TEC Canada is pleased to provide the Andersen Monthly Economic Report exclusively to our members. The former assistant chief of the Bank of Canada’s research department, Dr. Peter Andersen provides valuable economic insight to help you make better business decisions.
Both the U.S. and Canadian economies can exist with COVID-19 and there will not be another absolute lockdown. Indicators predict the U.S. recession is over, and although gradual, the Canadian economy is beginning to rebound. Direct business sector surveys in the U.S. give an up-to-date picture of economic conditions; in Canada, reduced spending on travel and dining-out has created opportunities for housing-related retailers and producers (hardware, building materials, electronics, etc.).
Although some international nations – such as Russia, Latin American countries and India – continue to show an unfavourable trend of new COVID-19 infections, most advanced industrial countries have economies that can successfully coexist with the virus.
- The Canada Mortgage and Housing Corporation’s (CMHC) forecast for a double-digit housing price decline is misleading –
- new homes sales surged at the start of 2020 and buyers are not backing out of deals. For some builders, weekly sales in May and June were stronger than expected and showed price increases.
- Encouraging COVID-19 numbers from Atlantic Canada, B.C. and Alberta – with Ontario and Quebec following with a lag – show that employment and spending are restarting and will continue to gain momentum throughout the summer and onward.
- Beware of out-of-date indicators in economic activity – the U.S. industrial production figures released on June 16 uses monthly volume components that lag behind a month or more. According to the Philadelphia Fed Manufacturing Business Outlook Survey, the diffusion index score* on shipments moved from -30.3% in May to +25.3% in June.
- The number of job openings will either maintain or improve from its April level. There is an expectation to see steady increases in hiring from here on out, though business failures and behavioural changes (entertainment, WFM, business travel, etc.) will keep the unemployment rate in the high single digits for months.
- The June surge in new COVID cases in the U.S is not representative of global trends. In Europe, cases have flattened over the past 60 days and show no indication of rising and causing a second wave of infections. Throughout the Asian Pacific Region, the data shows a flattening in total cases since the beginning of March.
- USA Today: Layoffs – 1.48M Workers File for Unemployment Amid COVID-19 Signaling Slow Recovery
- Baystreet: Conference Board of Canada Forecasts Economic Growth Of 6.7% In 2021
- Bloomberg: Top U.S. Economic Adviser Says U.S. Won’t Shut Down Despite Surge in Virus
*Diffusion Index Score: The measurement of the spread of economic activity across firms. Calculated by the percentage of respondents that indicate an increase of business activity minus the percentage of respondents that indicate a decrease.