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TORONTO, Aug 28 (Reuters) - Canada’s second quarter annualized growth sank by a record 38.7% as businesses and stores were shuttered during the quarter to slow the spread of the coronavirus pandemic, Statistics Canada said on Friday.
MARKET REACTION: CAD/
DEREK HOLT, VICE PRESIDENT AND HEAD OF CAPITAL MARKETS ECONOMICS AT SCOTIABANK:
“The most relevant market angle is that the momentum continued into July. The preliminary guidance (for July) from Statscan saying that the economy expanded by another 3% reinforces our rebound expectations, so it’s quite encouraging.
“For now it’s definitely a V shaped (recovery). I have to admit that when I hear people tamping down the strength of the data, we have to put that in the context of how all the data has surprised to the upside. How confident should one be that we won’t see this sustain itself? Any tendency to tamp that down should be checked by the fact that few people expected this magnitude of a rebound to begin with.”
“As painful as the job losses have been, we’ve recouped just over half so far, but the vast majority of people who did hang onto their jobs are getting record low borrowing costs and a pretty strong stock market in terms of the backdrop to any wealth effect, and so there are enough people out there who have confidence to continue spending and to resume some activity in the initial stages of a rebound.”
DOUGLAS PORTER, BANK OF MONTREAL CHIEF ECONOMIST:
“The second quarter came in just a touch less negative than the initial estimates from Statistics Canada. There was a little bit more momentum in May and June coming out of the shutdowns. That being said, that is still an historic decline in the second quarter. There’s no getting around that fact. But I think that’s been well known for many, many months now, that we were looking at something on the order of almost a 40% decline in the quarter.”
“No real surprise to us, but it does look like the economy had a good head of steam coming out of the quarter.” (Reporting by Jeff Lewis and Steve Scherer Editing by Denny Thomas)
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