(October 25 – 12:10 ET) – Notwithstanding the pounding that the markets are taking today, BMO Nesbitt Burns Chief Economist, Sherry Cooper, says the Canadian economy is headed for a soft landing.
Canadian growth appears to be taking on a sustainable pace in the months ahead, alongside moderate slowing in the U.S., she says. EconoPulse, BMO’s leading indicator of economic activity, slipped in September, trimming the year-over-year gain to 3.1% from 3.5% in August.
“While the annual trend is far from robust, it is still in a range consistent with steady but unspectacular growth,” says Cooper. “While Canadian economic momentum may be coming off the boil, it will remain fairly warm in the year ahead. We now estimate GDP advanced at nearly a 4% pace in the third quarter, and look for only a slight moderation in Q4 and 2001.”
Among the components of the EconoPulse, the Consumer Spending Index gained 0.8%. “The Canadian consumer remains relentless – the spending component advanced for the third month in a row. Big gains in full-time job creation helped jumpstart housing starts in September and maintain a healthy level of car sales. Expect consumption to be one of the main growth drivers for the Canadian economy in coming months as income tax relief kicks in,” says Cooper.
The Financial Index was up 0.3% in September. “There is no denying the strength in this sub-index,” says Cooper, noting year to date strength in the TSE and in the short end of the bond market. However, the Canadian dollar remains a notable exception to the good news story on the financial side.”
-IE Staff