“This report shows the Canadian economy struggling slowly to retool away from oil into other growth markets,” said William Phelan, president of PayNet. “The shift to the East and to manufacturing is underway, but the oil contraction is still the overwhelming factor.”
Industry sectors show this spreading decline as transportation and wholesale are down 10% and 20%, respectively. The accommodation and food pullback to a 5% pace from 11% in the prior month indicates slowdown of the consumer. Accommodations and Food employment has also started to falter. Agriculture is still correcting from the end of the Supercycle and has fallen 2%. No lift is coming from small business construction as housing and commercial real estate has failed to pick up the slack.
“The effects of the oil shock are weighing heavily on all parts of the Canadian economy as tertiary businesses are impacted by the oil problem,” said Phelan.
One piece of good news is found in manufacturing, which is benefitting from the low Canadian dollar with financing expanding by 8%, a higher pace than at any time since the oil build out in 2011. Canadian exports in volume terms are up nearly 20% annualized so far in Q1/16.
However, the Alberta oil sector is still reeling with new investment down 17%. Ontario and Quebec, on the other hand, are expanding at healthy double digits.
Loans past due are increasing as the oil shock spreads into the broader Canadian economy. Loans 30 days past due stand at 1.00%. While loans past due are up, they are still far below the all-time high of 2.55% in May 2009. Loans severely past due remain at a relatively low 0.33%.
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