Weekly Economic Update

For the week of April 4 to 8

CONCE_000007816956_HiRes_RGBThe Bank of Canada’s quarterly Business Outlook Survey was released on Friday, and one of the main issues highlighted was the divergence between energy companies and companies that are benefitting from the cheaper Canadian dollar. The report goes on to state that January’s 0.6 percent GDP growth will likely not be repeated in the following months. In conclusion, the report determined that Canada’s business outlook is “subdued” due to these two forces pulling in opposite directions.

Lynn Patterson, Bank of Canada deputy governor discussed the impacts that the downturn in oil prices has had on the Canadian economy, including damaging employment. Not only had approximately 100,000 individuals lost their jobs by the end of 2015, but many of these positions were both high paying, and involved working greater than average hours. Patterson went on to state that the economy will see this in the form of lower household spending. As has already been seen, Canadian willingness to move from energy-centered provinces such as Alberta to work in an industry where jobs are available will help pick up the slack left by the weak energy industry. Oil prices are up slightly this morning (0.68 percent) to $37.04 per barrel, but the Canadian dollar isn’t following suit as it trades down slightly against its United States counterpart. Todays expected range is 1.3000 – 1.3100.

Both employment and manufacturing numbers released better than expected in the United States on Friday, signaling the continuing resilience of their economy. This data, along with a dovish speech by Janet Yellen last week that suggests the Fed will remain accommodative in the near future had markets in a good mood at the end of last week.

In Canada this week, data will be released for employment and housing starts on Friday. Housing Starts for the month of March are expected to post at 190.0k, slightly lower than February’s posting of 212.6k. Canada is expected to have added 10.0k jobs for the month of March after losing 2.3k in February. The unemployment rate is expected to remain unchanged in March. Saskatchewan is holding its provincial election today. In the United States this week we are expecting data releases for Trade Balance and Wholesale Inventories.

Source: Bloomberg

Posted by Concentra Financial Markets

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