Home Breadcrumb caret Economy Breadcrumb caret Economic Indicators Trouble still brewing for the loonie, says CIBC economist Canada’s manufacturing recovery will be shallower than previously expected, predicts CIBC, given the lacklustre response by Canadian dollar-sensitive firms in adding capacity and expanding payrolls. By Staff | September 30, 2016 | Last updated on September 30, 2016 2 min read Canada’s manufacturing recovery will be shallower than previously expected, predicts CIBC, given the lacklustre response by Canadian dollar-sensitive firms in adding capacity and expanding payrolls. In a recent research note, CIBC expert Nick Exarhos explains, “A strong July GDP print this morning likely confirms a nice rebound in the third quarter, dampening the odds of a quick [rate] cut by [Bank of Canada] Governor Poloz over the next few months. Plus, OPEC’s decision—assuming it holds—should see somewhat firmer oil prices over the next few quarters. Both of those developments have taken pressure off of the loonie.” But, says Exarhos, “as some risks fall off our radar, others are emerging as next year’s prospects come into sharper focus.” For example, “the medium-term [economic] outlook looks increasingly challenging, threatening our modest 1.7% growth forecast for Q4 and a similar pace expected in 2017.” CIBC has downwardly revised its export growth forecast and will look for next week’s labour force survey to confirm this move. Says Exarhos, you can blame global developments for that, noting, “The news on external demand for exports from all source countries remains discouraging. The World Trade Organization is forecasting growth in trade volumes of only 1.7% this year, a figure that if anything understates the magnitude of the slowing that we’ve seen through the second quarter.” Read: G20 leaders endorse trade, tighten import controls He adds, “The worst may be over for Canadian GDP, but don’t think that risks to the Canadian dollar are fully behind us. Weak global demand and trade fundamentals remain as threats to the loonie, even if Q3’s growth rebound has Poloz willing to be patient for now.” Read the full report here. Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo