Can Canada slide again into recession?

Can Canada slide again into recession?

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A quickly cooling housing market, excessive family debt and aggressive fee hikes by the Financial institution of Canada have all raised the specter of a recession in current months.

However Capital Economics says there’s one other drive threatening to carry again Canada’s development, asking: “Are Canadians retreating into recession?”

July’s employment numbers have been a little bit of a “head-scratcher” for economists just lately, when the economic system shed 30,600 jobs as an alternative of the 15,000 anticipated. The decline in employment adopted the lack of 43,200 jobs in June, however the unemployment fee remained at a historic low of 4.9% because the labor drive shrank.

The shock drop was partly as a result of pensions rising to file ranges, Capital mentioned.

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Pensions have been rising for years as a result of growing older child boomers, however the current spike seems to be as a result of individuals delaying retirement throughout the pandemic, when the labor drive participation fee of Canadians aged 55 to 64 has far exceeded pre-epidemic requirements.

Economists on the Nationwide Financial institution of Canada mentioned 70% of job losses in July got here from employees over 55, with Statistics Canada reporting a file 300,000 Canadians retired final yr. “It seems that compelled retirements, not layoffs, are the principle purpose for the discount,” Nationwide mentioned.

Whereas capital economists do not suppose pensions will rise any additional, in addition they do not suppose they will ease a lot from the present fee of 25,000 a month because the proportion of the over-55 inhabitants continues to rise.

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There isn’t any seen reduction from the youthful generations both. The participation fee of Canadians aged 25 to 54 rose to a file excessive throughout the pandemic, however has since began to say no. In response to UN forecasts, with out immigration, the variety of individuals between the ages of 18 and 54 will lower by 100,000 or 0.5% yearly.

Canada will then depend on immigration to develop its workforce, mentioned Stephen Brown, a capital economist. However even that will not be potential.

“Future waves are extra helpful to the workforce, but when historical past is any information, the federal government’s goal of 450,000 new arrivals a yr will nonetheless solely enhance the workforce by 26,000 per 30 days, solely barely offsetting the anticipated variety of retirees,” he wrote.

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Capital presently sees employment development forecasts of 0.6% in 2023 and 1.2% in 2024 in danger. The economic system may get a lift if hours labored per capita and output per hour improved, however since each have been declining just lately, that should not be counted on, Brown mentioned.

“All of this will increase the draw back dangers to GDP, particularly if the variety of pensions continues to rise,” he mentioned.


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Ballard Energy Techniques Inc., a Vancouver-based maker of hydrogen gas cells utilized in vehicles, trains and ships, obtained a lift on Friday when the U.S. Inflation Aid Act was handed. The invoice consists of tax credit that would lastly create a clear provide of hydrogen — a important lacking ingredient if corporations like Ballard hope to take part within the power transition, studies the Monetary Submit’s Gabriel Friedman. Because the illustration exhibits, North America has a technique to go to develop its hydrogen infrastructure.

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  • Mary Ng, Minister for Worldwide Commerce, Export Promotion, Small Enterprise and Financial Improvement; and Francois-Philippe Champagne, Minister of Innovation, Science and Financial Improvement, meets with Mexican Financial system Minister Tatiana Clouthier on the first digital occasion of the Canada-Mexico Excessive Stage Financial Dialogue.
  • Premier Jason Kenney will share particulars concerning the Alberta authorities’s new expertise recruitment marketing campaign concentrating on Toronto and Vancouver.
  • Affiliation of Municipalities of Ontario 2022 AMO Convention
  • Benoit Charette, Quebec’s Minister of Atmosphere and Local weather Change, makes a number of bulletins concerning the authorities’s environmental necessities for Glencore’s Horne smelter.
  • The Financial institution of Canada has launched the Senior Mortgage Officer Survey
  • Immediately’s information: Canadian present house gross sales, manufacturing gross sales and wholesale

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One other signal of Alberta’s financial power got here just lately when the province’s unemployment fee fell barely under the nationwide common to 4.8%. Robert Kavcic, chief economist at BMO, provides 4 causes for the comparatively sturdy outlook. First, Alberta is closely reliant on oil, and that is presently a boon, boosting income and authorities income. Second, individuals transfer to the province. Third, the actual property market is coming into the pandemic restoration with distinctive, enticing valuations, avoiding the excesses of different provinces resembling Ontario.

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“Total, the volatility within the unemployment fee highlights what we see as Alberta’s sustained outperformance, barring one other collapse within the oil market,” Kavcic wrote.


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Immediately’s Posthaste is written by Pamela Heaven (@pamheaven), with further protection from The Canadian Press, Thomson Reuters and Bloomberg.

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