- The Canadian economy rebounded strongly from the slowdown of 2003, shrugging off a soaring Canadian dollar in 2004 while making the best of high oil prices. Real GDP advanced 2.8% in 2004, an acceleration from the 2.0% growth in the previous year.
- Following a gradual start, employment picked up momentum in the second quarter of 2004 and over the last four months of the year. Overall, employment grew by 1.8% (+284,600), somewhat weaker than a year earlier. The proportion of the employed working-age population edged up to 62.7% from 62.4% in 2003, while the unemployment rate averaged 7.2%, down from 7.6% in 2003.
- The further appreciation of the Canadian dollar dampened exports, production and job creation among manufacturers. The higher exchange rate, combined with high energy and other commodity prices, caused economic momentum to shift from central to western Canada, with Alberta and British Columbia posting the strongest performances.
- Retail sales were up 5.0% in 2004, compared to 3.8% in 2003. Vehicle sales slumped to their lowest level since 1999, dragged down by the high cost of gasoline and insurance, and by consumer resistance to rebates and other incentives.
- The housing market continued to strengthen in 2004. The growing labour market and continued low mortgage rates helped to push housing starts to their highest level in 17 years, a healthy 6.9% rise from 2003.
- In the financial markets, the TSX/S&P Composite Index increased 12.5% in 2004, driven by a surge in prices of natural resources along with strong performances from key financial services and information technology sectors. The Canadian index outperformed its main US counterparts.
- The turbulence from the previous year lingered into 2004, with the US border remaining closed to live cattle exports, costing that sector about
$5 billion. Canada’s protracted dispute with the US over softwood lumber continued to threaten the industry.
- Canada’s trade sector held up well during the first half of 2004, but lost steam in the third quarter when the dollar surpassed 80 cents (US). The adjustment to a higher dollar will hold back growth in 2005 and continue into 2006, although the impact will be less intense next year.
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