As coronavirus restrictions are slowly being lifted across the country, the resulting economic damage is becoming more evident. According to real time alternative data including job postings numbers, mobility tracking, and restaurant bookings all suggest that Canada’s economy is beginning to rebound after nearly three months of strict COVID-19 lockdown. Comparatively however, the data also shows that the Canadian economy is at least two to three weeks behind in terms of recovery when compared to its US counterpart.
Taking a closer look at some of Canada’s largest cities, the reason for the difference between the two economic recoveries becomes evident. Given provinces such as Quebec and Ontario had some of the highest infection rates and virus related deaths, cities including Montreal and Toronto are still enforcing their economic restrictions as a result. In the US on the other hand, Some of the worst-hit regions are going ahead with the lifting of restrictions, and getting the ball rolling on an economic recovery.
Economists at National Bank Financial- which are the ones tracking the alternative data, indicators such as restaurant bookings and movement tracking all suggest that Canada’s economy is farther from achieving its pre-pandemic levels than the US. That indicates Canada is suffering a worse downturn than its counterpart, most likely because Canadians are more obedient in following COVID-19 mitigation rules than their southern counterparts.
On the other hand, consumerism in Canada is showing a rebound, suggesting the worst of the economic downturn may be subsiding. According to credit card transaction data compiled by RBC, TD Bank, as well as Bank of Nova Scotia indicate that discretionary spending is on the rise, with Canadians beginning to spend more on dining out, and purchasing jewelry as well as apparel. In addition, online job posting data on Indeed Canada suggests employment numbers are slowly starting to recover as of May, and will most likely continue at a snail’s pace for the remainder of summer.
There is also a positive side to lagging behind economically compared to the US. The extra bout of caution taken by Canadian policy makers in terms of mitigating the spread the coronavirus will ultimately yield better results than in the US. Although Canada’s economy may be taking the long route to recovery, the US on the other hand is increasing its chances of the resurgence of a second wave.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.