Canada Economic Forecast

Canada Economic Forecast

August 27, 2019

The economy likely gained momentum in the second quarter. GDP growth for May exceeded expectations, with the manufacturing sector expanding strongly, supported by normal production in the automobile industry following temporary shutdowns in April, while construction had another strong showing. Moreover, easing production cuts in Alberta’s oil sands should have also supported momentum in the quarter. However, soft retail sales in Q2 suggest consumers remain wary despite the strong labor market. Looking at the third quarter, the economy seems to be losing some steam. In July, the unemployment rate rose, while confidence among small businesses fell as skilled labor shortages and weak domestic demand weighed on sales. That said, in the same month, the manufacturing PMI moved back into positive territory, while strong housing starts bode well for residential investment.

Canada Economic Growth

Growth is expected to soften this year, as a weaker global growth outlook hits exports. Moreover, pipeline delays and the recently announced extension of Alberta’s oil cuts will cap the energy sector’s contribution. U.S.-China trade tensions, volatile oil prices and elevated household debt pose downside risks. FocusEconomics analysts expect growth of 1.4% in 2019, which is unchanged from last month’s forecast, and 1.7% in 2020.

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Canada Facts

ValueChangeDate
Bond Yield1.131.00 %Sep 03
Exchange Rate1.320.15 %Sep 04
Stock Market16,4490.23 %Sep 04

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