Canada’s recovery, already slowing, faces second wave roadblock by Bloomberg


© Reuters.

(Bloomberg) – The economic recovery that is already slowing in Canada is in danger of losing further momentum, according to a set of high-frequency indicators.

Other data on credit card transactions, restaurant reservations and job listings show the economy entered a more uneven pace of growth in September after the initial strong rebound in the summer. With the increase in virus cases and the tightening of restrictions by the provinces, the road to full recovery faces major obstacles.

Here’s a look at the numbers from last month.

Consumer transactions appear to have plateaued in August and September after an initial strong rebound from May, Scotiabank spending data through September 25.

“Between April and mid-July, the trend was up year-over-year and spending since then has been fairly stable compared to last year,” said Scotiabank economist Nikita Perevalov by phone.

The Toronto-Dominion Bank’s credit and debit card data shows a similar linear trajectory. Spending resumed in September after a lull in August, but the rebound was mainly due to home improvement purchases. This reflects the boom in the housing market – one of the few industries to remain resilient in the face of Covid-19.

“If cases continue to rise and hospitalizations do the same, governments could impose even tighter restrictions, leading to lower spending in the weeks and months to come,” said Sri Thanabalasingam, an economist at the TD, in a report. “This next phase of the recovery will be the most difficult to date.”

Canada has recovered nearly two-thirds of the 3 million jobs lost at the height of the pandemic. Collecting the rest will not be easy, given the capacity restrictions and low demand that many businesses are currently facing.

The restaurant business is also down, according to data from OpenTable. The number of sit-down dinners in Canadian restaurants was about 33% lower on average in September compared to a year earlier. This is only a slight improvement from August.

The industry faces further risks this month, after restaurants and bars in Montreal and Quebec City were ordered to close for a month to help curb the spread of the virus. In Ontario, food and beverage establishments have been ordered to close at midnight. Additionally, as the weather cools and patios close, some diners may be reluctant to visit restaurants, as the risk of catching the virus is known to be higher indoors.

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