The bank raised its second-quarter growth estimate for Canada to 2.3 per cent, up from 1.3 per cent, citing some “temporary” factors, such as a surge in oil production. It cut its global growth forecast for 2019 to 3.0 per cent, down from 3.2 per cent due to escalating global trade conflicts. (The Logic)
Talking point: The bank’s confidence in the domestic economy, at least in the short term, follows a string of positive economic indicators in recent months. Canada added 27,700 jobs in May and a record 106,500 jobs in April. Its unemployment rate fell in May to its lowest level since 1976. Aiding the positive outlook—along with what the bank calls a healthy labour market—is the bank’s view that Canada’s housing market is cooling off, as well as the loonie being the top performing G10 currency this year. But, while the recent job growth mostly came from full-time positions, much of it was from an increase in self-employment, which can be more precarious for workers and the economy. And, the bank said that trade tensions between the U.S. and China in particular are negatively impacting manufacturing as well as investment, and is pushing down commodity prices globally. Those impacts continue to cloud the Bank of Canada’s overall outlook, spurring it to remain cautious in its view for Canada’s economy.