balanced fund quarterly report

June 30, 2020

Economic Commentary

April marked the low point in terms of the devastating impact that COVID19 had on the global economy. Economic activity ground to a halt and job losses skyrocketed, pushing the world economy into a swift and deep recession of unprecedented magnitude. Canadian GDP declined 7.5% in March and 11.6% in April, putting the year-over-year drop at 17.1%. Manufacturing indices in most countries around the world dropped below the important midpoint level of 50, signifying a dramatic contraction in economic activity.

Following the massive hit to the economy in March and April, economic data were better than expected in many sectors in May, particularly the labour markets. U.S. payroll data rebounded from a loss of 21 million jobs in April to a gain of 2.7 million in May, followed by another gain of 4.8 million jobs in June. Despite the rebound, only one-third of the jobs lost due to the pandemic have been recovered. A key issue going forward will be the length of time it will take to recover all of the jobs lost or whether some of these losses will become structural changes to the labor force. A major concern to near-term economic prospects is the sharp increase in reported new cases of the coronavirus as economies began loosening social restrictions.

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