Double dip won't affect Canadian economy! |

Canada won't double dip! This week’s top stories include how U.S. wholesale inventories increased while sales fell, how a double dip in the economy may just be dull growth, how there is no double dip recession expected in Canada, how Canada’s trade deficit rose in the month of May and how Canadians are just not saving money for rainy days.

U.S. wholesale inventories up

There were mixed signals about the strength of the recovery as inventories held by wholesalers rose for the fifth straight month while sales fell for the first time in more than a year. According to the Commerce Department, wholesale inventories were up 0.5% while sales were down 0.3%, which represented the first decline in sales since March of last year.

The decline in May sales figures could be the latest sign that the economic recovery could be losing steam going in to the second half of 2010. If weakness in sales begins to discourage businesses from increasing orders, it could relate to a slow down in factory production. Economists were hoping that a steady rise in demand would encourage businesses to increase orders and restock shelves. This would lift the factories segment and encourage hiring to support the increase in production. Manufacturing is noted to be amongst the strongest industries coming out of the recession. What do you think? Please comment below.

Read the full article here

Double dip or dull growth?

There has been added worry in the market as of lately and the worrying is legitimate as the momentum coming into 2010 has now begun to fade. The latest U.S. jobs report was extremely disappointing, confidence readings were down, and while GDP is expanding in most countries, the slow positives are looking like they might become negatives in a short period of time.

To put some concern temporarily to ease, a new global recession is not likely in the next few quarters as growth remains strong in most developing countries and the weaker data is just a sign that there is sustainable growth, just not at as fast a pace as anyone would like. So the recovery is not expected to turn into a double dip recovery, which is a partial recovery followed by another decline. Regardless, the financial system is still in poor shape.

Banks are now concerned about building up capital than they are about pushing out loans to businesses. Governments are now turning from stimulus to austerity, which may hurt demand and even though the central bank is pushing out money, companies continue to hoard cash like it’s going out of style. Although this is all negative, the worst is that globally, excess leverage has not been reduced but just shifted to governments. It seems to me that it could be years before the world’s balance sheet is restored to an acceptable range. What do you think? Please comment below.

Read the full article here

No double dip in Canada

Even if the U.S. economy falls back into a recession, many analysts feel that Canada’s economic recovery will be safe. Last Friday’s jobs report showed that 93 200 new jobs were created in the month of June. Economists say that a collective effort in dealing with the financial crisis has made Canada more immune to U.S. shocks than it previously was.

Jimmy Jean, economist at Moody’s Economy.com stated, “It is often thought that when the U.S. sneezes, Canada catches a cold, but with the shift towards service oriented economy over the last three decades, Canada has grown more resilient to U.S. woes. The last two U.S. recessions are solid proof that Canada is now better able to withstand strong headwinds from the south. Not that they’ve decoupled altogether, but should a downslide mild double dip U.S. recession materialize, Canada’s recovery would very likely survive.”

Read the full article here

Trade deficit rises

Imports were up in the month of May by 5.7% while higher volumes of automotive products caused merchandise exports to rise to 5.2% according to Statistics Canada. They also reported that Canada’s trade deficit had reached $503 million, up $173 million from April’s deficit of $330 million.

Exports reached $34.5 billion, up $1.7 billion from the $32.8 billion seen in April after witnessing two months of straight declines. The export sector did post gains but over half of the gain was attributed to automotive products. Export volumes were up 3.9% with prices rising 1.2%.

Imports also rose, up $1.9 billion from $33.1 billion in April with majority of sectors posting gains in the month of May. Import volumes were up 4.2% with prices increasing 1.4%. The data is great news in comparison with news coming out of the U.S. and we can hope to see better numbers in the near future as the economy continues to gain steam. What do you think? Please comment below.

Read the full article here

Canadians don’t save

According to a survey by Scotia bank, one in five Canadians have not put money aside for a rainy day. Finance experts insist that everyone should have an emergency fund that should cover a minimum of one to three month’s of household expenses. The survey found that one out of every four people do not have three months expenses set aside, while one out of three do have that set aside and 23% have less than one months expenses set aside.

More than half of Canadians have a plan in place to achieve their savings goals and 23% stated that they live day to day and are not concerned about saving money. Chris Hodgson, Scotia bank stated, “We’re really becoming a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do. There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”

Statistics Canada figures show that the personal savings rate was 2.8% during the first quarter of this year, which is down 0.7% from the final quarter of 2009 and also a decline of 2.4% from the previous year. Does this mean that Canadians don’t save? Please comment below.

Read the full article here