U.S. economy starts to grow November 24, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: economy, Grow, starts
comments closed
The U.S. economy grew 2.8 per cent in the three months ending in September, the Commerce Department reported Tuesday.
That was a revision from the government’s earlier estimate that the gross domestic product ?the value of all goods and services produced in the U.S.? grew by 3.5 per cent.
U.S. economic growth is still not expected to be strong enough to drive down high unemployment rates.(Paul Sakuma/Associated Press)
The report shows the economy grew for the first time after a record four quarters of contraction.
But economists and officials with the U.S. Federal Reserve say growth is not expected to be strong enough to drive down unemployment quickly. It’s now at 10.2 per cent, only the second time since the Second World War that the American jobless rate has risen above 10 per cent.
Much of the growth reflected massive government stimulus to encourage spending on homes and cars.
Spending on homes and other residential projects soared at an annualized pace of 19.5 per cent last quarter. Sales of durable goods ? such as large appliances and cars ? rose 20.1 per cent.
Overall consumer spending, a major part of the economy, grew 2.9 per cent last quarter.
Whether that will continue after the government spending abates isn’t clear.
U.S. President Barack Obama recently warned that the economy could suffer a “double dip” and return to contraction. The chairman of the Federal Reserve, Ben Bernanke, has said he doesn’t think that will happen. But last week Bernanke warned the recovery was threatened by “important headwinds,” such as tight credit and a weak job market that will make consumers cautious in their spending.
The GDP report showed companies cut back spending on commercial construction by 15.1 per cent and trimmed inventories by $133.4 billion last quarter.
However, after-tax profits soared 13.4 per cent after only a 0.9 per cent rise in the second quarter.
Paul Ferley, assistant chief economist at RBC Economics Research, said in a commentary the report “is indicative of an only modest recovery in economic activity.”
While the jump in corporate profits is “encouraging,” he said, “there remains some uncertainty as to whether it reflects aggressive cost cutting or widening margins.”
Another widely followed report released Tuesday showed the rate of home price increases in 20 major U.S. cities slowed in September.
The Standard & Poor’s/Case-Shiller home price index rose 0.3 per cent over the month to 146.51. That’s its fifth consecutive monthly increase but a dip from August’s 1.2 per cent rise. The index is now up more than three per cent from its bottom in May, but still 30 per cent below its peak in April 2006.
With files from The Associated Press (more…)
Canadian economy shrinks in August November 3, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: August, Canadian, economy, shrinks
comments closed
The Canadian economy declined by 0.1 per cent in August, Statistics Canada said on Friday. A month earlier, the economy was unchanged.
Steam rises from a stack at a factory in Hamilton. The Canadian economy shrank by 0.1 per cent in August, Statistics Canada says.(Adrian Wyld/Canadian Press)
Oil and gas extraction and, to a lesser extent, manufacturing were the main sources of the decline, the agency said.
Oil and gas extraction fell 2.3 per cent during the month, as maintenance work at some crude petroleum facilities on the East Coast slowed production. Natural gas production also retreated as prices hit record lows as storage facilities neared capacity.
Manufacturing activity decreased 0.7 per cent, with eight of the 21 major groups within the sector retreating.
Wholesale trade also declined by 0.5 per cent during the month, reflecting weakness in foreign and domestic demand.
Bright spots
Public sector activity increased 0.4 per cent, Statistics Canada said, largely as a result of the end of a strike by municipal employees in Toronto.
Federal Finance Minister Jim Flaherty expressed concern that the public sector led growth, suggesting private demand must be the long-term driver of Canada’s economy.
“The figures quite frankly confirm what we’ve been saying and that is that there are some positive signs in the economy but the recovery is fragile and tentative,” he said.
Retail trade was another bright spot, with activity increasing by 0.3 per cent. New car dealers increased their activity after two monthly declines, as incentive programs may have bolstered sales, the agency said.
And for the first time since October 2008, construction activity increased, by 0.2 per cent in August.
The August decline on the heels of a flat July puts pressure on the Bank of Canada’s expectation of two per cent growth in the third quarter as a whole, which it reiterated as recently as last week.
Real GDP is now down a hefty four per cent year over year, although that’s still an improvement on the 4.6 per cent figure in July, BMO economist Robert Kavcic noted.
He’s cautiously optimistic about the latest economic data.
“This trend will continue to improve as the Canadian economy has found a floor in recent months,” he said. “As we saw in the U.S. yesterday, Canada’s recession is in the rear view mirror.”
Economy on the right path to recovery: Carney September 23, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: Carney, economy, Path, recovery, Right
comments closed
Bank of Canada governor Mark Carney says the country’s economy is on the right path to recovery “but it’s a very long road.”
In an exclusive interview with Peter Mansbridge, Carney said the economy is performing as the central bank projected when it said growth would start to return in the second half of the year.
Carney said that initial return to growth is being prompted by fiscal and monetary policy ? that is, expanded government spending coupled with low interest rates.
“We?re at, if you will, the easy bit of the growth, and it?s a little early right now to say that we are seeing that self-sustaining private sector growth that is going to carry us up, that?s going to prevent that second dip,” Carney said.
He added that it is also too much to say if the economy is expected to go back into retreat.
Carney added that the economy in the United States ? our biggest trading partner ? is going to be choppy over the next 12 to 18 months.
The U.S. economy, Carney said, has had a big shock, and that the potential of that economy has slowed down. The U.S. will have to become “more of an exporter than an importer, the private sector will rely less on debt and more on income, and all of that will add up to a more difficult environment for Canadian businesses in the U.S,” Carney said.
Peter Mansbridge’s interview with Bank of Canada governor Mark Carney will be broadcast on Mansbridge One on One on CBC and CBC Newsworld.
Swiss economy out-competes U.S. September 9, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: competes, economy, Swiss
comments closed
Switzerland pushed the United States out of the top spot as the planet’s most competitive economy while Canada moved up one to ninth, according to rankings released Tuesday.
The World Economic Forum said the tiny landlocked European country received high marks for its banking system, established infrastructure and stable inflation and growth policies in the group’s “global competitiveness rankings.”
As a result, Switzerland, the 39th largest economy in the world according to the Central Intelligence Agency, beat out the United States in the forum’s 2009 list of most competitive economies.
“Switzerland tops the overall ranking.?The United States falls one place to second position, with weakening in its financial markets and macroeconomic stability,” said the Swiss-based Economic Forum in a press release.
The United States ranked as the top economy in terms of innovation and efficiency but slumped badly to 28th out of 133 nations surveyed in terms of physical infrastructure and financial institutions.
By contrast, Switzerland posted thirds in all three categories.
The United States was tops as the world’s most competitive economy in 2008 while Switzerland was second.
Canadian rise
Canada’s economy inched up a single spot in the World Economic Forum’s ranking, rising to ninth on the list of most competitive economies, ahead of the Netherlands and just behind Japan.
Canada scored highest in terms of basic institutions, especially health care, and so-called “efficiency enhancers” where the country was ranked fourth.
The rankings were derived from publicly available statistics and the results of the organization’s executive opinion survey, in which 13,000 business leaders were asked questions regarding the 133 countries.
Of those executives, 22.6 per cent of respondents said access to finance capital was Canada’s biggest economic problem followed by 16.7 per cent who complained heaviest regarding Canadian tax rates.
More ‘green shoots’ for U.S. economy August 28, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: economy, Green, more, shoots
comments closed
New economic data released Thursday lent more credence to the theory that the U.S. economy is emerging from its worst slump in at least 60 years.
The U.S. Commerce Department said gross domestic product shrank at an annual rate of one per cent in the second quarter that ended in June. That’s better than the 1.5 per cent slump expected by analysts.
‘The pace of decline has eased sharply…’?RBC economist Paul Ferley
It was the fourth straight quarter of negative GDP growth in the U.S. But economists noted that the Q2 figures were a big improvement from the dismal situation of the previous two quarters.
GDP shrank by an annualized 6.4 per cent in the first three months of 2009 after declining 5.4 per cent in the final quarter of last year.
Speculation that the longest U.S. recession since the Second World War might be drawing to a close was bolstered by new data from the U.S. Commerce Department that showed initial jobless -benefit claims falling by 10,000 to a seasonally adjusted 570,000.
Continuing claims dropped by 120,000 to 6.13 million ? the lowest in more than four months.
While those numbers are still well above the numbers expected in a healthy economy, they had more economists and policy-makers declaring that the rebound is underway.
Corporate profits jump
Corporate profits rose 5.7 per cent from the first quarter ? the biggest increase in more than four years ? and consumer spending was down by a stronger-than-expected one per cent.
“Although today’s report continues to show an economy declining in the second quarter, the composition was more favourable, with a greater drawdown in inventories being offset by less weakness in consumer spending,” RBC economist Paul Ferley said in a morning commentary.
“Thus, the report will likely not alter the emerging view that the economy returned to positive growth in the third quarter.”
Analysts point to the “cash for clunkers” program, which helped spur 700,000 vehicle sales in the past month, and the first payouts from the $787-billion-US economic stimulus program for helping to stem the economy’s steep decline.
U.S. Federal Reserve Chairman Ben Bernanke says prospects for return to growth ‘appear good.’ (Jim Young/Reuters)
The only question now is how sustainable the recovery will be. A recent survey of U.S. economists found that a significant minority believes the current recovery amounts to little more than a head fake and will soon change direction and become a double-dip recession.
Last week, Federal Reserve chairman Ben Bernanke painted a more optimistic picture ? saying economic activity “appears to be levelling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good.”
Bank of Canada governor Mark Carney is forecasting that the rcession in Canada is all but over as economic growth returns in the current quarter.
But economists and central bankers in both the U.S. and Canada warn that unemployment is likely to worsen in the months to come.
Mexican economy recovering, Calderon says August 26, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: Calderon, economy, Mexican, recovering, says
comments closed
President Felipe Calderon says there are signs Mexico’s economy is heading toward recovery following the worst quarterly contraction since comparable record-keeping began in 1981.
Calderon says the recovery “will be slow but positive for Mexico.”
In a televised addressed Tuesday, he said “there is initial data, still insufficient but very encouraging,” that the economy will expand again.
Anemic growth
As the worldwide recession was unfolding, Mexico’s economy was hit especially hard by the swine flu outbreak. After Mexico was identified as the source of the outbreak, the tourism sector dried up. Hotel occupancy rates were cut in half, and many airlines cancelled flights to the country.
The government unveiled a $1.5 billion package to stimulate the key economic sector. The government in the capital city even offered free health insurance to all travelers.
The Mexican economy has lost the equivalent of $2.59 billion on account of the swine flu outbreak, the finance minister said in May.
That, coupled with Mexico’s heavy dependence on a wobbly U.S. economy, combined to make Mexico’s gross domestic product shrink 10.3 per cent in the second quarter.
The central bank predicts a full-year decline of between 6.5 per cent and 7.5 per cent for 2009, while the Treasury department forecasts a 5.5 per cent decrease.
With files from The Associated Press (more…)
Economy to shrink 2.9% this year, World Bank says June 23, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: bank, economy, says, shrink, This, World, Year
comments closed
The World Bank warned Monday that the international economy will shrink by 2.9 per cent this year, a sharper decline than the 1.7 per cent drop predicted in March.
“The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction,” Justin Lin, World Bank chief economist, said in a news release.
Less money for everyone
The bank’s forecast for 2009 predicts the gross domestic product (GDP) per capita will by fall by $600 US to $8,362 worldwide this year. In other words, the production of goods and services will drop by that amount.
In the “high income” countries, the decline will be $2,164, to $38,470. For Canadians, given that about 60 per cent of GDP is spent on consumption, it means about $1,300 less to spend.
Developing countries could help drive the recovery, but they need capital, and that means a resumption in the flow of credit, the bank said.
But private capital inflows to developing countries are forecast to drop to about 30 per cent of the 2007 level this year. The flow, which peaked at $1.2 trillion US in 2007, will hit $363 billion this year, the bank said.
A drop in capital flows will cut growth, jobs and trade, and hurt the neediest people.
“To prevent a second wave of instability, policies have to focus rapidly on financial sector reform and support for the poorest countries,” said Hans Timmer, director of the bank’s prospects group.
Global GDP growth will rebound to two per cent in 2010 and 3.2 per cent by 2011.
The bank called for the “quick implementation of detailed reforms” and said governments have to give up ownership stakes in the financial system to make room for private capital.
Like other economic forecasters, it also said the advanced countries will have to unwind the expansion of the money supply and cut deficits “in the medium term,” to avoid a debt crisis.
Rona hit by economy, poor weather in Q1 May 12, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: economy, poor, Rona, weather
comments closed
Rona 3-month TSX chart
The weak economy and poor weather hampered Rona Inc.’s first-quarter results, resulting in a loss, the company said Tuesday.
The Boucherville, Que.-based company said its overall sales dropped by 7.2 per cent year-over-year to $846.0 million, compared to $911.5 million in 2008.
“This decline is largely the result of an 8.5 per cent drop in same-store sales due to low levels of consumer confidence in the economy and the significant drop in housing starts in Western Canada,” the company said, also citing a period of intense cold at the start of the year, which affected sales of construction materials and forest products across Canada.
Rona said it lost $2.5 million, or two cents a share, in the quarter, compared to a loss of $2.4 million, or two cents a share, a year earlier.
More to come
Canadian economy contracted 0.7% in January April 1, 2009
Posted by businessnewss in businessnewss.wordpress.com.Tags: Canadian, contracted, economy, January
comments closed
The Canadian economy shrank by 0.7 per cent in January, as activity in the manufacturing, wholesaling and construction sectors fell, Statistics Canada said Tuesday.
The January drop met the expectations of economists.
The economy has now contracted for four straight months, following declines of one per cent in December, 0.7 per cent in November and 0.1 per cent in October.
Activity in the manufacturing sector fell for a sixth consecutive month in January, dropping by 3.1 per cent. About half of the decline was because of a 27 per cent decline in motor vehicle and parts production, Statistics Canada said.
“Motor vehicle manufacturers sharply curtailed their output in January in reaction to lower demand in the United States,” the federal agency said. “This brought the level of production in the Canadian motor vehicle and parts industries to about 40 per cent of the peak recorded in the first quarter of 2007.”
Wholesale activity fell by 3.4 per cent in January on declines in automotive products, building materials, and machinery and electronic equipment.
Activity in the construction sector fell by three per cent, led by a decline of 6.4 per cent in residential construction, especially of new dwellings.
Amid the overall decline, some sectors of the economy did show increased activity, including retail trade, oil and gas extraction and the public sector.
Retail activity was up 1.4 per cent in January, following three consecutive monthly declines.
Dawn Desjardins, assistant chief economist at RBC Economics, said the weak January GDP figure raises the “downside risks” to the bank’s forecast that the economy contracted at an annualized rate of 4.4 per cent in the first quarter of this year.
“The weakness in late 2008 and the soft start to 2009 raises the odds that first-quarter GDP will again underperform the Bank of Canada’s forecast,” Desjardins said.
“When the forecast was issued in January, the [central bank] projected that the economy would contract at a 4.8 per cent annualized pace in the quarter, a pickup from the 3.4 per cent annualized drop in the fourth quarter of last year.”
