Canada trims growth outlook despite February jobs surge

Fri Mar 8, 2013 2:07pm EST
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By Louise Egan

OTTAWA (Reuters) - The Canadian government cut its forecast for 2013 economic growth on Friday, based on private sector estimates, even as new employment data for February hinted at a comeback after the two weakest quarters since the 2008-09 recession.

The weaker, near-term outlook, while expected, is another challenge for the Conservative government, which is grappling with a significant hit to revenues as it puts the final touches on its budget for the 2013-14 fiscal year.

The numbers will form the basis for Finance Minister Jim Flaherty's fiscal projections in the next budget, expected before the end of March.

"The growth projections are slightly lower in the near term, as I expected ... mainly in 2013, 2014," Flaherty said after a meeting with the 11 private sector economists surveyed by his office.

"The factors involved there are the continuing issues, challenges in Europe and the United States," he said.

Breaking with his usual practice, Flaherty did not give precise figures. But five of the economists gave reporters their individual growth forecasts for this year, ranging from 1.5 percent to 1.8 percent. The average forecast in October was 2.0 percent.

"We still expect to see at least better numbers than we saw in the last half of 2012," said Avery Shenfeld, chief economist at the Canadian Imperial Bank of Commerce.

The news came after Statistics Canada data on Friday showed that following losses in January, the job market added 50,700 net new positions in February, above the 8,000 expected by market players.   Continued...

A man, with a sign strapped to his back, uses a megaphone to attract the attention of potential employers as he hands out resumes on Bay Street in the financial district in Toronto, March 5, 2009. REUTERS/Mark Blinch