Despite a blockbuster jobs report, the Canadian economy still faces economic headwinds as it heads into the new year, warns David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates.
“The numbers, stand alone, just look absolutely wonderful [but] employment is a bit of a coincident to lagging indicator,” he told BNN. “The Canadian economy for 2018 has question marks all over it and that’s not solved by today’s number, no matter how good it was.”
The Canadian economy added 79,500 jobs in November – eight times the amount expected, and the largest month of gains since April 2012, when the economy was still recovering from a recession.
But all is not well in the economy, according to Rosenberg, who noted recent weak wholesale trade, retail sales and manufacturing data.
He added the Canadian economy will continue to struggle with a cooling housing market, changes to lending requirements, and looming threats by U.S. President Donald Trump to rip up the North American Free Trade Agreement.
And while the Canadian jobs data spiked, Canada’s GDP showed less impressive growth of 0.2 per cent in September, albeit slightly ahead of expectations.
“Come New Year’s Day we are not going to be talking about the November jobs report anymore,” Rosenberg told BNN. “We are going to be talking about the impediments to the Canadian economy for the new year — there are just too many question marks. “
The Canadian dollar surged on the jobs data, but Rosenberg recommends investors sell the loonie whenever it rallies. He believes the Canadian dollar will likely come under pressure in the coming months as economic uncertainty keeps the Bank of Canada on the sidelines and the U.S. Federal Reserve follows through on its plan to boost interest rates.
“It’s not difficult for me to see the Canadian dollar back in the US$1.35-1.37 range – so sell the Canadian dollar on strength,” he said.