Canada Oil Economy - June 2016

The situation of Canada’s economy remains challenging. The combination of recent wildfires that have hurt the oil industry and the current soft dynamic in the US economy, Canada’s most important trading partner, are estimated to have negatively impacted economic growth.

Canadian exports declined again in April, falling by 2.3% y-o-y, after a decline of 4.5% y-o-y in March. Also, industrial production remained muted and rose by only 0.2% y-o-y in March and by 0.6% y-o-y in February. On a positive note, retail trade improved again by 3.2% y-o-y in March, after an already considerable increase of 5.7% y-o-y in February. Some other positive developments are reflected in the PMI for manufacturing, which remained almost unchanged in May at 52.1, compared to 52.2 in April. This is now the third consecutive month of a PMI level above 50. Given the challenges ahead, and despite some positive momentum up to around April, the GDP forecast for 2016 remains at 1.5%. This compares to estimated GDP growth of 1.1% in 2015.