Tracking of economic numbers is always a few months behind real time as it takes about three months to accumulate all the information. So, the latest information we have is from October. It came out a few days before Christmas and, according to one forecaster, it carries some fairly significant signals.
First of all, the national economy contracted in October, even though most observers were expecting a bit of growth. That, says ScotiaBank’s economists, got the fourth quarter of 2019 off to a weak start. And there are signs the weakness will continue….another indicator that the possibility of a recession is rising, not retreating.
On the other side of the equation, though, as we see utilization of productive capacity decline – reducing the need for labor – all this softness might be the trigger needed by the Bank of Canada to lower interest rates.
The Central Bank had been projecting 1.3% growth in the final quarter of last year but we’re already off to a negative start …ScotiaBank’s economists say it is more likely to be a full point lower or, perhaps, even less than that.