Canadians likely wish their economy was batting like Josh Donaldson right now.
The Jays slugger has an average of .305 on the season.
But the truth is that Canada is batting closer to Ryan Goins' numbers right now — a lowly average of .175.
Ryan Goins of the Toronto Blue Jays. (Photo: Tom Szczerbowski/Getty Images)
That's what TD economist Leila Preston concluded in a weekly report released Friday.
Her report outlined three recent strikes against Canada's economy -- though she leaves some hope for the future.
The first strike was the Bank of Canada's Business Outlook Survey, which found that businesses across Canada don't expect to see strong sales growth over the next year.
The feeling is most pronounced in the Prairies, a region that is still reeling from the oil price shock.
Firms surveyed by the bank see some hope in stronger demand from the United States. But the bank said that any such demand "remains insufficient to outweigh the continued drag from commodity-related activity combined with modest domestic demand."
The Port of Vancouver. (Photo: Thomas Kurmeier/Getty Images)
Trade data also isn't giving Canada's economy much of a boost.
Preston noted that export activity "continued to lose momentum in May." But she does believe that a recovery in the sector can happen later this year, especially after exports showed so much strength earlier in the first quarter.
The final strike against Canada's economy was noted in the Labour Force Survey (LFS) for June.
Canada's labour market treaded water last month, with the number of jobs falling by 700 — "essentially unchanged," Preston said.
The bank noted that Canada's unemployment rate also fell to 6.8 per cent, as fewer people looked for work. Employment fell in all provinces except in British Columbia.
The Conference Board of Canada expects Ontario and B.C. to lead the country's economic growth between now and the end of 2017.
It expects less out of resource economies like Saskatchewan's, which is expected to see its GDP fall in the coming year.
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Many in Canada’s oil sector have been holding their breath to see whether the U.S. approves the Keystone pipeline,which would see tarry bitumen from Alberta’s oilsands pumped south for export from the U.S. President Barack Obama did not have very nice things to say about Keystone in his year-end press conference, leading some to believe he’s bent on rejecting it. The lack of a functional pipeline capable of getting the oilsands crude to international markets has held back the price of crude produced there. There’s also massive domestic opposition to homegrown alternatives such as the Energy East Pipeline or Northern Gateway.
This promises to be a big year for elections around the world, with votes at home and abroad. The Conservatives presided over a Canadian recession that was relatively mild compared to much of the world, but after nearly a decade of Conservative rule, voters could be ready for a change. The U.K. is looking ahead to an election in May. If the U.K.'s Conservative Party wins and follows through with its promise to hold a referendum on EU membership, it would be a further blow to the Eurozone. The U.S. is looking ahead to an election in 2016, and the year before an election in that country has proven to be an often interesting, volatile ride.
Weak demand and a glut of supply are keeping prices of commodities low, and it doesn’t just affect Canada’s oil patch. The mining sector, one of the heaviest hitters on the Toronto Stock Exchange, could see a resulting slowdown in investment in projects and hiring.
Canada, along with the U.S., is on track for an interest rate hike in 2015. It would be the first since 2010 and consumers — particularly on this side of the border — have continued to pile on debt loads and take out large mortgages in the years of low interest rates. While any hike is expected to be gradual, it could be a shock to some households who are struggling to pay back debt. A higher interest rate could sink more Canadians into bankruptcy and could cause a slowdown in the housing sector, which has propped up Canada’s economy in the years since the recession.
Economists have been warning consumers for years that debt loads are growing to astronomical levels, and that could be a huge risk if interest rates rise. In Canada, the household debt-to-income ratio rose to a new record high of 162.6 per cent in the most recent quarter. And things are not much better south of the border, where consumer debt is worth a total of $3.2 trillion and where there has been a resurgence in subprime lending, the risky banking practice that helped spark the global economic crisis in 2008.
An increase in terrorism and geopolitical instability doesn’t inspire confidence in investors. Threats from ISIS and other terrorist organizations have dominated headlines in the past year and such political uncertainty could spill over into broader conflicts or destabilize markets.
Russia’s ruble has sunk by about 40 per cent in the past few weeks, and the country could soon find itself in recession, partly due to Western sanctions over its aggressive behaviour in Ukraine. As a G8 country, it is a large source of demand for Canadian exports. The country already slapped retaliatory sanctions on Canada in 2014 and the lack of trade could hit Canada’s overall trade figures.
Chinese growth has been a massive driver of the global economy but is losing momentum, affecting the entire global supply chain. Investors are hoping that China’s GDP growth does not come in worse than the 7-per-cent rate it has predicted. A chain reaction caused by the slowdown in China could be particularly concerning for Canada, which had been protected from the worst of the Great Recession, benefitting from Chinese manufacturing’s demand for commodities. In addition, the unrest in Hong Kong, one of the world’s financial hubs, is not over, posing a risk of more uncertainty in the region.
That’s right, Greece is still causing Europe, and global markets, some serious headaches five years after its sovereign debt crisis was first brought to light. It is again making headlines as the new year approaches, with legislators rejecting Prime Minister Antonis Samaras’s nomination for president, Stavros Dimas, triggering a snap election. Polls favour anti-austerity candidates, which could see the country pull away from its debt obligations under its bailout plan with the Eurozone, stoking concerns for the rest of the continent, which is already struggling with sky high unemployment and a shaky financial system. A slowdown in Europe would have knock-on consequences for Canada.
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