The Canadian economy has been sluggish and entirely unpredictable. In the fourth quarter of 2018, Canadian gross domestic product (GDP) advanced a miserly 0.4%. In September, November, and December, GDP contracted 0.1%. 2019 isn’t looking too much better. In January, GDP grew just 0.3%. In March, the Canadian economy lost 7,200 jobs—its first employment drop in seven months. Is this just a blip or is the Canadian economy showing signs of really slowing down?
New Jobs Added, But Is It Enough?
Statistics Canada announced that the Canadian economy unexpectedly lost 7,200 jobs, ending a seven-month winning streak. The number of people working in the private sector fell by 17,300. Meanwhile, the government added 4,200 jobs to its payroll and the number of self-employed Canadians rose by 6,000.1
Economists were actually expecting the Canadian economy to add 3,000 jobs. But their optimism may have been a little misplaced. Between August 2018 and February 2019, the Canadian economy added 290,000 jobs; that’s the largest six-month increase since 2002.
Those job gains though came at a time when economic indicators showed production was stalling, which was a result, in part, due to falling oil prices.
Some economists have noted that the strong jobs data had to slow down at some point and that it’s not indicative of broader economic slowdown. But the heads of some of Canada’s biggest banks are painting a more bearish picture.2
Economic Problems Still Need Fixing
Bharat Masrani, President and CEO of Toronto-Dominion Bank told shareholders at its annual meeting in late March that he expects the Canadian economy to face “constrained growth” in 2019. He noted that there are economic “problems that still need fixing,” including oil export, provincial trade barrier, Canada’s housing supply, and a lack of infrastructure projects.
Meanwhile, Dave McKay, President and CEO of Royal Bank of Canada told shareholders at its annual meeting that the nation has lost “momentum.” He also said that investors are concerned about “Canada’s falling position in the world.”
Those concerns at not misplaced. Canada exports of non-energy goods is stagnant and there is a “growing crisis” in the resources sector. “Our capacity to grow and advance our economy is stalling,” he said.
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- Labour Force Survey, March 2019, Statistics Canada, April 5, 2019; https://www150.statcan.gc.ca/n1/daily-quotidien/190405/dq190405a-eng.htm
- Zochodne, G. “Big bank chief executives paint picture of a sluggish Canadian economy”, Regina Leader-Post, April 4, 2019; https://leaderpost.com/news/fp-street/td-bank-sees-constrained-growth-for-canadas-economy-this-year/wcm/971d42e5-1129-453b-9d04-7309374a486b
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