Canada Experiences Healthy Export Growth In July

[Anonymous]

This could be part of the Money Sense thread or the politics subbie. Anyway, it seems the recession may already be over as exports minus energy were up in July. The low dollar is finally starting to pay dividends.

Canada's much-discussed recession may already be over, thanks in part to a long-awaited export rebound.



Merchandise exports rose 2.3 per cent in July, paced by resurgent shipments of non-energy goods, including autos, aircraft and consumer products, Statistics Canada reported Thursday.



The trade deficit narrowed for a third consecutive month to $593-million – the smallest shortfall since November, 2014.



A cheaper Canadian dollar coupled with a resurgent U.S. economy is finally helping to revive the country's downtrodden export sector and take the sting out of the recent oil price collapse, economists said.



"If Canada was in a recession in the first half of 2015, it seems to have come out of it in the third quarter," National Bank of Canada economist Krishen Rangasamy said in a research note.



The latest trade numbers come just two days after Statscan confirmed that the economy had shrunk in both the first and second quarters – meeting the most basic litmus test of a recession. Gross domestic product declined 0.5 per cent at an annul rate in the April-to-June period and 0.8 per cent in the first quarter.



But, like the improving export sector, the economy appears to be doing better since. And that's likely to quiet chatter about a possible recession.



The trade numbers are also good news for Bank of Canada Governor Stephen Poloz, who has been predicting an export rebound for more than a year.



The central bank is now widely expected to hold its key interest rate unchanged when it makes its next scheduled rate announcement Sept. 9. The bank has already cut its overnight lending rate twice this year amid the fallout from sliding oil prices to 0.5 per cent from 1 per cent.



The central bank is forecasting GDP growth to return in the July-to-September period, increasing 1.5 per cent. But many private sector economists say July's export gains suggest growth of nearly twice that rate may now be possible.



"Canada's economic soft patch is now in the rear-view mirror," said Toronto-Dominion Bank economist Diana Petramala.



"The non-energy sector is expected to finally get that positive boost from the currency we have been anxiously waiting for."



July was an undeniably good month for Canada's merchandise trade.



But lingering concerns remain about the country's longer-term export competitiveness – in spite of a 20-per-cent plunge in the Canadian dollar versus the U.S. dollar in the past year. The dollar is now trading at less than 76 cents (U.S.).



For starters, some of the sectors that drove exports in July may be temporary. Aircraft exports surged 19 per cent in July; autos and parts, nearly 10 per cent.



These two sectors are notoriously volatile. July's auto exports, for example, were buoyed by the return to full production of Chrysler's minivan plant in Windsor, Ont., which had been down for retooling in recent months.



And a further decline in crude oil prices will hit energy exports, which fell 5.7 per cent in July.



The longer-term worry is that while Canadian exporters will benefit from the cheaper Canadian dollar, a host of structural changes means they may never fully recover market share lost in recent years to countries such as Mexico and China in the all-important U.S. market.



A 20-per-cent decline in the Canadian currency should have triggered a 10-per-cent boost in non-energy exports, based on historical patterns, according to a report released Thursday by Toronto-Dominion Bank. Instead, the gain has been half that, or roughly 5 per cent during the dollar's two-year slide, TD said.



"Competitive forces and a changing global landscape have both delayed and restrained the cyclical rebound," TD said. The bank pointed out that Canada has lost six percentage-points of U.S. import market share since 2000, largely to emerging markets.



Nonetheless, TD said it expects exports to be an "important driver of growth" this year, and particularly in 2016.

http://www.theglobeandmail.com/report-on-business/economy/canadian-exports-jump-for-second-month-in-july-as-trade-recovers/article26203482/">http://www.theglobeandmail.com/report-o ... e26203482/">http://www.theglobeandmail.com/report-on-business/economy/canadian-exports-jump-for-second-month-in-july-as-trade-recovers/article26203482/

[Anonymous]

Yes, the technical recession is over. But, I am not optimistic about global growth prospects.

[Anonymous]

More evidence coming in that the recession in Canada is already over.



Canada's job market posts steady gains

http://globalnews.ca/news/2203322/economy-adds-12000-jobs-in-august-but-unemployment-rate-rises/">http://globalnews.ca/news/2203322/econo ... ate-rises/">http://globalnews.ca/news/2203322/economy-adds-12000-jobs-in-august-but-unemployment-rate-rises/