Tentative evidence allays fears of second recession OTTAWA
— After a summer of discontent for the economy, September indicators so far are helping to allay fears of a coming second recession. Encouraging signals from China in the past few weeks, a rebound in commodity prices and equity markets, and better data in North America have reduced the risk of a second downturn, analysts say. In response, New York’s Dow Jones industrial average has advanced about five per cent so far this month, while in Toronto, equities are up more than two per cent. Markets also reacted this week like they dodged a bullet over new Basel III rules to increase capital reserves for banks, since it gives commercial banks eight years to build up to standard. The evidence that the danger of a double dip has passed is still not strong. Indicators from manufacturing to sales to production output continue to be weak, and employment gains remain modest, particularly in the United States. Canada has seen the torrid pace of job creation slow from about 51,000 a month for the first half of the year, to an average of 13,000 in July and August. But in a welcome reversal of recent months, the latest trend is for data to be stronger than economists forecast. “The markets a few weeks ago were pricing in an elevated risk of a recession, now some of those fears have abated in light of more positive data,” said Bank of Montreal economist Sal Guatieri. “If you are looking for a strong recovery the news is still bad, but if you were afraid of a double dip, it’s been good news.” In an interview with Reuters, Secretary-General Angel Gurria of the Organization for Economic Co-operation and Development said his Paris-based organization was ruling out the possibility of a new global recession in advanced economies, with the possible exception of Japan. “We are saying yes there is a slowdown in the recovery, not a double dip recession, just a slowdown in the recovery,” Gurria is quoted as saying. Bank of Canada governor Mark Carney, meeting with reporters after a speech in Germany, said Canadian growth will be slower than the 2.8 per cent advance the bank predicted in July, but will still be positive.
Source Jason Kays- Mortgage Brokers City