BENGALURU (Reuters) – The impact of the coronavirus outbreak in China on U.S. economic growth will be negligible and short-lived, according to economists in a Reuters poll who nonetheless now say risks to their forecasts are skewed more to the downside.
FILE PHOTO: A customer counts her money at the register of a Toys R Us store on the Thanksgiving Day holiday in Manchester, New Hampshire November 22, 2012. REUTERS/Jessica Rinaldi
The outbreak has also significantly increased the chance Beijing doesn’t comply with all of the terms of a Jan. 15 initial trade agreement signed with Washington, potentially reigniting a damaging trade war between the world’s two largest economies.
Still, medians from the Feb. 10-19 Reuters poll of over 100 economic forecasters found the overall U.S. economic growth outlook for this year unchanged compared with last month.
The forecast for growth in the current quarter was reduced just 0.1 percentage point to a seasonally adjusted annualized rate of 1.5% – already slow, even by recent standards. The economy was then expected to grow 1.8-2.0% each quarter until end-2021.
“At this point, we are assuming the coronavirus impact will be relatively small, and more importantly, temporary. So whatever drag there is in the first quarter will largely be reversed in the second,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities.
“It will not have a significant impact on the U.S. economy. But that is certainly a risk for sure. I mean, that is the source to downside risk if it keeps escalating.”
Growth is expected to pick up to 1.8% in the second quarter of this year, only slightly slower than the 1.9% forecast in the January poll.
In that survey, which was conducted before the World Health Organization declared the coronavirus a global public health emergency, 56% of economists said the risks to their U.S. growth views were more to the upside.
However, as the outbreak spread, that has switched around to nearly 70%, or 33 of 48 respondents now saying the opposite. Around 75,000 people have been reported as carriers of the virus globally, with over 2,000 confirmed dead.
Despite these risks, the likelihood of a U.S. recession in the coming year only edged up to a median 23% from 20% in January.
“The threat the coronavirus outbreak poses in an environment of already subdued global growth underlines the potential for medium-term U.S. economic weakness,” said James Knightley, chief international economist at ING.
“It is impossible to forecast the path of the virus, but it increases the chances the Federal Reserve will cut rates at least once more to provide some support to the economy.”
While the consensus showed the Fed would keep rates unchanged at 1.50%-1.75% at least until the end of next year, Reuters analysis showed nearly 40% of economists polled now expect at least one rate cut at some point this year.
“We think the Fed will keep rates on hold, but we agree with the market that there are asymmetric risks to policy where easing is more likely than tightening,” said Michelle Meyer, U.S. economist at BofA Global Research.
“With underlying economic data remaining robust, core inflation trending higher and policy already accommodative, there is a higher hurdle to cut this year than last.”
The poll found that inflation as measured by the core PCE price index, the Fed’s preferred gauge, would range between 1.8% and 1.9% until the second quarter of next year and touch the central bank’s 2% target in the second half of 2021.
When asked if the chance of non-compliance by Beijing with the terms of the initial trade agreement had increased significantly since the coronavirus outbreak, nearly two-thirds of economists, 30 of 48, said yes.
That stands in contrast to results from a separate poll last week on the hit to China’s economy, in which about 56% of economists said the chance of non-compliance had not increased.
“If domestic activity in China remains severely negatively affected by the outbreak of the virus, in our eyes, it’s highly likely the Chinese would try to reduce the purchases of U.S. goods they have promised,” said Bernd Weidensteiner at Commerzbank.
“There is actually a paragraph in the Phase 1 agreement that in case of natural disasters…there is a way to purchase less than the promised amount, and they have a reason now that they cannot fully live up to their commitments, which are relatively generous,” he added.
Additional reporting by Indradip Ghosh; Graphics by Vivek Mishra and Mumal Rathore, Polling by Manjul Paul and Sumanto Mondal; Editing by Ross Finley and Andrea Ricci
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.
