XPost: can.jobs 
 From: abc@123.cl 
  
 Economy climbing back, but from €deeper hole€ than expected 
  
 Manufacturing, energy lead decline in May 
  
 Gordon Isfeld, Thursday, July 23, 2009 
  
 The economy retreated by 0.5% in May -- a bigger slide than in any of 
 the previous three months, and extending the economic downturn to 10 
 straight months. Canwest News Service The economy retreated by 0.5% in 
 May -- a bigger slide than in any of the previous three months, and 
 extending the economic downturn to 10 straight months. 
  
 OTTAWA -- The end may be in sight for Canada's recession, but it will 
 have to "crawl out of a deeper hole"than anybody expected, economists 
 said Friday, 
  
 In May alone -- less than two months before the Bank of Canada declared 
 the recession all but over -- the economy was in deep decline, as key 
 industries like energy and manufacturing continued to contract, 
 Statistics Canada said Friday. 
  
 The economy retreated by 0.5% in May -- a bigger slide than in any of 
 the previous three months, and extending the economic downturn to 10 
 straight months, the federal agency said. 
  
 While most economists acknowledge the recovery will become evident in 
 the coming months, BMO Capital Markets deputy chief economist Douglas 
 Porter said May's surprisingly big contraction means "the economy will 
 need to crawl out of a deeper hole." 
  
 GDP had been expected to shrink 0.3% during the month. 
  
 Charmaine Buskas, senior economics strategist at TD Securities, said 
 "it is clear that activity throttled back significantly in May." 
  
 "If one assumes June GDP growth is flat, then second-quarter Canadian 
 GDP is on track for a slightly more than 3% . . . decline." 
  
 Still, BMO's Porter said the May GDP report "is looking deep into the 
 rear-view mirror." 
  
 "Early results from June are much more positive, and we believe next 
 month's release will show something closer to flat," Mr. Porter said, 
 adding there are signs of improving auto and home sales that should 
 make July "a relatively strong month." 
  
 "There is a sense that things are turning,"he said. 
  
 Marco Lettieri, an economist at National Bank Financial, said he 
 expects "both domestic and foreign demand to rise in the second half of 
 the year and that the second quarter should mark the end of the current 
 recession in Canada." 
  
 In its report, Statistics Canada said energy-sector output fell 2.3% in 
 May. "Oil and gas extraction as well as associated support activities 
 posted significant declines. Both petroleum and natural gas production 
 were hampered by falling export demand. Maintenance work at some crude 
 petroleum facilities also lowered production," the agency said. 
  
 Manufacturing, meanwhile, continued to decline in May. Output fell 
 1.6%, led by a big drop in motor vehicle manufacturing auto parts 
 production. 
  
 "The temporary closure of two assembly plants, combined with the 
 discontinuation of the production of a model line in Canada, 
 contributed to this decline. Output was also down in primary metal, 
 fabricated metal products, and machinery manufacturing." 
  
 So far, official data have shown Canada's economy shrank 5.4% in the 
 first quarter of this year - its fastest pace of contraction since 
 1991. That followed a 3.7% decline in the fourth quarter of 2008. 
 Economists are forecasting a 3% drop in the second quarter. 
  
 Last week, the Bank of Canada said the recession in Canada had come to 
 an end. Bank governor Mark Carney said the economy is now expected to 
 grow 1.3% in the third quarter of this year, ending Sept. 30, followed 
 by a 3% gain in the final three months of 2009. 
  
 The central bank also revised its forecast for this year, saying the 
 economy would contract 2.3% overall and grow 3% in 2010. It had 
 previously expected a 3% decline this year and 2.5% growth next year. 
  
 On Thursday, the Conference Board of Canada offered its outlook for the 
 economy, saying Canada will still end the year with negative growth of 
 1.9%. However, the think-tank said GDP will increase to 2.7% in 2010. 
  
 The next important reading on the economy comes next week, when 
 Statistics Canada releases unemployment data for July. The Canadian 
 economy has lost 454,000 full-time jobs since peak employment in 
 October and the unemployment rate has climbed to 8.6%, an 11-year high. 
 Economists expected next Friday's report to show a further 20,000 job 
 cuts and an even higher unemployment rate. 
  
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