TORONTO, Sept. 18, 2020 /CNW/ - The BMO Business Activity Index (BMO BAI) from BMO Economics, which tracks monthly business activity with information on jobs, spending, sentiment and other indicators, rose 5.0 per cent in July, and is on pace for a 2.7 per cent gain in August. That would mark four consecutive months of strong growth from the pandemic low set in April, leaving the index 4.7 per cent below February's peak.
"Activity by this measure had sunk as much 24 per cent at one point," said Robert Kavcic, Senior Economist, BMO Capital Markets. "Thinking of it another way, about 80 per cent of the economic hole caused by the pandemic has been filled back up."
Almost all indicators that make up the index continued to support the rebound in July and August. Hours worked posted solid gains as the job market recovers. The upside-surprise in housing has continued, with sales and starts both rising strongly in July and August. Meanwhile, sales measures in retail, wholesale and manufacturing are all still pushing higher. Sentiment measures from the Canadian Federation of Independent Business and equity market remain supportive. Credit growth is the lone soft spot, with business credit dipping again in July.
"The Canadian economic recovery continues, with business activity improving again in July and August," noted Mr. Kavcic. "That said, momentum is fading, and the work required to fill the last 20 per cent or so of the COVID hole will be much, much tougher than it was to fill the first 80 per cent."
The BMO BAI is compiled from ten monthly indicators, with supporting information from Statistics Canada's preliminary estimates of a few monthly indicators and high-frequency data on retail mobility and internal credit card transactions.
Today's BMO BAI report can be found at https://economics.bmo.com/en/publications/detail/cfade1f2-f3cc-43d5-b980-0e832fb6ce35/
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SOURCE BMO Financial Group