Although Bank of Canada Governor Mark Carney stated with confidence last week that the recession is over, most analysts predict a slow climb back. A look at some of the realities of our economy seems to lend credence to that belief.
The Globe and Mail summarized the facts nicely in a recent article that references the “slow slog” we are facing. For starters, the economic numbers in May showed the tenth successive month of declining activity. The main culprit is the bruised and battered manufacturing sector. Another factor, the article notes, is that the Canadian economy is “largely on government life support.”
Adding further to the rather gloomy outlook in the article were some troubling numbers. Statistics Canada reported that the only private industry that grew between May 2008 and May of this year was finance and insurance. The Canadian Manufacturers and Exporters Association reported that inventories among its members are high, and that companies are not planning to rehire. More than half of the association’s members also reported that the value of current orders is lower than it was three months ago.
The strong Canadian dollar will not likely do much to help the situation for manufacturers, nor will continued slow growth in the U.S.
Is there any good news? While not reported in the Globe article, the housing market has shown surprising strength, despite the economic downturn. Most experts predict home sales in the latter half of this year to keep pace or even exceed the numbers we saw in the first half. As we have said in previous posts, a robust housing market is not a sign of a full recovery. It is, however, a ray of light in a mostly cloudy sky.
