Jobless rate nudges down to 5.5%
Hong Kong airport shutdown: The decision to cancel all departures and inbound flights not already in the air was made after thousands of pro-democracy protestors gathered at the airport, the region’s third busiest after Beijing and Tokyo.
Protests have been rocking Hong Kong for months, and the crisis is already having a noticeable effect on the city’s economy. Some demonstrations have ended in violent clashes with police.
Crowds appeared to be dissipating at the airport by Monday evening in Hong Kong. But the canceled flights are a stark reminder of the risk to global businesses and the city’s tourism sector.
More than 74 million passengers traveled to and from the airport last year. It handles 1,100 passenger and cargo flights each day, and serves about 200 destinations around the world.
The airport contributes 5% to Hong Kong’s GDP, directly and indirectly, said Frank Chan, Hong Kong’s transport secretary, in May.
“This is a disaster for Hong Kong that will cost tens of millions of dollars,” said Geoffrey Thomas, editor in chief and managing director of AirlineRatings.com, a website that monitors airlines.
The direct impact of Monday’s suspension isn’t the only problem, he said.
“Travelers for months to come will cancel and rebook with other airlines to avoid Hong Kong as a hub,” Thomas added.
Hong Kong is home to seven Fortune Global 500 companies, including Lenovo () and CK Hutchison ( ), and it operates as a regional base for big corporations and major banks that prize its semi-autonomous legal system and close ties to mainland China.
Companies have already reported “serious consequences from the disruption,” including lost revenue, disrupted supply chains and shelved investments, the American Chamber of Commerce in Hong Kong said last month.
Fewer visitors, less business
Hong Kong’s status as a hub for business travel was already under threat before the protests began.
More business travelers are taking direct flights to mainland China instead of stopping over in Hong Kong, according to a February report compiled by the Hong Kong Tourism Board.
It’s still too early to assess the economic impact of Monday’s shutdown, said Eleanor Wan, the CEO of BEA Union Investment Management, an investment firm based in Hong Kong.
But she added that the airport closure will have a “negative psychological impact,” noting that several countries have already issued travel warnings for the city.
“I’m afraid there will be even fewer visitors coming and fewer hotel bookings,” Wan said. She also pointed out that Hong Kong hosts many conventions that keep its hotels and conference centers busy.
Right now, authorities have only said that Monday flights are affected. But even if the airport reopens soon, the city’s image has already taken a hit.
“This will severely damage its reputation and it will take a long time to recover,” said Thomas, the aviation expert.
The turmoil could also give rivals a leg up. Thomas pointed to places like Singapore as an alternative gateway to China and the rest of Asia that could benefit from Hong Kong’s problems.
A little more sun is shining on a cloudy U.S. economy
Is the sun peaking through the clouds that have been gathering over the U.S. economy? It sure seems so.
Interest rates have fallen and fueled a rebound in auto and home sales. The unemployment rate has skidded to a 50-year low of 3.5%. A key measure of how Americans fell about their own financial health rose to a three-month high. And to cap it off, news of at least a tentative trade deal between U.S. and China announced Friday have pushed stock markets close to record highs again.
More good news could come this week from the sum of retail sales in September. Economists polled by MarketWatch predict sales rose a steady 0.3% during the month.
Consumer spending has the biggest influence of all on how fast the U.S. economy grows and retail sales are a big part of that. Sales of new cars and trucks were strong in September, likely more than offsetting a decline in gas-station receipts tied to lower fuel prices.
Robust car sales tell us a lot about the economy. Buyers only make big purchases when they are confident about their job security and their ability to make their monthly payments.
The evidence suggests that Americans are still fairly optimistic even though the economy is not as strong now as it was in the spring. Consumer sentiment, for example, rebounded in early October, reflecting an expectation that the strong labor market will continue to boost their incomes.
What could be a big help is the first step in broader trade deal between the U.S. and China.
President Trump on Friday announced a “substantial phase-one agreement” after a fresh round of talks aimed at ending a trade war between the world’s two largest economies that has choked global growth and damaged both countries. Manufacturers globally have been particularly hard hit.
“The tightening of trade terms around the globe and the uncertainty surrounding trade negotiations are the main reasons for the spreading malaise,” economist at Northern Trust wrote.
The spat has also dampened U.S. business investment — another key driver of economic growth — and kept a lid on the stock market. The recent rally has been fueled largely by hopes of a deal.
Yet even a partial deal or warmer relations with China probably won’t be enough to reignite U.S. and global economic growth, at least not anytime soon. After so many abrupt turns in trade talks, Wall Street is sure to take a wait-and-see attitude once the initial euphoria wears off.
“It is difficult to take that much comfort from the latest signs of progress given that we’ve had plenty of apparent truces in recent months end abruptly in a sudden further escalation in trade tensions,” pointed out senior economist Michael Pearce of Capital Economics.
U.S. stocks notched significant gains Friday, though they closed off session highs, after news that the U.S. and China had reached an agreement to ease trade tensions that includes the elimination of at least some planned tariffs.
The Dow Jones Industrial Average
rose 319.92 points, or 1.2%, to 26,816.59, the S&P 500 index
advanced 32.14 points, or 1.1%, to 2,970.27, while Nasdaq Composite Index
gained 106.26 points, or 1.3%, to 8,057.04.
Canada economy gains 54,000 jobs, beat past expectations
Canada posted another surprisingly strong month of job gains in a labour market that is on track for one of its best years on record.
The economy added 53,700 jobs last month, Statistics Canada said Friday in Ottawa, following a gain of 81,100 in August. Canada has now added 358,100 since December, the most in the first nine months of a year since 2002.
Canada’s labour market seems to have been vaccinated against the global economic flu going aroundAvery Shenfeld, chief economist at CIBC World Markets
The strong print will only reaffirm Bank of Canada expectations that the economy has developed a certain amount of resilience to trade headwinds and global economic uncertainties, giving it ammunition to buck the global trend of lower interest rates.
“Canada’s labour market seems to have been vaccinated against the global economic flu going around,” Avery Shenfeld, chief economist at CIBC World Markets Inc., said in a note to investors.
The rise in employment dropped the unemployment rate to 5.5 per cent, from 5.7 per cent in August, near the lowest in the past four decades.
Economists were anticipating just 7,500 jobs in September, with the unemployment rate unchanged. Canada’s dollar jumped after the report, rising 0.5 per cent to C$1.3227 against its U.S. counterpart at 8:33 a.m. Toronto time. Yields on government two-year bonds increased 9 basis points to 1.63 per cent.
The underlying details of the report were not as strong as the headline number. While the gains were all full-time, they were entirely public-sector positions and self-employed. Private sector jobs dropped by 21,000, with continued weakness in goods-producing industries.
On the plus side, not only is employment growing, but so are wages. Hourly pay was up 4.3 per cent in September from a year earlier, accelerating from a 3.7 per cent pace in August. The last few months have seen the strongest year-over-year increases in a decade
- Total hours worked in September were up 1.3 per cent from a year earlier, from a pace of 1.2 per cent in August
- The economy added 70,000 full-time jobs in September, with part-time employment down 16,300. Canada has added almost 300,000 new full-time jobs this year
- One difference in the September report from recent trends is that most of the job gains reflected largely lower unemployment levels rather than rising labor force participation. The number of unemployed Canadians fell by 46,900 in September, while the labor force increased by just 6,800.
- September’s gains were led by the health care sector, which produced 30,000 jobs; the information sector led lossesBloomberg.com
Scheer blames “troubling” Canadian economy on Trump, Trudeau policies
Conservative Leader Andrew Scheer blamed rising protectionism around the world — including the approach of the Trump administration — for creating the “troubling signs” faced by the Canadian and global economies.
Scheer insisted that as prime minister he would help Canada deal with any global downturn by cutting taxes, working to attract more investment and balancing the federal books.
He made the comments Tuesday as he brought his tour through suburban Toronto for the seventh time since the start of the election campaign.
Scheer argued that several years of budgetary shortfalls posted by the Trudeau government have put Canada in a difficult spot to deal with an economic downturn.
“Obviously, there are a lot of troubling signs around the world. Any time you see a streak of protectionism go through the world, as we saw with the United States and other countries as well, that always has a negative impact on global growth,” Scheer told reporters in the Toronto suburb of Markham.
“There are certainly troubling signs on the horizon, which is once again a reason for Canadians to be very concerned about the massive deficits that Justin Trudeau has been running.”
The global economy has been slowing down, in large part due to the U.S.-China trade war.
Shortfalls in recent years, Scheer added, have taken away the flexibility for Canada to react in the event of a downturn.
The Liberals won the 2015 election on a platform to run deficits as a way to lift the economy by funding major infrastructure investments and tax reductions.
However, they broke their promises to return Canada to balanced budgets by the end of their mandate and to run annual deficits of no more than $10 billion. Their shortfalls ultimately swelled to almost double that size.
The Liberals’ 2019 platform has no timeline to eliminate the deficits. It projects another four years of red ink: $27.4 billion next year, falling to $21 billion by the fourth year of a new mandate.
The Conservatives have vowed to balance the budget in five years, but they have yet to release a full campaign platform.
The Liberals have maintained their shortfalls have been small enough to continue to lower Canada’s debt burden, as measured by debt-to-GDP.
During his tour of Toronto’s suburbs, Scheer promised to ease traffic congestion and shorten commute times with funding for a pair of projects to expand Toronto’s subway system: the Ontario Line and the Yonge Subway Extension.
The Conservatives almost surely have to pick up new seats in the critical region, known as the “905,” if they hope to defeat Justin Trudeau’s Liberals on Oct. 21. Much of the region’s map was painted red in 2015.
Scheer said he would work with the provinces on transit projects to get them done “at the right price, and on time,” but had no other details.
He insisted Trudeau had failed to deliver on his promised infrastructure spending of $187 billion that would have eased the woes of commuters.
Scheer held an evening rally in the riding of Mississauga-Lakeshore, where four years ago Liberal Sven Spengemann edged out then-incumbent Conservative Stella Ambler. Spengemann and Ambler are running against each other again.
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