OTTAWA - Canada's painful recession appears close to an end after the economy received two key votes of confidence Monday suggesting the turnaround -- albeit modest -- is just around the corner.
The Bank of Canada's summer survey of businesses revealed a surprisingly upbeat mood among Canada's leading executives, with 61 per cent expecting improved conditions and 39 per cent planning to start hiring in the upcoming 12 months.
And the Conference Board of Canada's newest quarterly forecast calls for the recession to finally end this summer, setting the stage for a better-than expected 2.7-per-cent output rebound next year.
Both reports confirm the new emerging consensus among analysts that what has been termed the Great Recession of 2008-2009 is winding down after exerting tremendous damage to workers, businesses, equities and homeowner wealth.
In a related development, realty firm ReMax reported that attractive prices and mortgage rates continued to revive house sales in June, with the largest markets of Toronto and Vancouver posting strong gains. The real estate company said most centres are now predicting year-end sales on par or ahead of 2008 levels.
There remain quibbles among economists about the specific end point of the recession, and the size of the rebound. But there is now a wide consensus that the recession is petering out and that the recovery, when it comes, will be sluggish or very sluggish, said Douglas Porter, deputy chief economist with BMO Capital Markets.
"Even the biggest, angriest bears out there are talking about the same thing, that there'll be a some kind of recovery in 2010," he said.
"I don't see anyone calling for a big booming growth rate next and I don't hear too many saying the economy is going to continue to contract next year."
The Bank of Canada survey of 100 businesses gives no estimate of when economic contraction will end, or the strength of the rebound, but the tone is less optimistic than the 61-per-cent number would suggest.
"The results of the summer survey indicate that businesses foresee an improvement in the economic outlook," said the central Bank of Canada.
It added: "Nevertheless, firms expect their activity to recover only gradually, and they continue to be cautious regarding investment."
Porter said the bank's cautious tone may reflect that the survey was conducted between May 25 and June 18, when stock markets, commodity prices and the loonie were rebounding. All have since cooled.
Conference Board economist Pedro Antunes cautioned against interpreting his analysis as signalling a robust rebound, although the 2.7 per cent projection is significantly higher than the International Monetary Fund's 1.6 per cent estimate, and even better than the Bank of Canada's 2.5 per cent forecast.
Antunes is on the rosy side of most economists, particularly his view that the economy has stopped shrinking and will grow by 0.9 per cent annualized in this current quarter, the July to September period.
But he notes that most deep recessions are followed by much bouncier rebounds than he is projecting and that he still has the economy underperforming for years to come.
"When you come off very low levels, it doesn't take much to give you strong growth," he explained.
"We're far away from the potential of the economy. We don't have normal output capacity being achieved until 2013, even with 2.7 per cent growth in 2010 and much stronger growth in the 3.5, four-per-cent range in 2011 and 2012."
On the jobs front, Antunes said the economy will stop shedding jobs in the fall, although the unemployment rate will continue to grow into next year as more Canadians enter the labour pool in search of work. He expects the jobless rate to peak at 9.3 per cent in the spring of 2010.
Canada has lost about 370,000 jobs since October.
The Conference Board sees Canada rebounding faster than the U.S., largely because massive global stimulus will whet the world's economy for commodities Canada has to sell, particularly oil and minerals.
Canada will also benefit from the $80 billion in combined federal and provincial stimulus, most of it kicking in next year, and a modest recovery in U.S. housing construction and auto sales, the think tank said.
Business managers also see positives in the U.S. economy, but only to a point.
Many still believe the demand south of the border will remain muted in the next 12 months, as will the price their products can command, and plan to curtain spending on new investment for some time.
In a separate survey of senior loan officers, the bank found that lending conditions continued to tighten in the second quarter ended June 30.
But the bank said the tightening "was less generalized among respondents than in previous quarters and was focused in specific industries, including the auto sector, forestry products and transportation."
