Canada: Early Canadian economic data for March looks dreadful – RBC

Analysts at RBC Capital Markets, point out that the latest number from the Canadian economy look dreadful, something expected. They point out the CFIB Business Barometer fell to its lowest level on record in March and the surge in employment insurance claims. 

Key Quotes: 

“Economic reports are starting to trickle out for the period impacted by the ramping up of the social-distancing in response to the Covid-19 outbreak in Canada and abroad.  And those indicators don’t look good. First were reports that almost a million Canadians filed employment insurance claims last week – an increase that in itself could represent a 5 percentage point increase in the unemployment rate.”

“Risks appear to be tilted to the downside relative to the 3.0% GDP contraction we expect in Q1 – and that is ahead of what is almost certain to be a double-digit contraction in Q2.”

“Light at the end of the tunnel? We have to remember these data are tracking the economy’s performance as measures to limit the spread of the virus got underway. Our base case view is that they will be successful in bringing the spread of the virus under control and that activity will resume. Fiscal and monetary policymakers are responding forcefully to help households and businesses bridge the gap to better times. There is still light at the end of the tunnel, but the near-term will be dark days for the economy.”