TORONTO, July 17, 2020 /CNW/ - BMO Economics today debuted
the new BMO Business Activity Index (BMO BAI), which tracks monthly
business activity with information on jobs, spending, sentiment and
other indicators. With the Canadian economy entering the
post-lockdown recovery phase, there is an increased need for timely
information on what the recovery looks like.
"Given the unparalleled economic crisis caused by the pandemic,
the need to track the recovery has never been greater," said the
authors of the BMO BAI: Sal
Guatieri, Director and Senior Economist, BMO Capital
Markets; Robert Kavcic, Director and
Senior Economist, BMO Capital Markets; and Erik Johnson, Economist, BMO Capital Markets.
"The index will inform how well the expansion is proceeding on what
is sure to be a long and bumpy journey."
The BMO BAI index includes ten indicators: hours worked, the
unemployment rate, home sales, housing starts, business credit,
wholesale trade, retail sales, manufacturing shipments, small
business sentiment (from the Canadian Federation of Independent
Business) and the TSX. In addition, real-time data on Google
retail and recreational mobility and credit card transactions are
used to estimate recent retail sales prior to the release of
official data. BMO Economics' view of the economy is also used to
benchmark estimates for other indicators when necessary. The index
is derived from monthly percentage changes in individual
indicators, whose contribution is adjusted to equalize the
volatility of each, ensuring that more volatile indicators do not
dominate swings in the index.
BMO Economics' analysis shows that the BMO BAI collapsed faster
than real GDP during the March/April recession, but snapped back
afterwards. "We estimate that the BAI rose 6 per cent in May and 9
per cent in June," stated the authors. "Business activity looks to
have retraced roughly half of its March-April decline – a good
start, but the second half will be a much tougher grind as pent-up
demand wanes and consumer caution persists."
The report on the introduction of the BMO BAI can be found at
https://economics.bmo.com/en/publications/detail/82f74b6c-fabf-4733-b4d4-33c50adf0d3b/.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly
diversified financial services provider - the 8th largest bank, by
assets, in North America. With total assets of $987
billion as of April 30, 2020, and a team of diverse and
highly engaged employees, BMO provides a broad range of personal
and commercial banking, wealth management and investment banking
products and services to more than 12 million customers and
conducts business through three operating groups: Personal and
Commercial Banking, BMO Wealth Management and BMO Capital
Markets.
SOURCE BMO Financial Group