OTTAWA — Canada’s economy unexpectedly shrank by 0.1% in October, the first monthly decline since February, partly because of a U.S. auto strike that hit manufacturing, Statistics Canada data indicated on Monday.
Analysts in a Reuters poll had forecast a gain of 0.1% following a 0.1% advance in September. Goods-producing industries posted a 0.5% loss while service sectors were essentially unchanged.
October’s growth figures were the latest in a string of disappointing data that analysts say could put pressure on the Bank of Canada to mull a rate cut.
“Today’s report may be seem easy to dismiss on its face given the strike-related disruption was well known in advance, but moving past that impact reveals some concerning weaknesses,” said Brian DePratto, a director at TD Economics.
“Don’t write off monetary easing in 2020 just yet.”
The central bank has held its key rate unchanged since October 2018 even as several of its counterparts, including the U.S. Federal Reserve, have eased. In October it forecast fourth quarter annualized Canadian growth would be 1.3% but analysts now say that is likely to be too optimistic.
“Because some of the softness is likely temporary, we look for growth to snap back above 2% in the first quarter of 2020,” said Robert Kavcic, senior economist at BMO Capital Markets.
The manufacturing sector contracted by 1.4%, the fourth decline in five months. Durable manufacturing dropped by 2.3% as a strike by the United Auto Workers prompted some Canadian plants and parts producers to scale back production.
The Bank of Canada’s next fixed rate announcement date is Jan 22 and market expectations, as reflected in the overnight index swaps markets, show operators expect it to stay put.
Statscan said retail trade in October fell by 1.1%, the largest decline since March 2016, on broad-based weakness. Transportation and warehousing rose by 0.6% on strength in the aviation sector, both in passengers and cargo.
“Although the Canadian economy is going through a soft patch in the fourth quarter, some of it is due to temporary disruptions that should be reversed early next year,” said Paul Ashworth, chief North American economist at Capital Economics.
(Reporting by David Ljunggren; Editing by Andrew Heavens and Alistair Bell)
Alberta government says jobs, economy, COVID to be focus of fall legislature sitting – CBC.ca
The Alberta government plans a busy fall legislature sitting aimed at adding jobs and diversifying the economy while focusing on tamping down the renewed surge of COVID-19.
Government house leader Jason Nixon says this will include proposed legislation on recognizing professional credentials to address labour shortages. The bill will be introduced by Premier Jason Kenney.
“Our focus will be on Alberta’s workforce, a couple of bills around diversifying the economy, a big focus on building infrastructure for our future, [and] growing our resources, particularly on the energy side,” Nixon said in an interview Friday.
There will also be new initiatives on environmental protection and conservation.
Nixon said there will be 18 to 20 bills for the sitting, which begins Monday and is scheduled to run to the first week of December.
“It’s a very robust fall agenda,” he said.
Nixon said the government will continue to take steps to reduce COVID-19 cases, which have severely stressed the health system.
No COVID-19-specific bills are planned, he said, noting they were passed in previous sittings.
“There’s certainly other stuff to be done to manage the pandemic but we’ll stand ready if Alberta Health needs us to pass any legislation to deal with the pandemic.”
He said debate in the chamber is expected to return to some semblance of normalcy.
In the spring sitting, both the United Conservative government and the Opposition NDP reduced their numbers in the chamber to prevent the spread of the virus.
This time, with all NDP members and all but one on the UCP side vaccinated, all will be allowed back in for debate.
The lone UCP member has a medical exemption and will be tested regularly, said Nixon.
He said there are still masking rules and members will try to maintain distancing where possible.
The NDP said it plans to hold the government accountable for what went disastrously wrong on COVID-19.
“This fall sitting of the legislature will be laser-focused on getting answers from the UCP on why they’ve failed Albertans so miserably in managing the devastating fourth wave of the COVID-19 pandemic,” said Christina Gray, the NDP house leader.
“Since July 15, more than 85,000 additional Albertans have been infected with the virus and 700 have died.”
Gray said the NDP will call for an all-party inquiry into the government’s handling of the pandemic with the power to compel documents and testimony.
Nixon said the government will not agree to such a motion. He said it would be wrong to redeploy vital health resources right now and that Kenney has promised an eventual review of how the province handled the pandemic.
Kenney has also promised to bring forward a motion to ratify and act on the results of Monday’s provincewide referendum on Canada’s equalization program.
Final results aren’t in from Edmonton, but figures from Calgary and other cities suggest the referendum will pass with about 60 per cent in support of urging the federal government to remove the principle of equalization from the Constitution.
Kenney has said the issue is not about removing equalization, something no province can do unilaterally, but about getting leverage to negotiate other issues surrounding federal transfers to attain a better deal with Ottawa.
Political scientist Jared Wesley said Kenney will likely continue to focus on initiatives such as the equalization referendum, if only to change the narrative on his low popularity ratings.
“The premier will be spending most of his time, if he has anything to say about it, outside the province, stumping for this fair deal,” said Wesley, with the University of Alberta.
Charting the Global Economy: Weekly Global Economy Check – Bloomberg
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China’s economy continues to cool as the nation’s housing slump intensifies, while supply-chain bottlenecks are keeping a tight grip on the recoveries in the U.S. and Europe.
Brazil's Economy Chief to Stay in Job to Avoid Further Crisis – BNN
(Bloomberg) — Brazil Economy Minister Paulo Guedes has decided to stay in the job even after losing four key members of this team over disagreements about the government’s spending plans, according to a person familiar with the situation.
Guedes held a meeting with the remainder of his team late on Thursday after the mass resignations amid President Jair Bolsonaro’s move to break the country’s spending ceiling rule to fund a new social program ahead of the 2022 elections. The minister said he would stay because he believes his departure would further deteriorate the situation, the person said, asking not to be identified to discuss internal government matters.
Read More: Bolsonaro Loses Top Economic Aides After Unveiling Spending Plan
Brazilian markets plunged on Thursday after Bolsonaro’s spending plan was unveiled. The currency sank 1.1% to its weakest level against the dollar since April and the stock market plunged 2.8%, extending its losses to more than 6% this week.
Resignations in Guedes’s team were announced after markets closed.
©2021 Bloomberg L.P.
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