Close X
Thursday, December 12, 2024
ADVT 
National

Recession Concerns Grow As GDP Falls For Fourth Consecutive Month, Warns Statistics Canada

The Canadian Press, 30 Jun, 2015 08:59 PM
    OTTAWA — Concerns about a possible recession are growing after Statistics Canada said Tuesday that the economy contracted in April, marking the fourth consecutive monthly decline.
     
    Statistics Canada said Tuesday that the country's real gross domestic product, hurt by weakness in the mining and energy sectors, edged down 0.1 per cent for the month.
     
    Economists had expected the country's real gross domestic product to gain 0.1 per cent, according to Thomson Reuters.
     
    "The surprise contraction in April GDP leaves open the probability that the second quarter as a whole could be negative, which would technically put the economy in recession," CIBC senior economist Andrew Grantham wrote.
     
    "Although the Bank of Canada was already very cautious regarding its expectations for growth during the first half of the year in its April monetary policy report, the actual numbers are clearly coming in even worse and could spark concern that the hit from oil isn't as 'front-loaded' as previously assumed."
     
    In its April monetary policy report, the Bank of Canada predicted the economy to grow at an annual rate of 1.8 per cent in the second quarter.
     
    However, economists expect that figure to be revised lower when the central bank updates its forecast on July 15 and some suggest the disappointing result for April raises the chances it will cut its key interest rate later this year.
     
    The Bank of Canada unexpectedly cut its target for the overnight rate in January as insurance against the impact of falling oil prices on the economy.
     
     
    "The oil shock continues to reverberate through the Canadian economy, in all its various forms," Bank of Montreal chief economist Doug Porter wrote in a report Tuesday.
     
    "This latest growth disappointment — along with the rumbling uncertainty surrounding Greece — has simply cranked up the odds of another Bank of Canada rate cut at some point this year, and heaped renewed downward pressure on the Canadian dollar."
     
    Statistics Canada said the decline came as a 0.8 per cent decrease in the output of goods-producing industries outweighed a 0.3 per cent increase by the service sector in April.
     
    Mining, quarrying, and oil and gas extraction contracted 2.6 per cent in April. The utilities, construction, manufacturing, transportation and warehousing, retail sales and finance and insurance sectors also lost ground.
     
    Meanwhile, agriculture and forestry, wholesale trade and the public sector made gains.
     
    Royal Bank assistant chief economist Paul Ferley noted the mining and energy sector was responsible for the lion's share of the drop in April.
     
    "At some point these production shutdowns reverse and activity bounces back, so you make up for lost activity," he said.
     
    "We may see some evidence of that in May. The only caution there is there were some wildfires around some of the production facilities in Alberta that may delay it until June."
     
    Ferley added that there is more to defining a recession than two consecutive quarters of GDP contraction.
     
    "It also has to fairly broad-based," he said.
     
     
    "Though we're not seeing evidence of low oil prices providing strong lift elsewhere, other sectors seem to be continuing to grow, particularly on the services side of the economy."

    MORE National ARTICLES

    B.C. Wildfire Likely To Grow As Hot, Dry Conditions Predicted For Coming Week

    B.C. Wildfire Likely To Grow As Hot, Dry Conditions Predicted For Coming Week
    B.C.'s Wildfire Management Branch says crews have contained about 30 per cent of the seven-square-kilometre fire raging in the Elaho Valley, located 67 kilometres west of Pemberton, B.C.

    B.C. Wildfire Likely To Grow As Hot, Dry Conditions Predicted For Coming Week

    New Charges Laid In 2013 Lac-Megantic Train Derailment

    New Charges Laid In 2013 Lac-Megantic Train Derailment
    OTTAWA — The federal government has laid new charges in the 2013 train derailment disaster in Lac-Megantic, including against Montreal, Maine and Atlantic Railway Ltd. and the company's president.

    New Charges Laid In 2013 Lac-Megantic Train Derailment

    Tories Create Vehicle To Raise Money, Counter Left-Wing Attacks On Harper

    Tories Create Vehicle To Raise Money, Counter Left-Wing Attacks On Harper
    OTTAWA — Conservatives have formed a political action committee to counter attacks against Prime Minister Stephen Harper from progressive groups and labour unions.

    Tories Create Vehicle To Raise Money, Counter Left-Wing Attacks On Harper

    Police Seek Witnesses After Surrey Metro Taxi Driver Stabbed And Robbed By Passenger

    Police Seek Witnesses After Surrey Metro Taxi Driver Stabbed And Robbed By Passenger
    RCMP say the male cab driver in his 50s picked up a man at about 5:30 a.m. Sunday near apartment buildings on the 13300 block of 105A Avenue.

    Police Seek Witnesses After Surrey Metro Taxi Driver Stabbed And Robbed By Passenger

    Glamour The Target Behind Shootings By Young People In Surrey And Delta: Police

    Glamour The Target Behind Shootings By Young People In Surrey And Delta: Police
    SURREY, B.C. — It's not criminal gangs, but the pursuit of glamour behind a series of shootings in two suburban Vancouver neighbourhoods that has residents worried about who the next bullet will hit, police say.

    Glamour The Target Behind Shootings By Young People In Surrey And Delta: Police

    Gang Violence: Five Things To Know About The Conflict Over Drugs And Territory In Surrey

    Gang Violence: Five Things To Know About The Conflict Over Drugs And Territory In Surrey
    Five things to know about the drug-fuelled turf war in Surrey, B.C. and the Surrey Wrap Project that aims to prevent gangs from growing:

    Gang Violence: Five Things To Know About The Conflict Over Drugs And Territory In Surrey