Recession Showing Signs Of Slowing Down

Looking for good news amid the many harrowing stories of job losses, bankruptcy and a struggling global economy can often be a fruitless objective. While this blog has highlighted some of the more positive aspects of the recession, it has also worked to locate the light at the end of the tunnel for Canadians doing battle with the current economic crisis.

Today, Statistics Canada reported that the rate at which Canada’s economy has been shrinking is showing signs of slowing down. Gary Norris of The Canadian Press wrote in the May 1st edition of The Toronto Sun that this has “prompted some optimism”.

Norris writes that the GDP drop in February was only 0.1% following 0.7%, 1% and 0.7% drops in January, December and November respectively.

He quotes BMO Capital Markets economist, Douglas Porter as saying: “Following an incredibly intense three-month plunge in Canadian output from November to January, the mild February decline seems like a relief — a version of 'been down so long, it feels like up' to the economy…While by no means out of the woods just yet, the deepest declines for the economy increasingly look like they are behind us.”

Norris notes that the February result was assisted by a 19% “bounce-back” in the auto industry from its terribly low production in January. Interestingly, Statistics Canada has also noticed that another contributor to February’s improved numbers is a 1.3% price increase in courier and messenger services suggesting a rise in the package delivery industry.

Construction, on the other hand, remains one of the weakest sectors alongside manufacturing and wholesale trade, observes Porter. “You always have to be cautious about reading too much into an equity market turn,” he warns.