Canada may lose its economic growth bragging rights
U.S. expected to best Canada in job creation and economic growth in 2012.
OTTAWA—As the year unfolds, analysts predict Canada will lose its G7 lead in economic growth and job creation and it’s the U.S. that could beat out Canada on both fronts.
The U.S. is likely to beat out Canada in both economic growth and job creation.
“We are going into a period of catch-up where it looks like the U.S. is doing better because they will be growing faster, on the jobs front perhaps most starkly,” says Douglas Porter, deputy chief economist with the Bank of Montreal.
Last week’s employment reports from both countries is the most graphic example. Canada added 2,300 jobs in January versus 243,000 in the U.S.
Even after allowing for the fact that Canada is one tenth the size of the U.S.
Indeed, employment in the U.S. has been rising at twice the rate in Canada for a year and many economists expect U.S. economic growth as a whole to outpace Canada’s in 2012 for the first time in seven years.
In the fourth quarter of 2011, the U.S. posted gross domestic product expansion of 2.8 per cent. Canada’s is projected at 1.5 per cent at the end of the month.
Despite the emergence of Chinese markets, the U.S. remains Canada’s best customer. A strong U.S. recovery will boost manufacturers of autos, machinery, aerospace and other products, including wood producers.
And there are indirect benefits.
“Our financial markets tend to move in sync with theirs, and when the U.S. economy is healthier, commodity prices tend to be healthier, and our consumers and businesses are affected in terms of confidence by what is going on south of the border,” Porter explained.