Manufacturing recession may be bottoming out

But economic come-back will be slow

Canadian Manufacturers & Exporters, whose members account for 75 per cent of Canada’s industrial output and 90 per cent of its exports, has released an optimistic, though guarded, economic outlook for Canadian manufacturing.

CME says that manufacturers are in the grip of a sector-wide recession that started last fall. The slump is primarily attributable to the slowdown in U.S. market demand, which accounts for 87 per cent of Canada’s merchandise exports and over 62 per cent of its industrial production. CME expects manufacturing production to be down five per cent for this year as a whole.

However, CME sees positive signs which lead it to forecast a slow and steady recovery during the second half of this year and in 2002. Jayson Meyers, CME’s chief economist, points to reduction in energy prices that ward off inflation and pave the way for further North American interest rate cuts; more stable orders for manufacturers and further inventory reductions that have occurred over the summer; and the boom in Canada’s oil and gas sector fueled by strong energy demand in the United States.

Nevertheless, there are factors that could waylay economic recovery:

•a major crisis in international financial markets could sharply depreciate Canada’s currency and lead to higher interest rates;

•increases in energy prices at the end of the year;

•job losses accelerating into the third and fourth quarter of this year.

To read the full story, login below.

Not a subscriber?

Start your subscription today!