which was not as bad as the 4.3 per cent drop in April.
Statistics Canada said manufacturing declined 0.8 per cent in May, marking the third contraction in four months.
The agency also noted that residential building construction dropped 4.2 per cent in May, down for the first time since November 2020, and a decline of 0.4 per cent in the real estate sector as home resale activity slowed.
“As housing sales and construction levels gradually return to more sustainable levels, this area of the economy could be a drag on growth in coming months,” noted TD senior economist Sri Thanabalasingam.
Statistics Canada said the easing of public health restrictions in many provinces in June helped reverse the slide in sectors reliant on in-person services, like retail, accommodation and food services, which all saw growth.
The agency adds that there were also gains in manufacturing in June, while construction and wholesale trade appear to have contracted.
The figures for June and the second quarter will be finalized at the end of August.
CIBC senior economist Royce Mendes said the economy has some open road to recover more lost ground this summer with virus cases generally low across the country.
“That said, there remain challenges on the horizon, most notably in the form of variants of the virus which have slowed progress towards healing in other developed economies,” he wrote in a note.
This report by The Canadian Press was first published July 30, 2021.
US auto workers expand strike as Biden prepares to join picket line – Al Jazeera English
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Manufacturers say American autoworker strike could idle Canadian supplier plants
American autoworkers will strike at 38 more supplier plants as of noon Friday, the union representing workers announced, citing little progress in negotiations with two of the three Detroit automakers.
Shawn Fain, president of the United Auto Workers (UAW), said Ford had made progress on their offer, but that Stellantis and GM hadn’t — prompting him to call strikes at those companies’ supplier plants across 20 states.
Earlier this week, 13,000 workers at three facilities were striking General Motors, Ford and Stellantis. They are now on their eighth day of job action. Those strikes will continue, Fain said.
Progress by Ford included reinstating the cost of living allowance formula the union lost in 2009, an enhanced profit sharing formula and the immediate conversion of temporary employees with 90 days’ service upon ratification
The ongoing strike by autoworkers at automotive plants in the United States will idle manufacturing plants in Canada in a matter of days, according to industry experts.
Flavio Volpe is head of the Automotive Parts Manufacturers’ Association, which represents companies that build components for vehicles being built in North America.
He said companies let out a “sigh of relief” when the tentative deal between Unifor and Ford was announced.
But he said those companies are worried about the United Auto Workers threats to expand job action if General Motors, Ford and Stellantis do not make “serious progress” on the union’s contract demands.
Volpe said that if strike action at a Jeep production plant continues, parts makers in Canada will adjust their production schedules next week.
“Auto part companies, employers that I represent, will idle those plants,” said Volpe.
Timing tough for rebounding manufacturing sector
The North American auto industry operates on a just-in-time production schedule where the Detroit Three automakers buy parts from large tier-one supplier plants that source components for those parts from smaller, tier-two supplier plants.
A string of global crisis level events that includes the disruptive and deadly COVID-19 pandemic, as well as an on-going global microchip shortage, has put those smaller supplier plants in difficult financial positions.
That’s made the timing of the UAW strike difficult for tier-one and tier-two suppliers — “especially given the interruptions over the last three years and how thin everybody’s balance sheets have become,” said Volpe.
Dennis Darby represents thousands of companies responsible for more than 80 per cent of the Canadian manufacturing sector as president of the Canadian Manufacturers and Exporters Association (CME).
“This could not come at worse time,” he told CBC News.
Darby is in Washington, D.C., this week meeting with his North American counterparts and said the strike is top of mind.
He believes manufacturing companies he represents in Canada are bracing for impact, which he believes will hit in a matter of days.
“All the all the big companies obviously are affected, you know the big ones like Magna. But of course so are lots of secondary and tertiary suppliers that make components in the system,” said Darby.
He welcomed the news of a tentative agreement between Unifor and Ford that, if ratified by members, will prevent strike action that would shut down engine and assembly plants in Ontario.
Labour action shows cracks in the system
Automotive and supply chain expert Jan Giffiths believes that it’s the tier-two suppliers that are in a difficult position right now because of the pandemic disruptions, a tight labour market with increasing wages and the global microchip crisis.
“All of these things coming together is putting a tremendous amount of strain on the tier two supply base and now you throw a strike in on top of that? The dominoes are going to start to fall.”
Griffiths, who has decades of experience leading global tier one supply chain organizations and is the founder of Gravitas Detroit, said suppliers in the United States are already issuing layoff notices.
“If your customer stops sending you orders because they’re not building cars, then what what do you do? You have to conserve cash to survive,” said Griffiths, adding that would traditionally mean laying people off.
But there’s a high demand for skilled manufacturers in Canada and the United States, which may see companies look for creative ways to keep employees on the payroll instead of laying them off.
“That would be the last lever that you would pull because trying to bring qualified people back and go through a whole retraining and startup initiative is going to be extremely difficult,” said Griffiths.
Volpe said the companies he represents will also be looking at ways to keep people on staff.
“They will hang on tightly to employees there because of the incredibly tight labour market and the last thing anybody wants to do is lose good people and have to scour the market for new ones.”
Darby, who said the majority of manufacturers supplying the auto industry operate along the Highway 401 corridor in Ontario, believes affected suppliers will reduce hours or try to land other contracts.
“What we saw during COVID in the short run, people found ways to try to retain their folks even if it meant fewer hours because it’s a lot easier than trying to find a replacement.”
Canada Post reviewing use of address data following criticism from privacy watchdog
Canada Post says it is reviewing how it uses data for tailored marketing campaigns after the federal privacy watchdog found the post office was breaking the law by gleaning information from the outsides of envelopes and packages.
Privacy commissioner Philippe Dufresne said in a report released this week that information collected for the post office’s Smartmail Marketing Program includes data about where individuals live and what type of online shopping they do, based on who sends them packages.
The information is then used to help build marketing lists that Canada Post rents to businesses.
The commissioner found Canada Post had not obtained authorization from individuals to indirectly collect such personal information, a violation of Section 5 of the Privacy Act.
In a statement today, Canada Post says it is committed to the privacy law and the protections it places on personal information, and will therefore review its data services program.
The post office says it understands the public might have concerns and that it will live up to the standards that Canadians expect.
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