Nathan Janzen, senior economist at the Royal Bank of Canada, argues that the latest round of tariff hikes on Chinese imports is likely to have a “modestly negative rather than dramatic downward impact on US growth,” and adds that spill-overs to the Canadian economy should be manageable.
“It seems concerns about the external growth backdrop will continue to take the shine off of recent Canadian economic data that are otherwise starting to show signs of improvement. Job growth data was, once again, almost unbelievably strong in April. Home resales appear to have stabilized further in the spring and non-energy exports picked up in March – bolstering the argument that a lot of a pullback in February was weather-related.”
“We expect data next week to continue to look better. For the manufacturing sector, we expect a bounce-back in transportation capacity after weather-related weakness in February will be a factor in a 1.5% increase in shipments March. And higher energy prices are likely to help the refining industry. But we don’t expect inflation trends to show any signs of coming unhinged on the upside.”