Posted: 01 May 2020 5 min. read

Tiff Macklem next Governor of Bank of Canada, manufacturing contracts deeply in April, threat of protectionism, provincial reopening news

Tiff Macklem was named the next Governor of the Bank of Canada. I think financial markets will be surprised to some extent by the announcement, because Senior Deputy Governor Wilkins was considered the most likely successor. Macklem brings a wealth of experience to the role. He was Senior Deputy Governor for the Bank of Canada under Mark Carney and Associate Deputy Finance Minister through the 2008/09 Financial Crisis. He was viewed as the leading candidate to succeed Carney. All of the candidates were strong, and the final decision will be viewed by financial markets as a positive outcome. 

The IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) fell from 46.1 in March to 33.0 in April—a record low. A reading below 50 shows a contraction in the manufacturing sector. The declines in output, orders, and employment were all dramatic.

Similarly, the US Institute for Supply Management Manufacturing Index that surveys purchasing managers in the sector dropped to 41.5 in April, signaling a contraction in US manufacturing activity. However, while the decline was less than the 36.9 reading that financial markets were expecting, contraction was seen across the components of the index. Only 2-of-18 manufacturing industries experienced growth—paper products and food products. I wonder if the paper products was the hoarding of toilet paper (I am only being partly funny here).

One of the key risks that we have repeatedly flagged is the threat of increased protectionism and the possibility of deglobalization. So, it is troubling that President Trump is now threatening to apply new tariffs of China to punish them for his view of their role in the pandemic.

On the provincial front:

Ontario is allowing certain businesses to reopen on May 4, with strict safety guidelines.

Alberta announced its reopening strategy last night and is resuming some activities as early as today.

Newfoundland and Labrador announce plans for reopening services as early as May 11 and some immediate easing of restrictions.

PEI announced new dates for reopening schools, with select schools reopening as early as May 11.

Saskatchewan is providing $1 million to support a province-wide marketing campaign to encourage Saskatchewan residents to support local businesses and their employees.

Economic Insights

A regularly updated snapshot by Deloitte Economics that provides commentary from Chief Economist, Craig Alexander on the latest developments shaping Canadian and international economies including, economic growth, business investment, trade, and market activity. Deloitte analysis gives you the knowledge to tackle the most challenging business issues of today.

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Craig Alexander

Craig Alexander

Chief Economist and Executive Advisor

Craig Alexander is the first Chief Economist at Deloitte Canada. He has over twenty years of experience in the private sector as a senior executive and leading economist in applied economics and forecasting. He performed macroeconomic research, regional and sector analysis, and fiscal market forecasting and modelling. Craig is a passionate public speaker and holds a graduate degree in Economics from the University of Toronto.