OTTAWA —
The Bank of Canada says the national economy will go in reverse for the first quarter of 2021, hammering the hardest-hit workers again on the path to a recovery that rests on the rollout of vaccines.
Workers in high-contact service industries will carry the burden of a new round of lockdowns, which the central bank warns will exacerbate the pandemic’s uneven effects on the labour market.
Governor Tiff Macklem, in his opening remarks at a late-morning news conference, warned the first-quarter decline could be worse than expected if restrictions are tightened or extended.
As a result, the bank announced it is keeping its key interest rate on hold at 0.25 per cent, citing near-term weakness and the “protracted nature of the recovery” in its reasoning.
But the short-term pain is expected to give way to a brighter outlook for the medium-term with vaccines rolling out sooner than the central bank expected.
Still, the bank warns in its updated economic outlook that a complete recovery from COVID-19 will take some time.
Nor does the Bank of Canada see inflation getting back to its two-per-cent target until 2023, one year longer than previously forecast.
“There is clear reason to be more optimistic about the direction of the economy over medium-term. But we are not there yet,” reads part of Macklem’s opening statement.
“The resurgence in COVID-19 cases weighs heavily on the near-term economic outlook. And this underlines the ongoing need for extraordinary fiscal and monetary policies.”
The bank’s latest monetary policy report, which every quarter lays out its expectations for economic growth and inflation, forecasts that COVID-19 caused the economy to contract by 5.5 per cent last year.
Despite an upswing over the summer and fall that may have spared the country from a worst-case economic scenario, the drive to a recovery will hit a pothole over the first three months of 2021.
The bank forecasts real gross domestic product will decline by 2.9 per cent in the first quarter of 2021 compared to the same period in 2020 before improving thereafter if severe restrictions start easing in February.
The bank is forecasting growth of four per cent this year, then 4.8 per cent next year, and finally 2.5 per cent in 2023.
Getting there will be like riding a roller-coaster as the bank warned that resurgence in COVID-19, or new, more virulent strains, could weigh down a recovery in one quarter before leading to strong upswing in the next.
Inflation may be equally rocky.
Gasoline prices, which have weighed down the consumer price index this year, will by March be “well above their lows of a year earlier,” the bank’s report said, even if prices hover around where they are now. That should significantly bump inflation, possibly pushing the headline reading to roughly two per cent in the second quarter.
The bump will even out over the rest of the year with the bank forecasting inflation for 2021 at 1.6 per cent. The outlook for subsequent years estimates 1.7 per cent in 2022 and 2.1 per cent in 2023.
Separately Wednesday, Statistics Canada reported the annual pace of inflation slowed in December as the consumer price index was up 0.7 per cent compared with a year earlier.
The agency also reported that the average last month of Canada’s three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 1.57 per cent.
All the numbers in the bank’s lookahead rest on efforts to vaccinate Canadians by the end of the year without any hiccups in that timeline, which would mean broad immunity six months sooner than the bank previously assumed.
The bank says the shorter timeline should mean less scarring overall for the economy in the form of fewer bankruptcies and fewer workers out of jobs for long stretches, which makes it more difficult for them to get back into the labour force.
The long-term unemployment rate, capturing those who have been out of a job for six months or more, reached 2.4 per cent last month, which the central bank noted was a “serious concern” because those workers may eventually drop out of the labour force altogether.
Recent restrictions will harm low-wage workers, who by December had employment levels four-fifths of what they were pre-pandemic, as well as youth and women who are more likely to work in hard-hit sectors like accommodations and food services.
The central bank’s report warned the longer restrictions remain in place, the more difficult it may be for these workers to find new jobs since the majority move to a new job but in the same industry.
This report by The Canadian Press was first published Jan. 20, 2021.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
