Winter may be warm, but economy likely chilled for ’07: Economists

OTTAWA — After a handful of years of tight capacity, higher truckload rates, and stronger buying leverage, 2006 was an economic letdown for many truckers — especially for general linehaul carriers in central Canada. Well, according to economists, this New Year isn’t expected to be much better for business.

According to a recent Canadian Press report, 2007 could be noticeably worse than last year as a sluggish economy seems to be grinding down to a significant slowdown in activity.

As 2007 unfolded, the differential between sectors — especially energy rich Alberta and manufacturing dependant Ontario — kept widening, says the report.

Statistics Canada shows output in the goods sector running 1.4 per cent below year-ago levels. Manufacturing, which has lost close to 300,000 jobs since 2002, is down four percent year-over-year, pulled back by the export-oriented automotive and forestry industries, which slumped 13 percent and five percent respectively, states CP.

Manufacturing in total fell 10 percent in 2006, observed Jayson Myers, chief economist at Canadian Manufacturers and Exporters.Overall, growth in Canada has been on a gradual downward path since 2004, he says.

On the horizon, a major slowdown in the U.S. is bad news for Canadian exports — and the trucks that carry those goods across the border.

“The real concern I have, moving forward, is the weakening in the U.S. economy,” said Myers in CP’s report. “Canadian companies are already being affected by a downturn in industrial demand in the U.S.”

Still, there are vague predictions of a modest overall upturn in the second half of the year.

In the near term, the outlook for manufacturing is stressful as the currency, global competition, and the costs of labor keep dragging down Canada’s major sectors, including auto and forest industries.

“Since 2004, manufacturing has really flatlined,” said Myers. “Prices in many sectors are falling, so it’s not only recession – it’s depression.”

— with files from Canadian Press