The signs aren’t particularly encouraging in a climate of U.S. “fiscal cliff” uncertainty and seemingly endless bad economic news out of Europe.
Expectations are for flat-to-slight growth or even decline in Canada’s gross domestic product numbers for October, due out Friday.
A major factor in how GDP growth fared in October is to what extent companies continued to hold back on investment over fears the United States is headed for another recession if the so-called “fiscal cliff” that will result in major spending and tax cuts isn’t averted. Also key is to what extent exports have been affected by slumping demand abroad.
Data released last week didn’t offer much encouragement: Manufacturing sales volumes down 2.4 per cent month-over-month in October, coupled with weak external trade data for the same month.
The data suggest that the Canadian economy stalled in October, Capital Economics’ David Madani said in a recent report.
Still, RBC Economics is calling for a 0.3-per-cent rebound for GDP growth in October, compared with flat growth in September.
That forecast is based on the view that mining and energy activity will post a robust 1-per-cent gain in October after five months of declines, mostly reflecting several maintenance shutdowns.
“The indications are that some of that [mining and energy] production is set to come back,” said RBC Economics assistant chief economist Paul Ferley. Add to that some expected recovery in wholesale trade, he said.
Mr. Ferley cautions that the 0.3-per-cent figure may have to be adjusted to 0.2-per-cent October GDP growth, after publication of retail and wholesale trade numbers.
Mr. Madani of Capital Economics sees GDP growth in October of between zero and 0.1 per cent. “I’m just hoping retail sales look better because manufacturing was a bit of a disappointment,” he said.
TD Economics’ Francis Fong and his team are anticipating a slip of 0.1 per cent in GDP growth in October. “The economic environment right now isn’t conducive to substantial growth,” he said.
“Things like the ‘fiscal cliff’ and European debt issues have put a restraint on consumer and business confidence,” he said, adding that emerging markets have slowed down as well. “We are in this modest growth environment that is being impacted from all sides,” he said.