Business activity rose in August, but momentum is slowing
New data from the BMO Financial Group and BMO Economics shows that Canadian business activity rose 2.6 per cent in August and would appear to be on pace for a 1.7 per cent gain in September.
The BMO Canadian Business Activity Index which measures 10 monthly indicators, shows that almost all indicators continue to support the rebound in business activity. Hours worked rose 2.9 per cent in August, while housing sales and starts both rose strongly during the month. On the other hand, business credit growth was soft in August while September’s numbers are beginning to show momentum in business activity is beginning to ebb.
“(August) would mark five consecutive months of growth from the pandemic low set in April, leaving the index three per cent below February’s peak. Looking at it another way, about 87 per cent of the economic hole caused by the pandemic has been filled back up,” says BMO Capital Markets senior economist, Robert Kavcic. “But momentum is fading, as suggested by some of the early September data, and we continue to believe the task of filling the remaining COVID hold will be much tougher than it was to this point. That is, some industries are still a long way from returning to any semblance of normal, while a second wave of cases is prompting some localized restrictions of activity as we head deeper into the fall.”