The Canadian economy appears to be on the mend again after a major stumble earlier this summer that rekindled fears of a possible double-dip recession.
Fresh evidence that July may have been an aberration, rather than the beginning of a downward spiral, built Friday as Canadian manufacturing, housing, and U.S. retail sales all came in surprisingly strong.
The most dramatic boost came in the unlikeliest place — a strong two per cent jump in the troubled manufacturing sector in August, powered by motor vehicle, petroleum and coal product manufacturers.
As well, new orders were up 5.3 per cent in a signal of future activity.
On the heels of better-than-expected export numbers Thursday, fuelled by auto shipments, the data is the first strong news the factory sector has received in months.
Equally important, say analysts, is that the long-idle U.S. consumer is showing signs of reviving, with the third consecutive month of healthy growth coming in September, a 0.6 per cent pickup following gains of 0.7 and 0.5 per cent the previous two months.
After a swoon, the Canadian housing sector is also showing signs of stabilizing. The Canadian Real Estate Association reports home sale activity rose three per cent in September, reaching the highest level since April.
“It’s a great way to end a Friday,” Scotiabank economist Derek Holt said. “We’ve got a whole Goldilocks round of data with pretty strong growth indicators but no inflation. This is a synchronous upturn in a broad cross-section of indicators that unwinds the synchronous downturn of the prior month.”
With positive data appearing for both August and last month, July appears to have been the low point of the rapid slowdown suffered by the Canadian recovery since it’s quick rebound of last fall and winter months.
Not only did July result in the first real contraction of activity at minus 0.1 per cent, it also ended the string of strong job creation numbers, actually producing the first loss — 9,000 overall and 139,000 full-time — since last year.
Economists caution that while a double dip appears to have been averted, for at least the rest of the year, there is also now signs that the economy is ready to take off.