BMO Harris Private Banking Market Outlook: Economy Rallies in North America
- U.S. employment and manufacturing business strengthened
- Eurozone turbulence affects international markets
- Canadian exports still struggling, but S&P/TSX equity index had a
TORONTO, ONTARIO -- (Marketwire) -- 03/20/13 -- BMO Harris Private
Banking's latest Market Outlook Commentary Report reveals that the
North American economy experienced positive growth in February
despite ongoing uncertainty in Europe and China.
Highlights from the report include:
Sequestration Takes Centre Stage
In the United States, President Obama and Congress were unable to
come to an agreement to avert sequestration, leading to the U.S.
Treasury to withhold $85 billion USD needed to run federal agencies.
"Differences in ideology are sidetracking U.S. policy makers from
negotiating a compromise on the deficit, which industry reports
suggest will significantly slow economic growth and damage confidence
in the U.S. economy," said Daniel Theriault, Chief Investment
Strategist, BMO Harris Private Banking. "But behind the scenes, both
sides are working towards an agreement that will likely emerge over
the next three to six months and further stimulate the economy."
Despite the political situation in the U.S., its economy continues to
improve. The report noted:
-- Employment grew by 157,000 new jobs in January
-- Manufacturing and non-manufacturing business activity was strong
Confusion in the Eurozone
The report stated that unease returned to Europe in the wake of the
anti-austerity Italian election results, Britain's loss of its
triple-A credit rating and troubling events in Spain. Additionally,
high labour costs and weaker productivity has eroded the
competitiveness of French exporters, and Holland's economy slipped as
well. As a result, international markets have suffered and concerns
are being voiced about Europe's northern economies.
"This volatile market environment will likely continue until
governments in Europe start to focus on measures that will reduce
debt and bolster growth," said Mr. Theriault. "The global economic
recovery could begin to get back on track after that occurs."
Canada Remains Hopeful
Companies in Canada's mining and construction sectors have been
reluctant to spend in the last few months. The effect of this was
twofold: the pace of business investment stalled, and markets began
to falter because investors grew wary.
The materials sector dragged down overall economic performance, an
indication that a full export recovery is still in the early stages.
"Canada's export sector relies heavily on robust economies in the
U.S. and China, neither of which has hit their stride yet," said Mr.
Theriault. "But lower mortgage rates could spur demand in the cooling
housing market, which could give the Canadian economy a boost."
Favourable Canadian economic growth signs were also noted in the
report, including the fact that the S&P/TSX equity index delivered
respectable returns for February - 1.08 per cent, continuing the
momentum from January."
To view the full report, please visit:
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Rachael McKay, Toronto
Valerie Doucet, Montreal
Laurie Grant, Vancouver
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