Trade impacts watched by BoC

The head of the Bank of Canada says the central bank will be watching for signs that fallout from trade disputes currently affecting Canada’s manufacturing sector has spilled over into additional industries.

The bank will be looking to see the extent to which weakness from manufacturing may spread to services, employment, consumer spending or housing, Governor Stephen Poloz said Thursday during a fireside chat that was part of the Vancouver Board of Trade’s economic outlook forum.

The U.S. presidential election this year will not solve a plague of uncertainty that has hurt trade and investment around the world, including in Canada, he said, regardless of whether Donald Trump or another candidate is elected.

“Those measures of uncertainty literally have exploded higher,” he said, adding trade channel breakdowns have a “particularly insidious” effect on the world economy by lowering living standards for almost everyone.

“The growth rate of the global economy will remain lower than it otherwise would have been ... because you’ve thrown sand into the wheels of global commerce. It’s hard to put your finger on what that’s all costing but we know it’s a very real cost.”

The central bank chief said he’s closely watching the Canadian labour and housing markets, noting the former’s recent weakness is balanced by higher wages, while the latter is being supported by strong immigration numbers and low interest rates.

In a news conference after the event, Poloz played down recent disappointments in economic growth and consumption statistics and said there aren’t compelling reasons to change his outlook for Canada.