Canada’s Economic Recovery Slowed as U.S. Virus Cases Surged
Canada’s economic recovery continued in July as provinces moved forward with their reopening plans but the pace slowed.
(Bloomberg) -- Canada’s economic recovery continued in July as provinces moved forward with their reopening plans but the pace of improvement slowed, a new report from Oxford Economics Ltd. says.
The Canada Recovery Tracker index from Oxford, which uses high-frequency data to track measures like jobs, rail shipments and consumer spending, rose 0.9 percentage points in July to 85.6. It’s a slower pace than in May and June, when the index rose an average of 3 points. A reading of 100 would mean the economy is back to where it was at the end of February.
“After an initial strong rebound as businesses reopened and social distancing measures were relaxed, the economic recovery moved into a slower second phase in July,” Oxford economist Tony Stillo wrote in the report.
The seven components of the index include health, mobility, activity, sentiment, employment, financial markets and the U.S. Recovery Tracker. A recent uptick in new Covid-19 cases in the country caused the health component to drop, underscoring the risk that a new wave of infections poses to a recovery. The activity index in Canada also remains low, at 65.7, because of weak oil and gas rig activity and restaurant bookings.
A resurgence of the virus in the U.S. also hurts Canada’s rebound. “The Canadian economy is quite open, with exports accounting for over 30% of GDP,” Stillo wrote. “About 75% of these exports are destined for the US, so developments south of the border are crucial to Canada’s recovery.”
One bright spot within the Oxford index is sentiment. Canadian consumer confidence has been consistently rising because of improving views on real estate and the future economic outlook.
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