Canada’s economy is in fantastic shape in 2017 and the idea of a recession in 2017 is as likely as Donald Trump going a week without tweeting.
Here are five reasons why Canada’s economy will do good in 2017.
- The job market is recovering
It may be cold comfort to anyone still looking for work, but Canada’s job market ended 2016 on a bit of a tear, adding more than 200,000 jobs from August onwards..
On the whole, there were more part-time jobs created in 2016 than full-time ones, but one big bank economist says it may be time to give up the notion that such jobs are somehow less desirable.
It’s always good to take volatile monthly figures with a grain of salt. But even ignoring the positive headline figures, the latest numbers show that wages are up, and so is the percentage of working-age adults who are choosing to be in the labour force. That’s good news no matter how you slice it.
2. Oil could be headed higher — finally
Canada’s economy is intrinsically linked to the price of oil, which is a big part of what made 2015 and 2016 such a bumpy ride. From a high of over $100 US a barrel in late 2014, oil bottomed out at under $30 US a barrel last year, wiping out billions from the stock market — not to mention tens of thousands of oil patch jobs in the process.
But ever since last fall, crude has been on a steady, albeit slow, march higher, up $10 a barrel in the past month. The main reason is that the byzantine oil cartel known as the Organization of the Petroleum Exporting Countries (OPEC) lurched back to life with ato get prices back to a level member countries are more comfortable with.
That move might actually be working.
Saudi Arabia has been pumping out 486,000 fewer barrels a day since October, and more and more countries are following suit. While OPEC nations compete with Canadian oil companies for market share, the latter are the unwitting beneficiaries of their rivals’ action.
3. The loonie could be headed higher, too
The loonie is currently hovering around 75 cents US, but one strategist with a track record of accuracy says it could be headed higher.
Bialas says the doom and gloom around the loonie is misguided, as Canada’s economy has been through the eye of the storm and is poised to grow. Believe it or not, the loonie was one of the best performing major currencies in the world last year, trouncing the yen, the franc, the euro and the pound.
“The beginning of the year could be difficult for the Canadian dollar, but we’re expecting the trend to start slowing down,” Bialas told Bloomberg this week, suggesting the loonie could end the year even higher than it is now, hovering around the 75-cent level.
“The Canadian economy will feel the positive effects of an acceleration of growth worldwide and the risks to trade with the U.S. — the worries over tearing down NAFTA — will drop,” he said.
4. Trade is picking up
There’s ample evidence that the trade winds are blowing, too. On Friday, Statistics Canada reported that Canada swung toin November, as the economy exported $526 million more than it imported that month.
Everything from energy products, to potash, aerospace parts and canola was booming, an encouraging sign of broad and diverse strength.
After two years of deficits, Canada’s trade balance swung into surplus in November.
5. The TSX is near an all-time high
In the markets, the TSX came within a few points of its all-time high of 15,685 points this week, set back in September 2014 — before oil’s decline waylaid the market.
As economic indicators go, the TSX is far from perfect. But an all-time high for a country’s dominant stock index is the sort of thing that tends to draw attention. Witness the hubbub in the U.S. right now over thelevel for the first time for about a month now.
The TSX fell just short of its all-time high mark this week, but strategist Colin Cieszynski at CMC Markets in Toronto says there’s every reason to think it could pass that mark soon.
Considering the slew of positive financial news, a surging TSX seems downright reasonable.