Bank of Canada governor Stephen Poloz says rebuilding Canadian economy might be a 5-year healing process
Bank of Canada governor Stephen Poloz says the country is on track for slow job growth. But also expect a growing divergence between a weakening resource sector and a slowly recovering export economy. (Todd Korol/Reuters)
“The chart between oil and the Canadian dollar looks like a pair of train tracks,” said Bank of Canada governor Stephen Poloz in Ottawa Thursday.
As Poloz was speaking, fears of a meltdown in China, one of the world’s biggest resource consumers, was sending Canada’s commodities-heavy stock index to a bear market close.
The governor’s folksy description of oil and loonie plunging in perfect parallel was in sharp contrast to what he sees as the result of that plunge: a sharp divergence, not just between the U.S. and Canadian economies but between Canada’s shrinking oil and resources sector and a recovery in other parts of the economy.
That double divergence is expected to show up in the jobs market — and the recovery won’t be quick.
- TSX in bear market as China fears grow
- Stephen Poloz says divergent monetary policy may see loonie lower
- Loonie hits lowest level since 2003 as Canadian oil trades below $20 US a barrel
Despite the new gloom that accompanied the global market tumble, Poloz said, there is already evidence of what he called a “solid U.S. economic expansion.” This week, an independent payroll survey showed the private sector created 257,000 jobs in December, the most in 12 months.
Growing gap
U.S. economists are forecasting that Friday’s job numbers will show 200,000 new jobs created in December and are predicting unemployment will stay at a low five per cent — whereas Canada’s unemployment rate lingers around seven per cent.
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