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(CEP News) - Canadian GDP is expected to produce weak results again in February, although not as bad as January and December's results.
"Even recessions take a breather," said Meny Grauman, economist with CIBC World Markets. February GDP is forecast to drop 0.1%, against a 0.7% drop in January and the 1.0% fall in December. Grauman thinks GDP won't be any worse than flat, based on an improvement in manufacturing shipments and only modest declines in retail sales. If it comes in better than expected, he said the Canadian dollar could see some strength and fixed income could sell off. Grauman added, however, "we wouldn't read too much into this one-month respite. Employment remained in freefall in March, construction is easing off as projects reach completion, and manufacturing isn't yet at a bottom." Indeed, Canada's unemployment rate reached 8.0% in March, the highest it's been since 2001. The Canadian economy has been facing increasing pressure from a downturn in demand among its trading partners. December saw the trade balance enter deficit for the first time in 33 years. It slid further in January, and entered surplus only marginally in February, challenging the view of Canada as an exporting nation. Economists at Scotiabank agreed that February could offer up slightly better results, based on an increase in auto production in the month caused by the re-opening of several idle plants. However, they added, "going forward, growth will likely revert back to its downward trend, with looming auto assembly shutdowns, further housing and consumption weakness and increased job cuts." Statistics Canada will release February GDP on Thursday at 8:30 a.m. EDT. By Megan Ainscow,
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, edited by Ernest Hoffman,
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