Canadian industry will improve next year as most sectors complete their restructuring, setting the stage for broader-based growth, according to CIBC.

“The slowdown in the United States has had a negative impact on the Canadian manufacturing sector, which is currently in recession,” CIBC chief economist Josh Mendelsohn said. “However, once manufacturers complete adjusting their inventory levels in the second half of the year, output is expected to start recovering.”

A pickup in U.S. demand by year-end will enhance Canadian exports and further tax cuts in 2002 will bolster consumer confidence. “By mid-2002, the increase in demand will require the expansion and upgrading of capacity, creating demand for investment-related industries”, said Anahid Mamourian, senior economist.

Industries that CIBC expects to outperform the economy in 2001, include: pharmaceuticals; telecommunications carriers; business services; crude petroleum & natural gas; and retail trade.

As the North American economies gain momentum in 2002, CIBC anticipates that these industries will continue to outperform the economy, and, by mid-year, will be joined in positive territory by industries that bore the brunt of the slowdown during the previous year.

While still below the overall industry average, CIBC believes much improved performance will be evident in: telecom equipment; pulp & paper; wood; metal mining; machinery; primary steel; and motor vehicle assembly.

Overall, CIBC expects Canadian gross domestic product at factor cost to grow by 2.3% this year before accelerating to 3.2% in 2002, still well below the 4.5% expansion achieved in 2000.