Is Canada in a recession?
Numerous Canadian and foreign banks are concerned that Canada may be slipping into a technical recession further to the release of Tuesday’s GDP figures, which saw a decline of -0.1% in April. However, we at National Bank believe that the solid job market, the introduction of recent fiscal measures and the rebound in industrial output in Ontario and Quebec should make up for the slump seen in the energy and mining sectors over the past few months.
Given the uncertain and fragile context, the upcoming July 15 key rate decision from the Bank of Canada will be eagerly awaited, as a further cut would drive the Canadian dollar down toward the lows seen in 2008.
The recent skid in the loonie was halted by the release of disappointing jobs figures south of the border. Although a respectable number of new jobs were created in June (223,000), the downward revision in numbers for April and May (close to 60,000 fewer jobs created) and the drop in labour force participation have reduced the likelihood of a Fed rate hike in September.
