...The impact of the significant rise in the U.S. effective tariff rate (ETR) on Canada has so far largely been confined to a sharp deterioration in sentiment. But there are early signs that economic activity is also being adversely affected, supporting Fitch Ratings' view that Canada is heading for recession. Surveys Show Collapse in Confidence: Business and consumer sentiment measures have fallen sharply, suggesting cuts to investment and household spending. The Composite PMI fell further in April, to 41.7, its lowest level since June 2020, while the CFIB business barometer has also plunged, consistent on past form with a sharp contraction in GDP. Housing indicators have also deteriorated. Growing Job Insecurity Fears: The decline in consumer confidence is in part due to worries about job security. In industries dependent on U.S. demand for Canadian exports, almost a fifth of workers anticipate a decline in headcount at their company in the next six months. Surveys such as the Bank of Canada's...
