Canada’s Jobs Recovery Slowed in October With New Pandemic Restrictions

General Bob Rees 6 Nov

Canada’s Jobs Recovery Slowed in October With New Pandemic Restrictions
The October Labour Force Survey, released this morning by Stats Canada, showed an employment increase of 83,600–well below the 378,000 gain in September and average monthly gains of 395,000 over the past six months (see chart below). Several provinces tightened public health restrictions last month in response to a spike in COVID-19 cases. These measures were targeted at indoor restaurants and bars, and gyms.

Most of the job gains last month were in full-time work. Among those who worked at least half their usual hours, the number working from home increased by 150,000. Working remotely continues to be an important adaptation to COVID-19 health risks, with 2.4 million Canadians who do not normally work from home doing so in October.

The unemployment rate was little changed at 8.9% in October but remained well-below the May peak of 13.7%. In addition to the unemployed, 540,000 Canadians wanted to work in October but did not search for a job, down 39,000 from September and continuing a downward trend from a peak of 1.5 million in April. If people in this group were included as unemployed, the adjusted unemployment rate in October would be 11.3%.

Long-term joblessness—defined as unemployed and looking for work or temporary layoff for 27 weeks or more— increased again in October. Not surprisingly, more than half (53.3%) of the long-term unemployed were living in a household reporting difficulty meeting necessary expenses. As of October, the long-term unemployed totalled 448,000, or one-quarter of all unemployed people. September and October increases in long-term unemployment are by far the sharpest recorded since comparable data became available in 1976.Job Gains Slow in Central Canada

Employment increased in the wholesale and retail trade industries in Ontario, two sectors largely unaffected by new COVID-19 restrictions. After five months of gains totalling 154,000, employment in Ontario’s accommodation and food services was virtually unchanged in the month and remained 15.7% below its pre-COVID February level. Employment declined in transportation and warehousing.

Following five consecutive months of gains, employment was little changed in Quebec in October, and the unemployment rate edged up 0.3 percentage points to 7.7%. Employment gains spread across several services-producing industries were partly offset by a drop of 42,000 in the accommodation and food services industry. The public health alert level in Montréal and Québec City was raised to “red” on October 1, which led to the closure of indoor restaurants and many cultural facilities. Travel between regions in the province was also discouraged. Over the subsequent two weeks, several other Quebec regions went to red alert, and additional measures were introduced.

Employment Grows in Alberta and BC

In British Columbia, employment grew by 34,000 (+1.4%) in October, adding to gains over the previous five months (+302,000). The unemployment rate fell for the fifth consecutive month, down 0.4 percentage points to 8.0% in October. In Vancouver, employment increased by 52,000 (+3.8%) and was within 4.3% of its pre-COVID level.

In Alberta, employment rose by 23,000 (+1.1%), the fifth increase in six months. Following large employment losses earlier this year, Calgary has posted four consecutive employment gains since summer, totalling 101,000 (+13.6%). Recent employment increases in Edmonton have been more modest, up 60,000 (+9.0%) since summer.

October employment gains in Alberta were spread across several industries, including healthcare and social assistance, transportation and warehousing, and wholesale and retail trade. Employment in natural resources edged up in the month but was down 5.2% on a year-over-year basis.

Employment Increases in Newfoundland and Labrador and PEI

In Newfoundland and Labrador, employment grew (+5,900) in October, while the unemployment rate fell 2.0 percentage points to 12.8%. Employment was also up in Prince Edward Island (+900), while the unemployment rate was virtually unchanged at 10.0%.

Hard-Hit Sectors of the Economy

The accommodation and food services industry was most directly affected by the recent tightening of public health measures—and, for the first time since April, employment declined in this industry in October. Employment in the arts, entertainment, and recreation sectors was farther from pre-COVID levels than any other sector in August. The next few months will shed light on the impact of public health restrictions on employment in this sector, which, like the accommodation and food services industry, has strong ties to travel and tourism.

With restrictions on travel and gathering still in place, the continuing impact of COVID-19 has been much more significant for the transportation of people than of goods. For example, the August Survey of Employment, Payrolls and Hours found that payroll employment in transit and ground passenger transportation was down by 17.8% from February to August, while payroll employment in truck transportation—primarily for goods—was down 7.9% for the same period. Similarly, in August, major Canadian airlines carried 86.8% fewer passengers than 12 months earlier, and Canadian railways carried 14.7% less freight.

In construction, employment was little changed for the third consecutive month in October, following increases totalling 190,000 (+16.2%) from April to July. Employment in construction was 7.5% (-112,000) below its February level in October. Recent data on housing starts showed a decline of 5.0% from September 2019 to September 2020, following two months of strong year-over-year increases.

Employment Growth Resumed in Retail Trade

Following a pause in September, employment growth resumed in retail trade, rising by 31,000 (+1.4%) in October, with most of the increase in Ontario. From February to April, employment declined by over one-fifth (-22.9%; -517,000) due to retail businesses’ closures during the first wave of COVID-19. In October, public health measures associated with the second wave did not include retail businesses’ requirements to close. Employment in this industry was 5.1% (-115,000) below its pre-COVID level and down by 2.4% (-54,000) compared with October 2019.

The Winners

Employment exceeded pre-COVID levels in three industries in October—wholesale trade; professional, scientific and technical services; and educational services.

In wholesale trade, employment increased by 15,000 (+2.3%) in October, driven by Alberta increases. Employment in this industry was 5.6% (+35,000) above its February level. The wholesale trade release’s latest results show that sales increased for the fourth consecutive month in August and were 1.7% above pre-COVID-19 levels.

Employment rose for the fourth consecutive month in professional, scientific and technical services, up 42,000 (+2.7%) in October and led by Ontario (+23,000). With this gain, this industry’s employment was 3.3% (+51,000) higher than its pre-COVID level. Job security among employees in this industry includes computer systems design and related services; architecture, engineering and related services; and legal services tend to be higher than in other industries.

Employment was little changed in educational services in October but exceeded its February level by 2.8% (+39,000). Compared with October 2019, employment in this industry increased by 32,000, in part a reflection of some jurisdictions increasing staffing levels to support classroom adaptations brought on by COVID-19.

Compared with other industries, a relatively high share of workers in educational services (25.8% in 2019) is temporary employees, reflecting the relatively high prevalence of teaching staff hired on a contract basis. While the number of temporary employees decreased markedly following the initial COVID-19 economic shutdown, it had rebounded in October (little changed on a year-over-year basis, not seasonally adjusted), helping to boost overall employment in the industry. Permanent employees in educational services also contributed to the recovery of this industry on a year-over-year basis. In October, the number of permanent employees was up 5.6% compared with 12 months earlier (not seasonally adjusted).
Bottom Line 

The economic recovery remains dependent on the evolution of the pandemic. It is likely that extensive lockdown measures, such as the widespread closures imposed early in the pandemic, will not be reintroduced. However, more localized and moderate containment measures will ebb and flow. The Bank of Canada suggests that vaccines and effective treatments will be widely available by mid-2022, at which time the direct effects of the pandemic on economic activity will have ended. However, households’ precautionary behaviour and the effects of the uncertainty surrounding COVID-19 are likely to linger.

The pandemic is also likely to have persistent effects on the preferences and behaviours of consumers and businesses. This could lead to lasting changes to the economy’s structure and could weigh on its potential output. The sizes and timing of such effects are difficult to estimate precisely. Given these considerations, the outlook for Canadian and global economic activity remains unusually uncertain.

The most recent COVID Consumer Spending Tracker, produced by the RBC economics group, that second wave worries have shifted more spending online. Household, clothing, and retail spending held steady, while travel spending continued to decline. Spending on dining out edged downward last month as cooler whether rendered outdoor dining less appealing. Entertainment expenditures ticked downward as well.

The regional real estate boards in Vancouver, Toronto and Montreal recently released their October housing reports showing continued sales activity and upward price prices except in the condo space, particularly smaller condos that were bought on spec for the rental market. With the nosedive in tourism, the short-term rental market has collapsed. Many of these former Airbnb properties are either for sale or have moved into the long-term rental space, driving down prices. The dearth of immigration this year has also exacerbated the decline in rent. Condo listings are rising faster than sales in many regions. In contrast, lower rise properties remain in very tight supply, and prices continue to rise. We will provide more details on housing trends with the release of the CREA data late next week.

 
Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

Bank of Canada Recalibrates Quantitative Easing and Holds Prime Rate

General Bob Rees 29 Oct

Bank of Canada Maintains Prime rate … as expected.  Some in depth info below from our Chief Economist Dr Sherri Cooper.  If you don’t have time to read all of the below, jump straight to the “Bottom Line” (very end of article).  Cheers!

 

Bank of Canada Recalibrates Quantitative Easing
As expected, the Bank held its target overnight rate at the effective lower bound of 25 basis points with the clear notion that negative policy rates are not in the cards. Instead, the central bank will continue to rely on large-scale asset purchases–quantitative easing (QE). The central bank is recalibrating its QE program as promised in recent weeks. In mid-October, it announced that it would end its Repo, Bankers Acceptance and Canada Mortgage Bond purchases this month, as they are no longer needed to assure liquidity in those markets. The volumes of purchases have declined sharply since April. This move will have minimal impact on market interest rates.

The Governing Council announced today it would also gradually reduce purchases of federal government bonds from at least $5 billion to at least $4 billion per week. “The Governing Council judges that, with these combined adjustments, the QE program is providing at least as much monetary stimulus as before.”

The PC opposition party has been warning Governor Macklem of the risks of financing Trudeau’s government spending. But the Bank has little alternative but to step-up its buying of newly issued benchmark bonds–those currently being sold by the government, as opposed to older debt that is becoming increasingly illiquid. As reported in Bloomberg News, “It means the bank’s quantitative easing program will increasingly mirror government debt sales at a time when opposition lawmakers are warning it against directly financing Prime Minister Justin Trudeau’s fiscal agenda.” (See chart below). The Bank already owns more than a third of all outstanding Government of Canada debt, proportionately more than most central banks because Canada ran budget surpluses, which paid down debt for so long.
Virtually every major central bank in the world is conducting an emergency QE program in response to the COVID-19 crisis. The Bank of Canada says its QE program reinforces its commitment to hold interest rates at historic lows over the next few years until the annual inflation rate is sustainably at its target 2% level. Today’s October Monetary Policy Report indicates they will likely keep the overnight rate at 0.25% until 2023.

The central bank has no intention of paring back stimulus, with risks to the economy growing amid the second wave of COVID-19 cases. “As the economy recuperates, it will continue to require extraordinary monetary policy support,” the bank said. “We are committed to providing the monetary policy stimulus needed to support the recovery and achieve the inflation objective.”

October Monetary Policy Report

  • Following the sharp bounce back in growth that occurred when containment measures were lifted, and the economy reopened, the Canadian economy transitioned to a slower, more protracted recuperation phase of its recovery. The recovery phases are proceeding largely as described in the July Report, though the initial rebound was stronger than expected. Furthermore, the near-term slowing in the recuperation phase is likely to be more pronounced due to the recent increase of COVID-19 infections.
  • There is ongoing and significant slack in the Canadian economy. The gap between the actual output and the economy’s potential output is not expected to close until 2023. The economy is progressing unevenly, with some sectors and workers disproportionately affected by the virus–particularly those in accommodation, food, arts, entertainment and recreation, as well as global transportation. Many of those hardest-hit are low-income workers.
  • Oil prices remain below pre-pandemic levels and are assumed to remain around current levels, hitting Alberta hard.
  • Ongoing slack in the economy is expected to continue to hold inflation down into 2023.

The Bank of Canada’s forecast for Canadian growth is shown in the table below. The economic recovery is projected to be prolonged, underpinned by policy support but largely influenced by the evolution of the virus, ongoing uncertainty and structural changes to the economy. These changes could result in longer-term shifts of workers and capital across different regions and sectors of the economy. This adjustment process weighs on the Bank’s estimates of potential growth.

After declining by about 5 1/2 percent in 2020, the economy is expected to expand by almost 4 percent on average in 2021 and 2022. Two factors will likely lead to quarterly patterns of growth that are unusually choppy: localized outbreaks and containment measures and varied recovery rates across industries.

Inflation is expected to remain below the lower end of the Bank’s inflation-control target range of 1 to 3 percent until early 2021, largely due to the effects of low energy prices. Subsequently, inflation is anticipated to be within the target range, but economic slack will continue to put downward pressure on inflation throughout the projection period.
The Reopening Phase Was Strong But Uneven

Growth is estimated to have rebounded strongly in the third quarter, reversing about two-thirds of the decline observed in the first half of the year.  A sizable bounce back in activity resulted from a rebound in foreign demand, the release of pent-up demand for housing and some durable goods, and robust policy support.

Housing activity recovered sharply in the third quarter, supported by historically low financing costs, resilient incomes for higher-earning households, and extra sales and construction that made up for delayed spring activity (Chart 7). By September, cumulative resales are estimated to have compensated for the missed activity during the normally busy spring market. Housing activity may also be benefiting from changes in preferences. In particular, more than one-quarter of respondents to the Canadian Survey of Consumer Expectations in the third quarter of 2020 reported they would like to move to a larger or single-family home because of the pandemic. The strength of the housing market recovery, combined with a tight resale market, has led to the rapid growth of house prices in some markets. In contrast to the appreciation of house values observed in Toronto and Vancouver in 2016, price growth has been strongest in markets with moderate loan-to-income ratios, such as Ottawa, Montréal and Halifax.
Bottom Line
Interest rates will remain low for the foreseeable future. The pandemic will largely determine the growth of the economy and the government’s response. Experts suggest that this second wave will last for much of the winter and that a widely dispersed vaccine will not be available until at least well into 2021. As tough as that is to take, Canada is still doing a better job of containing the virus than the US, UK and the Euro area. Output is likely to remain below pre-pandemic levels everywhere through the end of 2022, the Bank of Canada’s forecast horizon.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Bank of Canada Will Stop Buying Canada Mortgage Bonds

General Bob Rees 26 Oct

Bank of Canada Will Stop Buying Canada Mortgage Bonds
This Wednesday, the Bank of Canada will release its interest rate announcement and the October Monetary Policy Report. Most people expect the overnight rate to remain at 0.25%, where it has been since the pandemic hit. A few have suggested that the Bank could take a page from Australia and reduce overnight rates by 15 basis points. I don’t think so.

Canada’s economy is not as similar to Australia’s as you might think. Yes, both countries speak mostly English, are commodity exporters, and have a currency called the dollar. But that is where the similarities end. Australia is largely a supplier to China and East Asia, while the US dominates Canada’s exports. And our major resource is oil rather than metals. Most importantly, the Bank of Canada believes that lower rates would not be helpful, given the squeeze they put on the banking system’s workings.

The Bank has committed to staying at 0.25% until economic conditions would be consistent with a sustained 2% inflation rate. With the second wave of COVID cases and rolling shutdowns upon us, the economic rebound will slow in the coming quarters. Moreover, it is unlikely we will see inflation averaging above 2% or higher through 2022. The base case forecast for overnight rates by the Bank of Canada will remain at 0.25% until 2023 unless we see a miraculous end to the pandemic far sooner than most experts predict.

Where the Bank will make policy changes is in quantitative easing–the buying of financial assets to improve liquidity in financial markets. The Bank’s Governing Council has, for months, hinted at the need for the current structure of the QE program to be “calibrated.” While there have been few details on what this means, we interpret it to imply a move away from a QE program supporting ‘market-functioning’ to one that attempts to achieve a ‘monetary policy objective.’ To some degree, this has already started.

On October 15, the Bank announced it would retire the Repo purchase program, the Bankers’ Acceptance purchase Facility and the Canadian Mortgage Bond Purchase Program (CMBP). These areas of the Canadian fixed income market are fully functioning at present, and the Bank likely felt ongoing support was no longer necessary. The end of the CMBP got the attention of some mortgage market participants who argued it spelled the end of declining mortgage rates. I think this is a misinterpretation of the Bank’s actions.

As the chart below shows, the use of the CMBP has waned considerably since its introduction in March. It just isn’t needed any longer to assure liquidity in the CMB market. Since August, lenders have only been using about $70 to $190 million per week of the BoC’s $500 million capacity. The last time lenders fully utilized, it was in April when the emergency program was clearly needed. Ending this program should have little impact on mortgage rates.

“As overall financial market conditions continue to improve in Canada, usage in several of the Bank of Canada’s programs that support the functioning of key financial markets has declined significantly,” the Bank said in announcing the changes. The program, designed to provide much-needed liquidity to the banking system to keep credit flowing during the worst of the crisis, has “fallen into disuse as the stresses from the pandemic eased, and markets became much more self-sufficient.” 

The move follows the bank’s decision a month ago to reduce its purchases of federal government treasury bills and similar short-term provincial money market debt, citing improvements in the health of short-term funding markets.
The CMB purchase program is also dwarfed by the Bank’s Government Bond Purchase Program (GBPP), as the chart below shows. “The central bank has pledged repeatedly that it will maintain the highest-profile of its emergency asset-buying programs – its minimum $5-billion-a-week purchases of Government of Canada bonds – until the [economic] recovery is well underway. It has also so far maintained its two programs to purchase provincial and corporate bonds, even though both programs’ demand has been far below original expectations.

Mortgage rates in Canada have an 85% correlation with the 5-year Government of Canada bond yield, which has fallen sharply over the course of the pandemic crisis.

Bottom LineOf the three programs being wound down in the bank’s latest announcement, the biggest is the expanded term repo program, under which the central bank has purchased more than $200-billion of the short-term bank financing instruments since mid-March. The program hasn’t generated any purchases since mid-September.

The Bankers’ Acceptance Purchase Facility, involving short-term credit instruments typically used in international trade financing, was used heavily when introduced in March. Still, it hasn’t been tapped at all since late April. The central bank made about $47-billion in purchases under the program. However, all of those purchased assets have since reached maturity, meaning the central bank is no longer holding any bankers’ acceptances on its balance sheet.

The Canada Mortgage Bond Purchase Program predates the pandemic, but the Bank of Canada ramped up its purchases dramatically during the crisis. Since mid-March, it has accumulated about $8-billion of the bonds under its emergency measures through twice-weekly purchases directly from Canada Mortgage and Housing Corp. The size of the bank’s typical purchases in the past couple of months has been less than a quarter of what it was routinely buying in the spring.

These changes in the QE program will have little impact on interest rates and mortgage markets.
Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

Residential Market Update from First National

General Bob Rees 14 Oct

Great update form one of our preferred lenders!
First National Financial LP

The latest employment numbers coupled with the September reports from the Toronto and Vancouver real estate boards have triggered a lot of optimism about Canada’s economic recovery and the state of the housing market.

Statistics Canada reports the economy added 378,000 jobs in September, and the unemployment rate dropped to 9%.  Toronto realtors posted a record breaking 11,083 sales last month, up 42% from a year earlier.  The benchmark price rose 14%, y-o-y.  Vancouver had its best September ever: 3,643 sales, up more than 56% y-o-y.  The benchmark price rose nearly 6%.

All of these numbers continue to defy expectations and so caution and patience need to be the guiding principles as we try to figure out what will happen next.

The employment numbers – which are a key indicator of economic health – surely got a boost with the reopening of schools.  Parents who had been staying home to look after their kids became available for work again.  But many are not back to full employment.  The number of mothers working less than half their usual hours was 70% higher last month than before the shutdowns.  For working-fathers the number is 23% higher.  Overall, employment is still 25% lower than it was before the pandemic.  And many of those jobs will not be coming back.

Further job growth remains in jeopardy as the two, biggest jurisdictions in the country, Ontario and Quebec, re-introduce closures and restrictions to slow the spread of COVID-19.

At the same time, signals from the housing sector are mixed.  Realtors continue to forecast rising sales and prices.  But the market is imbalanced.  Most of the gains are coming in “ground-oriented” units – singles, semis and townhouses.  Condos are seeing significantly smaller increases.

Canada Mortgage and Housing Corporation continues to forecast that price declines, in the 10% area, will start showing up sometime around the middle of next year.  Moody’s Analytics predicts a national “peak-to-trough” price decline of 7%.  Both reports cite employment shortfalls, reduced immigration and increasing loan delinquencies.

Bank of Canada Relies on Quantitative Easing

General Bob Rees 9 Sep

Hot off the press!  No change in prime rate and the next Bank of Canada Meeting is October 28!

 
Bank of Canada Relies on Quantitative Easing

As promised, the Bank held its target overnight rate at the effective lower bound of 25 basis points with the clear notion that negative policy rates are not in the cards. Instead, the central bank will rely on large-scale asset purchases–quantitative easing (QE–of at least $5 billion per week of Government of Canada bonds. QE adds liquidity to the financial system and keeps market yields low. The Bank began aggressive QE with the beginning of the pandemic and will not cease until the economy has recovered, and inflation is sustainably at 2%. This could be years away, as for example, Ontario has paused reopening plans with the virus numbers ticking up. Many public health officials are expecting infections to rise with the opening of schools and the turn to colder weather. The government is preparing for a possible second wave. Policymakers, however, have dialled back language on more aggressive action.

The Bank has stated, “Both the global and Canadian economies are evolving broadly in line with the scenario in the July Monetary Policy Report (MPR), with activity bouncing back as countries lift containment measures. The Bank continues to expect this strong reopening phase to be followed by a protracted and uneven recuperation phase, which will be heavily reliant on policy support. The pace of the recovery remains highly dependent on the path of the COVID-19 pandemic and the evolution of social distancing measures required to contain its spread.”

In Canada, real GDP fell by 11.5% (39% annualized) in the second quarter, resulting in a decline of just over 13% in the first half of the year, mainly in line with the Bank’s July Monetary Policy Report (MPR) central scenario. All components of aggregate demand weakened, as expected. Global financial conditions have remained accommodative. Although prices for some commodities have firmed, oil prices remain weak.

As the economy reopens, the bounce-back in activity in the third quarter looks to be faster than anticipated in July. Economic activity has been supported by government programs to replace incomes and subsidize wages. Core funding markets are functioning well, and this has led to a decline in the use of the Bank’s short-term liquidity programs. Monetary policy is working to support household spending and business investment by making borrowing more affordable.

Housing activity has been particularly robust with substantial existing home sales in July and August. With record-low mortgage rates, buyers are satisfying their demand for more space and for moving further from city-center congestion. This urban exodus is more than anecdotal. You can get more for your money, and with many people working from home, long commutes don’t seem to be as relevant. The chart below shows that the outer suburbs of Toronto have seen the most significant increase in sales since the market picked up in early June.

Also, the construction of new homes surged to the highest level in more than a decade in August following a sharp increase in July. The greatest strength was in Toronto and Vancouver, particularly in multiple units.

Household spending rebounded sharply over the summer, with stronger-than-expected goods consumption and housing activity. There has also been a large but uneven rebound in employment. Exports are recovering in response to strengthening foreign demand, but are still well below pre-pandemic levels. Business confidence and investment remain subdued. While recent data during the reopening phase is encouraging, the Bank continues to expect the recuperation phase to be slow and choppy as the economy copes with ongoing uncertainty and structural challenges.

CPI inflation is close to zero, with downward pressure from energy prices and travel services, and is expected to remain well below target in the near term. Measures of core inflation are between 1.3% and 1.9%, reflecting the large degree of economic slack, with the core measure most influenced by services prices showing the weakest growth.
Bottom Line

The Bank also suggested that “as the economy moves from reopening to recuperation, it will continue to require extraordinary monetary policy support. The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved. To reinforce this commitment and keep interest rates low across the yield curve, the Bank is continuing its large-scale asset purchase program at the current pace. This QE program will continue until the recovery is well underway and will be calibrated to provide the monetary policy stimulus needed to support the recovery and achieve the inflation objective.”

The next policy meeting will be held on October 28 when the Bank will release its new forecast in the MPR. A rate hike is unlikely this year or in 2021.
Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

Canadian Economy Took a Record Nosedive in Q2

General Bob Rees 28 Aug

Although the heading is not too positive, looks like housing was silver lining ………….

 

 
Canadian Economy Took a Record Nosedive in Q2

Canadian real GDP plunged 11.5% in the second quarter, or -38.7% at an annualized rate, the worst quarterly decline on record (see chart below). This followed an 8.2% plunge in Q1. The worst of the contraction occurred early in the quarter as the lockdown in March and April wreaked havoc on activity. Since then, the economy has shown surprisingly strong signs of recovery.

StatsCan revealed today that GDP rose 6.5% in June following the 4.8% rise in May and an estimated 3.0% growth in July. Even so, Canada’s recovery is expected to be bumpy and long. No doubt, not all businesses and sectors will expand in sync, and not all jobs will be recovered.

One of the brightest spots in the recovery has been housing, where activity surged in July, reflective of record-low mortgage rates and pent-up demand. Apparently, many homebound Canadians are reassessing their housing needs. Demand for increased space, especially in the suburbs or exurbs, has been robust.

Virtually every sector of the economy was battered in Q2. Household spending dived 43% while business investment collapsed at a 57% annual rate. Virus containment weighed on both, with a fall in oil prices exacerbating the decline in oil & gas investment. Net exports were the only sector that added to economic activity, but only because imports fell more than exports as housebound consumers and shuttered businesses had little need for imported products.

On a year-over-year basis, the monthly rise in June and July will leave GDP down a much milder 5%, but still worse than the -4.7% drop during the financial crisis. The surge in June–itself a record bounce–reflects the gradual re-opening of the economy, with retail, wholesale and manufacturing leading the way. Retail trade jumped 22.3% in June, surpassing its pre-pandemic level of activity. Motor vehicle dealers contributed most to growth.

Following a 17.3% jump in May, the construction sector rose 9.4% in June as a continued easing of emergency restrictions across the country contributed to the return to nearly normal levels of activity at construction sites. Residential construction grew 7.1% as increases in multi-unit dwellings construction and home alterations and improvements more than offset lower single-unit construction. Non-residential construction rose 11.0%, surpassing the pre-pandemic level of activity, as all three components were up.

Real estate and rental and leasing grew 2.5% in June. Activity at the offices of real estate agents and brokers jumped 65.2% in the month, following a 56.4% increase in May, as home resale activity in all major urban centres saw double-digit increases. The output of real estate agents and brokers was about 7% below February’s pre-pandemic level, but other data show it was up sharply in July, hitting new record highs.
Government Provided A Much-Needed Cushion 
Household disposable income surged last quarter despite the pandemic thanks to government income support (see chart below). The rise in income, coupled with the massive decline in consumer spending as well as the deferral of mortgage payments for many triggered a surge in the savings rate. The household saving rate jumped to 28.2% from 7.6% in the prior quarter. Savings rates, of course, are generally higher for higher income brackets.
Bottom Line

The plunge in economic activity in the second quarter–though awful–was not as deep as the Bank of Canada expected (-43%) in its most recent Monetary Policy Report. As well, the rebound since the end of April has been stronger than expected, especially in the housing sector. To be sure, labour market conditions are still very soft with the jobless rate at 10.9% in July, but the new programs announced last week by the federal government to replace CERB will help ease the transition for people still looking for work. 

A possible resurgence in the virus remains a risk unless an effective vaccine can be distributed. The economy will operate below capacity into the next year, but perhaps not as drastically below capacity as previously feared.
Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

Canadian Economy Recovers Almost Half Its COVID-Induced Loss in May and June

General Bob Rees 4 Aug

Let’s keep the momentum going!

 
Canadian Economy Recovers Almost Half Its COVID-Induced Loss in May and June

The Canadian economy bounced back sharply in May and June as Canadian provinces eased lockdown measures.

GDP expanded 4.5% in May, and activity in June was even more robust at an estimated 5% rise. Cumulatively, GDP rose 10% in May and June, after plummeting more than 18% in March and April. These figures are calculated on a month-over-month basis.

These figures point to about a 40% annual rate decline in second-quarter GDP in Canada, which is roughly in line with economists’ projections. South of the border, the US posted a 33% contraction in GDP for the second quarter, the most massive plunge on record (see details below). It’s not surprising that Canada’s economy tanked by more than the US in Q2, as Canada enacted more aggressive restrictions earlier than the US and eased them more slowly. These public health restrictions were well worth it, as Canada has had far greater success at flattening the curve of new cases and deaths. Moreover, Canada’s economy will likely outpace the US in Q3, showing the benefit of allowing the public health considerations to dominate.Canadian output was up in most sub-sectors in May, with double-digit monthly gains by retailers coinciding with the reopening of many stores. Construction, too, recorded a strong rebound, with activity up 17.6% month-over-month in the sector.

Activity at food services and bars rose 35.1% in May as dining rooms and patios began to open in certain parts of the country, while other restaurants continued relying exclusively on take-out and delivery. Meanwhile, accommodation services dropped 2.3%, as ongoing restrictions on international and interprovincial travel kept most Canadians at home.

Real estate and rental and leasing increased 1.5% in May following a 3.4% decline in April. Activity at the offices of real estate agents and brokers jumped 57.1% in the month, as home resale activity in nearly all major urban centres increased in conjunction with a substantial increase in the number of newly listed homes. Nevertheless, the output of real estate agents and brokers remained 44% below February’s level.

Arts, entertainment, and recreation declined another 2.9%. We expect some of these services industries to continue to lag the recovery as demand will be slow to rise due to remaining safety protocols and concerns about virus spread.

Oil production remained sluggish in May, down another 2.7% from April and drilling activity has yet to show signs of a significant rebound into the summer.
US Economy Shrinks at a Record 32.9% Pace in Q2
US gross domestic product shrank 9.5% in the second quarter from the first, a drop that equals an annualized pace of 32.9%, the Commerce Department’s initial estimate showed on Thursday. That’s the steepest annualized decline in quarterly records dating back to 1947. The drop in GDP in the quarter was close to expectations but was still alone more than twice the total 6-quarter peak-to-trough decline in the 2008/09 recession.

Consumer spending, which makes up about two-thirds of GDP, slumped an annualized 34.6%, also the most on record. While employment, spending and production have improved since reopenings picked up in May and massive federal stimulus reached Americans, a recent surge in infections has tempered the pace of the recovery.

US Jobless Claims

A separate report Thursday showed the number of Americans filing for unemployment benefits increased for a second straight week. Initial claims through regular state programs rose to 1.43 million in the week ended July 25, up 12,000 from the prior week, the Labor Department said. There were 17 million Americans filing for ongoing benefits through those programs in the period ended July 18, up 867,000 from the prior week.

While the economic restart has helped put 7.5 million Americans back to work in May and June combined, payrolls are down more than 14.5 million from their pre-pandemic peak.

“We have seen some signs in recent weeks that the increase in virus cases, and the renewed measures to control it, are starting to weigh on economic activity,” Fed Chairman Jerome Powell said at a news conference Wednesday after the central bank’s two-day policy meeting. “On balance, it looks like the data are pointing to a slowing in the pace of the recovery,” though it was too soon to say how extensive — or sustained — this period would be, he said. This is a reminder that there are limits to how much the economy can rebound to a ‘new normal’ in the absence of a vaccine or more effective treatments.

According to Bloomberg News, The US economy has stalled for the fourth consecutive week as new virus cases continue to surge and some lockdown measures have been reinstated. In the week ending July 24, we saw a decline in US public transit ridership, airline passengers, mortgage applications, consumer confidence, and same-store sales.

With the election only three months away, American voters will have to decide whether to re-elect President Donald Trump to a second term against a backdrop of the virus-induced recession and his response to the health crisis. Not surprisingly, Donald Trump floated the idea of delaying the election in a tweet yesterday morning, suggesting once again the false claim that widespread mail-in voting would make the election “inaccurate and fraudulent.” The president has no power to postpone or cancel an election on his own, and his comment triggered a hugely negative response from both his own party and the Democrats. 

In the meantime,a $600 weekly supplement to unemployment benefits that has provided a key economic lifeline for millions of Americans ends today with Republicans and Democrats still quarrelling over a path forward. This, while US coronavirus deaths now top 152,000, hitting records in Texas and Florida and Dr. Anthony Fauci warns that the disease is spreading rapidly to the Midwest.
Bottom Line

The Canadian economy is outpacing the US in the early recovery period.Some of the initial bounce-back in Canada – particularly in the housing market – probably reflects the release of pent-up demand generated during the lockdown. Unprecedented income supports have also helped prop up near-term household purchasing power. Payments from CERB alone looked larger than total wage losses through the downturn in April, and we expect to see more of the same in May payroll employment and wage numbers in the week ahead.

The threat of a resurgence in virus spread will still limit the amount that the economy can recover over the second half of this year – and activity in the oil and gas sector still looks exceptionally soft. We still expect GDP to be more than 5% below year-ago levels, and the unemployment rate elevated, in Q4. But there is some scope for Canada to outperform the US in the very near-term, provided virus spread can remain relatively well contained.

According to early advance data for July published by RBC economics, retail and recreation activity in Canada continues to recover more quickly than in the US states suffering surging COVID cases (see chart below).

Bank of Canada Holds Target Rate Steady Until Inflation Sustainably Hits 2%

General Bob Rees 15 Jul

Certainly some positives and some momentum building.  See below for a summary of today’s Bank of Canada economic forecast.  

 

The Bank of Canada under the new governor, Tiff Macklem, wants to be “unusually clear” that interest rates will remain low for a very long time. To do that, they are using “forward guidance”–indicating that they will not raise rates until capacity is absorbed and inflation hits its 2% target on a sustainable basis, which they estimate will take at least two years. As well, they indicate that the risks to their “central” outlook are to the downside, which would extend the period over which interest rates will remain extremely low. The Bank also made it clear that they are not considering negative interest rates. The benchmark interest rate remains at 0.25%, which is deemed to be its the lower bound.

The Bank is also continuing its quantitative easing (QE) program, with large-scale asset purchases of at least $5 billion per week of Government of Canada bonds. The provincial and corporate bond purchase programs will continue as announced. The Bank stands ready to adjust its programs if market conditions warrant.

With the benchmark rate at its effective lower bound, the Bank’s quantitative easing is the way it is lowering mid- to longer-term interest rates, reducing the borrowing costs for Canadian households and businesses. The Bank assumes that the virus will be with us for the entire forecast range, which is two years.

The Bank released its new economic forecast in today’s July Monetary Policy Report (MPR). The MPR presents a central scenario for global and Canadian growth rather than the usual economic projections. The central scenario is based on assumptions outlined in the MPR, including that there is no widespread second wave of the virus in Canada or globally.

The Canadian economy is starting to recover as it re-opens from the shutdowns needed to limit the virus spread. With economic activity in the second quarter estimated to have been 15 percent below its level at the end of 2019, this is the most profound decline in economic activity since the Great Depression, but considerably less severe than the worst scenarios presented in the April MPR. Decisive and necessary fiscal and monetary policy actions have supported incomes and kept credit flowing, cushioning the fall and laying the foundation for recovery.

Mincing no words, the MPR acknowledged that the COVID-19 pandemic has caused a “worldwide health-care emergency as well as an economic calamity.” The course of the pandemic is inherently unknowable, and its evolution over time and across regions remains highly uncertain.

In Canada, the number of new COVID-19 cases has fallen sharply from its April high, and the economic recovery has begun in all provinces and territories and across many sectors. Consequently, economic activity is picking up notably as measures to contain the virus are relaxed. The Bank of Canada expects a sharp rebound in economic activity in the reopening phase of the recovery, followed by a more prolonged recuperation phase, which will be uneven across regions and sectors (Figure 1 below). As a result, Canada’s economic output will likely take some time to return to its pre-COVID-19 level. Many workers and businesses can expect to face an extended period of difficulty.
There are early signs that the reopening of businesses and pent-up demand are leading to an initial bounce-back in employment and output. In the central scenario, roughly 40 percent of the collapse in the first half of the year is made up in the third quarter. Subsequently, the Bank expects the economy’s recuperation to slow as the pandemic continues to affect confidence and consumer behaviour and as the economy works through structural challenges. As a result, in the central scenario, real GDP declines by 7.8 percent in 2020 and resumes with growth of 5.1 percent in 2021 and 3.7 percent in 2022. The Bank expects economic slack to persist as the recovery in demand lags that of supply, creating significant disinflationary pressures.

Bottom Line

Governor Macklem said in the press conference that what he wants Canadians to take away from today’s Bank of Canada’s actions is “Canadian interest rates are very low and will remain very low for a very long period”. The reopening of the Canadian economy is well underway. Economic activity hit bottom in April and began expanding in May and accelerated in June. About 1.25 million of the 3.0 million jobs that were lost in March-April, were added in May and June.

Some activities, including motor vehicle sales, have already seen a strong pickup since April. Likewise, housing activity fell sharply during the lockdown but is beginning to recover quickly. In contrast, some of the hardest-hit businesses, such as restaurants, travel and personal care services, have only just started to see improvements in recent weeks and are expected to continue to face significant challenges.

The chart below, from July’s MPR, shows that household spending patterns have shifted since the onset of the pandemic. Some of these shifts might last. In the central scenario, the effects of the downturn and lower immigration hold down housing activity over the next few years. After a near-term boost from pent-up demand, residential investment slowly increases as income and confidence recover.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres 

Robust Jobs Report in June, Much Better Than Expected

General Bob Rees 10 Jul

 

Some more positive news!

 

 

Robust Jobs Report in June, Much Better Than Expected
The June Labour Force Survey, released this morning by Statistics Canada, reflects labour market conditions as of the week of June 14 to June 20. By that time, public health restrictions had been eased in most parts of the country. Tighter restrictions remained, however, in much of southwestern Ontario, including Toronto. Even though businesses reopened, physical distancing and other requirements reduced the employment impact of the easing lockdown provisions.

From February to April, 5.5 million Canadian workers–30% of the workforce– either lost their jobs or saw their hours significantly scaled back. Yet, nearly 8.2 million Canadians receive the $2,000 per month Canadian Emergency Response Benefit (CERB) payments. Is this a disincentive for some workers to return to work?

The benefits have been recently extended by eight weeks to roughly the end of August, and the NDP is urging Ottawa to continue them until early October. If you earn more than $1,000 per month, you lose the full $2,000 monthly payment, so clearly, this might preclude some from seeking new work or returning to their original employers.

CERB has cushioned the blow of the pandemic on households and helped to boost consumer confidence. Nevertheless, keep it in mind in assessing the speed at which the jobless are returning to work.

Blowout Jobs Report in JuneBy the week of June 14 to June 20, the number of workers affected by the COVID-19 economic shutdown was 3.1 million, down 43% since April.

Building on an initial recovery of 290,000 in May, employment rose by nearly one million in June (+953,000; +5.8%), with gains split between full-time work (+488,000 or +3.5%) and part-time work (+465,000 or +17.9%). With these two consecutive monthly increases, the total level of employment in June was 1.8 million (-9.2%) lower than in February.

The speed of job recovery has been much faster than in previous recessions, just as the pandemic-induced decline in jobs was more sudden. Men are closer to pre-shutdown employment levels than women in all age groups. The hardest-hit sectors, accommodation, food services, retail trade and personal services are heavily dominated by female employees. The burden of daycare with schools closed likely fell more heavily on women as evidenced by the higher unemployment rate for women with young children.

Unemployment Rate Drops in June After Reaching a Record High in May

The unemployment rate was 12.3% in June, a drop of 1.4 percentage points from a record-high of 13.7% in May. While this was the most significant monthly decline on record, the unemployment rate remains much higher than in February, when it was 5.6%.

Employment Increases in All Provinces

In Ontario, where the easing of COVID-19 restrictions began in late May and expanded on June 12, employment rose by 378,000 (+5.9%) in June, the first increase since the COVID-19 economic shutdown. The proportion of employed people who worked less than half of their usual hours declined by 6.5 percentage points to 14.1% in Ontario. The unemployment rate declined 1.4 percentage points to 12.2% as the number of people on temporary layoff declined (see table below).

In Toronto, where the easing of some COVID-19 restrictions was delayed until June 24, the recovery rate was slightly below that of Ontario in June. The employment level in Toronto was 89.6% of the February level, compared with 94.5% for the rest of the province (not adjusted for seasonality).

Quebec recorded employment gains of 248,000 (+6.5%) in June, adding to similar gains (+231,000) in May and bringing employment to 92.2% of its February level. At the same time, the number of unemployed people in the province declined for the second consecutive month in June (-119,000), pushing the unemployment rate down 3.0 percentage points to 10.7%. The decline in unemployment in Quebec was entirely driven by fewer people on temporary layoff.

The number of people employed in British Columbia rose by 118,000 (+5.4%) in June, following an increase of 43,000 in May. The proportion of employed people who worked less than half of their usual hours declined by 2.9 percentage points to 14.6%. The number of unemployed in the province was little changed in June, and the unemployment rate edged down 0.4 percentage points to 13.0%.

In the Western provinces, employment increased in Saskatchewan (+30,000) for the first time since the COVID-19 economic shutdown and rose for the second consecutive month in both Alberta (+92,000) and Manitoba (+29,000).

In New Brunswick, the first province to begin easing COVID-19 restrictions, employment increased by 22,000 in June. Combined with May gains, this brought employment in the province to 97.1% of its pre-COVID February level, the most complete employment recovery of all provinces to date.

Employment increased for the second consecutive month in Nova Scotia (+29,000), Newfoundland and Labrador (+6,000) and Prince Edward Island (+1,700).
Sectoral Variation in Job Growth

Those sectors that require proximity of workers to customers (accommodation and food services and retail trade other than online) remained hardest hit by the medically-induced job losses. As well, a high proportion of jobs in both the health care and social assistance and educational services industries involve proximity to others. Employment increased in all of these sectors, but remain well below pre-COVID levels.

Also hard hit was employment in businesses that rely on the gathering of large groups (information, culture and recreation industry). This sector was subject to some of the earliest public health restrictions in the form of the size of gatherings as all provinces continue to limit the number of people allowed to gather in public.In several services-producing industries—such as wholesale trade, public administration, and finance, insurance, real estate and rental and leasing—fewer than 40% of jobs involve proximity with others. In many of these industries, employment in June was at or near pre-COVID-shutdown levels.

Monthly employment gains were recorded in wholesale trade (+38,000) and finance, insurance, real estate and rental and leasing (+17,000). Employment returned to pre-COVID-19 levels in wholesale trade, while it was 1.0% lower than pre-COVID-19 levels in finance, insurance, real estate and rental and leasing.

In most industries where few jobs require close physical proximity with others, workers have shifted to working from home on a large scale. In finance, insurance, real estate and rental and leasing, 6 in 10 (61.2%) were working from home during the week of June 14, more than double the proportion (28.5%) who usually do so. A larger-than-usual percentage of workers also continued to work from home in professional, scientific and technical services (73.2%) and public administration (53.8%).

After avoiding significant job losses in the first month of the COVID-19 economic shutdown, both the construction and manufacturing industries experienced heavy losses in April, followed by an initial recovery in May.

In June, employment in construction was 157,000 higher than in April, reaching 89.3% of its February level. In the manufacturing sector, employment gains in May and June totalled 160,000, bringing employment to 91.9% of its February level.

In each of the construction and manufacturing industries, both the proportion of people working less than 50% of their usual work hours and the number of people on temporary layoff fell markedly in June. Construction recorded a 53.8% decrease in the number of people on temporary layoff (not adjusted for seasonality).

Bottom Line 

This was an unambiguously strong jobs report, and we will likely see a continued rebound in employment as long as the economy can open further. Undoubtedly, however, Canada’s economy is still digging itself out of a deep hole, and some jobs are gone for good. But new sectors are growing rapidly as the pandemic accelerated the technological forces that were already in train. I expect to see strong job growth in the following new and burgeoning areas: telemedicine, big data, artificial intelligence, cloud services, cybersecurity, 5G, driverless transportation and clean energy. Online shopping will also continue to proliferate as Canadians have learned to use delivery services and online retail.

These new jobs require training and a high degree of expertise. Those who have suffered permanent job losses will need to adapt. What we do not want to see is government programs that slow the rate of adaptation or support businesses that are no longer viable. Support for those most in need with little likelihood of adaptation will remain necessary.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Astonishing Fiscal Red Ink Announced Today

General Bob Rees 8 Jul

A great summary and breakdown of Canada’s Finance Minister’s announcement today!

 

 
Astonishing Fiscal Red Ink Announced Today
Finance Minister Bill Morneau presented his fiscal snapshot this afternoon. Most economists were expecting a budget deficit of roughly $260 billion. Instead, the government announced a deficit for the fiscal year 2020-21 of $343.2 billion–close to 16% of GDP. That compares to the $34.4 billion deficit projected before the pandemic.A big chunk of that additional deficit can be attributed to the $212 billion in direct support measures the federal government is providing to individuals and businesses. The deficit was initially estimated at C$256.2 billion by the Parliamentary Budget Officer, the country’s budget watchdog. The discrepancy reflects lower tax revenue, an eight-week extension of CERB and the wage subsidy increase.

Aside from the pandemic program spending, the economic slowdown is estimated to have added another $81.3 billion to the deficit in 2020-21, driving spending levels to their highest since 1945. The recession has also taken a toll on revenue, which will drop as a share of the economy to the lowest since 1929.

The prime minister argued the economy would be in much worse shape were it not for the government’s response, in part to thwart the need for households to take on more debt. “We made a very specific and deliberate choice throughout this pandemic to help Canadians, to recognize that overnight people had lost their jobs,” Trudeau told reporters in Ottawa. “We decided to take on that debt to prevent Canadians from having to do it.”

To be sure, the government can finance the debt at a much lower cost than households. Long-term interest rates for the government of Canada are at record lows–below the rate of inflation. The ten-year GOC yield is 0.56% and the 30-year bond yield is just a tad over 1.0%. In consequence, the interest cost to the government of the rising debt burden is very modest.

In addition, the vast majority of the temporary surge in Ottawa’s new debt is being absorbed by the Bank of Canada in its bond purchases. While the BoC’s holdings of federal government debt as a share of its total securities holdings has risen abruptly from less than 14% at the start of the year to around 27% now, that’s still below the share of domestic government debt held by central banks in Japan, Germany and Sweden, for example. Canada’s overall public sector net debt remains moderate among major economies, and especially when compared to the U.S., Britain, or the Euro Area.

GDP decline

The Canadian economy is projected in the report to shrink by 6.8% this year before bouncing back by 5.5% next year, making this crisis the worst economic contraction since the Great Depression. The economy is expected to decline in FY2020-21 more than twice as much as it did in FY2009-10 in response to the global financial crisis.

Between February and April, 5.5 million Canadians either lost their jobs or saw their work hours significantly reduced.  Those losses pushed the unemployment rate to 13.7% in May — the highest rise on record — from a pre-crisis low of 5.5% in January.

Finance Minister Bill Morneau said that without government pandemic programs, the GDP would have contracted by more than 10% and unemployment would have risen by another 2 percentage points.

Debt Strategy

The government now projects debt will rise to 49.1% of GDP in the fiscal year that started April 1, up from 31.1% last year. In his speech, Morneau didn’t provide any forecasts beyond 2020 or provide any indication of future fiscal plans other than to say Canada will continue to hold its low-debt advantage relative to other major economies. That status is facilitated by historically low interest rates, with public debt charges actually declining as borrowing costs fell.

“We, the collective we, will have to face up to our borrowing and ensure it is sustainable for future generations. Canada’s debt structure is prudent, it’s spread out over the long term, and it compares well to our G-7 peers,” the finance minister said. “And we will continue to make sure this is the case in the months and years to come.”

Federal government spending, along with the deficit, is poised to hit all-time highs as a share of GDP outside of World War II. Program expenses will surge 69% to C$592.6 billion, or 27.5% of GDP. That figure has averaged about 15% in the past half-century.

That includes a cost of C$80 billion for the main income support program — the Canada Emergency Response Benefit, or CERB. One change in Wednesday’s documents is a top-up of almost C$40 billion in the government’s wage subsidy program to C$82.3 billion. The numbers suggest the government anticipates transition Canadians from the C$2,000-per-month cash support beginning in September.
Bottom Line

The government has asserted bragging rights as having the most comprehensive fiscal response to the pandemic in the G20 (see chart below).

The fiscal snapshot states, “Canada’s strong fiscal position going into the pandemic has allowed the government to implement an ambitious economic response plan by international standards. Direct fiscal support measures alone represented over 10% of Canada’s GDP, relative to 6.7% on average for G7 countries, with the bulk of support directed at individuals and households. In comparison, the U.S. plan also devotes a large share of direct support to individuals and households but to a lesser extent than Canada. Beyond its total size, which is among the most significant in the G7 and the G20, Canada’s plan is also among the most comprehensive, covering a broader range of measures than most plans announced in peer countries. Canada is notably one of the few countries that has announced both a national program to provide commercial rent assistance for small businesses and forgivable credit to SMEs.”

Let us hope that the government does not consider restraint measures until it is certain that the pandemic has been contained and the economic recovery is on firm ground. The last thing we need right now is tax increases, which many people fear will be the outcome of all of this red ink. Much of the one-time fiscal costs will roll off as the economy recovers. it is essential, however, that we avoid supporting businesses that are no longer viable in a post-pandemic world. We also want to assure that the CERB and other income supports do not discourage people from returning to work that is available.

The government did not forecast beyond the current fiscal year. Given the uncertainty surrounding a possible second wave of the virus and the timing of a vaccine, that forecast would be highly unreliable. Morneau will get back to us with an update in the fall.
– Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres
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