Canada report expected to confirm recession's end

By Louise Egan

OTTAWA (Reuters) - The Canadian economy has started a slow crawl back to health after the sharpest three-quarter recession in 50 years, a Statistics Canada report is expected to show on Monday.

The median forecast of analysts surveyed by Reuters as of Thursday is for a 3.1 percent annual rate of contraction in gross domestic product in the second quarter.

That follows declines of 5.4 percent in the first quarter and 3.7 percent in the fourth quarter.

But the more gripping news may be that the turning point was reached in June, when monthly GDP is expected to grow 0.3 percent after 10 months of decline. Canada is unusual in that it reports both monthly and quarterly GDP figures.

"Certainly at a very minimum, it indicates the economy is bottoming," said George Vasic, chief Canadian economist at UBS Securities Canada.

"A necessary first step is to get a positive sign at least on a single month and that much will be accomplished and will set the basis for what looks to be a positive third quarter," he said.

Japan, Germany and France all pulled out of their recessions in the second quarter and even the U.S. downturn in that quarter was not as bad as predicted.

The Bank of Canada and market economists expect the economy to start growing in earnest in the third quarter but job losses and household income will take longer to bounce back.