Business

Canada to enter 'moderate and short-lived' recession in 2023, RBC economists warn – The Globe and Mail

Published

2 years ago

July 7, 2022

A person walks by the Royal Bank of Canada building on Bay Street during the COVID-19 Pandemic in Toronto on Wednesday, May 27, 2020.Nathan Denette/The Canadian Press

The Canadian economy will slip into a “moderate and short-lived” recession in 2023 as it copes with rising interest rates and lofty inflation, Royal Bank of Canada warned on Thursday.

The recession won’t be as severe as previous downturns, but will see consumers pull back on spending as they deal with the strongest price growth in decades, higher costs of borrowing and the loss of wealth, stemming from a slowdown in the housing market, the RBC report said.

Canadians will also be affected by job losses, sending the national unemployment rate – now at a record low of 5.1 per cent – to around 6.6 per cent, the bank estimates.

The Bank of Canada and its global peers are aggressively raising interest rates, aimed at curbing demand and knocking down inflation. Canada’s annual inflation rate hit 7.7 per cent in May, the highest since 1983. The consensus view on Bay Street is that the Bank of Canada will raise its policy rate by three-quarters of a percentage point next week to 2.25 per cent.

As monetary policy tightens, global investors are betting that it results in a recession, which has led to a selloff in stock markets and lower prices for commodities, such as crude oil. RBC is the first of Canada’s major lenders to predict the country will enter a recession in the near term.

In an April forecast, the Bank of Canada said the economy would grow 4.2 per cent this year and 3.2 per cent in 2023, after adjustments for inflation. The central bank will issue a new forecast on Wednesday, alongside its rate decision. Private-sector forecasters have been pencilling in slower rates of growth as the inflation threat lingers.

“When you’re at the top of the hill the only way to go is down. Canada’s economic growth has fired on all cylinders following pandemic shutdowns,” wrote RBC economists Nathan Janzen and Claire Fan in their report. “But a historic labour squeeze, soaring food and energy prices and rising interest rates are now closing in. Those pressures will likely push the economy into a moderate contraction in 2023.”

The authors noted that higher interest rates were “necessary to tame inflation” and that a downturn “can be reversed once inflation settles enough for central banks to lower rates” again.

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Business

TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

Published

5 hours ago

November 7, 2024

Anne Joseph

CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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Business

BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

Published

5 hours ago

November 7, 2024

Anne Joseph

BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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Business

Canada Goose reports Q2 revenue down from year ago, trims full-year guidance

Published

5 hours ago

November 7, 2024

Anne Joseph

TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.

The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.

Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.

On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.

In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.

It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:GOOS)

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