MONTREAL, Que. — Lobbyists for the Canadian manufacturing sector says it will be gripped by recession until at the end of 2002 in a best case scenario.

Jayson Myers, chief economist with the Canadian Manufacturers and Exporters, the sector as it faces an erosion of confidence and spending in response to the devastating terrorist attacks on the U.S.

“It’s going to take a long time before the shock of that wears off, it’s going to take a long time before consumers gain back the confidence to continue spending,” he says. “And it’s going to take a very long time before investors are able to take on some of the risks they were able to take on before.”

Canadian manufacturers and exporters were already in a downbeat mood about the coming year before Sept. 11. The manufacturing sector’s output shrunk by 0.3 per cent in the second quarter after falling 1.5 per cent in the first quarter — officially marking the beginning of a recession in the backbone of Canada’s export-driven economy.

A CME survey of 532 companies during the summer indicate only 37 per cent considered business conditions to be improving next year, rising to 41 per cent in 2003. Almost 60 per cent of respondents say they weren’t planning an expansion over the next three years, while over 70 per cent anticipated employment levels would remain the same or decrease over the next two years.

“We thought conditions had kind of bottomed out and we were just beginning to see some indications that there would be a slow but gradual recovery,” adds Myers. “Now, all bets are off.”