Canada had weak first 4 months but not in a recession: C.D. Howe economists

Despite struggles over the first four months of 2015, there is no proof that Canada’s economy has entered a recession, according to some of the country’s top economists on the C.D. Howe Institute’s Business Cycle Council.

“Data [does] not provide evidence that Canada had entered an economic downturn,” the group said in a July 28 release.

The Business Cycle Council is the arbiter of business cycle dates in Canada and is comprised of some of the most prominent economists active in the field.

A variety of recent economic data has prompted some observers to claim that Canada’s economy has slipped into a recession, particularly after the Bank of Canada released a new forecast on July 15, showing that the economy would contract in the first half of the year.

Back-to-back quarters of contraction is the conventional litmus test of a recession. The council said it defines a recession as a “pronounced, pervasive and persistent decline in aggregate economic activity.”

Through its review of recent data for output as measured by gross domestic product (GDP), for employment, and measures of sectoral activity, the council noted weak GDP data in the first four months of 2015, primarily associated with low oil prices and falling investment in the energy and some other resource sectors. It also noted resilience in labour markets, as reflected by employment data at the national level. It concluded that there is not enough evidence pointing toward a downturn at this time.

The council said it plans to review its position this fall. According to the council, Canada’s most recent recession began in October, 2008, and ended in May, 2009.