Canada’s economy contracted slightly in October, with real gross domestic product down 0.1 per cent from September — the first month-to-month decline since February, Statistics Canada reported Monday.
Economists had projected a flat GDP report for October compared with September, according to financial markets data firm Refinitiv, despite a recent flurry of Statcan reports that indicated significant slowing in some sectors.
The slowing included the biggest month-to-month decline in retail sales since March 2016 as well as significant declines in wholesale sales and manufacturing.
“Markets and the Bank of Canada have been tempted to sound the ‘all clear’ signal . . . but a 0.1 per cent decline in October GDP puts the economy on a chilly path at the start of the fourth quarter,” CIBC chief economist Avery Shenfeld said in a note to clients.
“You have to go all the way back to June to find a monthly growth reading better than a plus-0.1 per cent, so coupled with the steep employment decline reported for November, there’s at least some doubts about the underlying trend late this year.”
Brian DePratto, senior economist for TD Economics, wrote that the Statistics Canada report on Monday sends his bank’s estimate for fourth quarter GDP growth significantly lower, to just 0.5 per cent annualized.
“If borne out, that pace of growth would, in an echo of the retail sales data, be the weakest in more than three years, and fall well short of the Bank of Canada’s 1.3 per cent tracking from their October Monetary Policy report.”
The Bank of Canada has kept its key interest rate on hold at 1.75 per cent since October 2018, despite rate reductions at other central banks including the U.S. Federal Reserve.
Its Dec. 4 rate decision, as well as subsequent comments from Bank of Canada officials, noted that the domestic economy seemed to be resilient but that the biggest risk was from trade conflicts weighing on global economic activity.
Jobs data surprised analysts on Dec. 6 when Statistics Canada announced the economy had lost 71,200 jobs in November, pushing up the national unemployment rate to 5.9 per cent — the highest since August 2018. The monthly jobs report is notoriously volatile, so economists caution not to put too much weight on one month’s results, but the disappointment for November followed a weak October showing.
The October GDP report says October had the biggest month-to-month decline in retail trade since March 2016 — falling 1.1 per cent, with 10 of 12 subsectors down.
There were also declines in wholesale trade (down 1.0 per cent) and manufacturing (down 1.4 per cent).
DePratto, in the TD Economics commentary, said that manufacturing represented the biggest drag on the economy.
“The biggest story there was spill-overs from a U.S. auto sector strike that sent transportation equipment manufacturing 2.5 per cent lower, but there were additional drags,” DePratto wrote.
“Eight of 10 subsectors reported lower output in October, including machinery manufacturing, fabricated metal products, and wood products, as well as rubber and plastics products.”
Those declines were only partly offset by an advance in the mining, quarrying and oil and gas extraction sector (up 0.1 per cent overall) as well as transportation and warehousing services (up 0.6 per cent).
This report by The Canadian Press was first published Dec. 23, 2019.
Action on climate change can provide a shot in the arm for the global economy, economist says – CNBC
Ramping up investment in policies and technologies to tackle climate change could play a significant role in the global economy’s recovery from the coronavirus pandemic.
In a recent note, Charles Dumas, chief economist at U.K.-based investment research firm TS Lombard, said that action on climate change is often criticized as moving too slowly. However, with governments increasing spending to aid their post-Covid economies, they may start catching up.
A key tenet of this is the ever-decreasing cost of electricity per megawatt hour, according to figures from TS Lombard, with costs of solar, offshore and onshore wind dropping over the last 10 years, while gas and coal have remained largely the same.
“Effectively by 2030 the cost of renewable electricity is going to be half that of coal and gas sourced electricity,” Dumas told CNBC.
These trends will bring many of the various pledges to reach net zero more closely in sight.
The fatal floods in Germany in recent weeks have put the impacts of climate change firmly in the spotlight again but they are only the latest in a series of devastating extreme weather events of late, including the sprawling wildfires in Oregon.
Amid this backdrop, the United Nations Climate Change Conference, better known as COP26, will meet in Glasgow in November. It will mark one of the most significant multilateral meetings on climate since the Paris agreement.
Dumas said that as COP26 approaches, governments need to understand their key priorities, and among them should be infrastructure investments as numerous technological and engineering challenges continue to obstruct renewable energy.
“I think the intermittency problem is pretty serious and it’s not just that the sun goes down at night,” Dumas said.
In the case of solar power, output can be mixed depending on the location of infrastructure like solar farms.
“There’s huge variation with sunny days in winter and sunny days in the middle of summer so the intermittency takes on a very big seasonal aspect,” Dumas said.
“You can have vicious weather for a long time in the middle of December or January and lo and behold you wouldn’t want to be depending on solar power.”
Energy transmission could be another bottleneck, he said. While the developing world, including several African nations, has great potential in developing sites for generating solar power, that power needs to move easily.
“The issue of transmission technology is really major. If you want Chad to be the new Saudi Arabia, because of the Sahara Desert there’s a lot of sun there, but you want the electricity to be used in Europe then you’re talking about some expensive processes and processes needing a lot of research and a lot of further investment.”
Storage and carbon capture are all areas that require hefty investment, Dumas added, if governments are to reach their net-zero targets.
“What we need is a very clear public policy lead in order to get anywhere near these net zero promises and I suspect that actually what it’s going to be about is a carbon tax, which the Americans may resist but will be necessary,” he said.
Paul Steele, chief economist at an independent policy research institute called the International Institute for Environment and Development, said that climate action and renewable energy investments will serve the dual purpose of tackling the climate crisis while creating jobs for the post-Covid economy.
“One of the priorities coming out of Covid is to create labor intensive employment. Both in developed and developing countries, you can provide labor intensive employment through renewable energy,” Steele said.
One example, he said, was the retrofitting of boilers in homes in the U.K., which would help push the country toward its climate targets and create new jobs while being relatively inexpensive in the grand scheme of things.
Steele said that investments to drive a climate-friendly economy cannot be short term or have quick goals.
He pointed to the various government support schemes for the airline industry, which has been battered by the pandemic. Just this week, the European courts gave the nod to a $2.9 billion bailout for Air France-KLM’s Dutch business.
Bailout funds like these should be tied to sustainability commitments by the airline industry, he said, but that can be a dicey proposition to get over the line.
“Governments aren’t making the connections enough and traditionally treasuries and particularly the ministries of transport are still dominated by road building lobbies and people who like to build highways and increase transport rather than people who want to invest in sustainable alternatives.”
Labour proposes 'new deal for jobs' to transform UK economy – BBC News
Labour says it will “fundamentally change our economy” with a “new deal” for post-pandemic Britain.
Shadow secretary of state for the future of work Angela Rayner will kick off a summer of campaigning with a visit to a social enterprise project in London on Monday.
She says the party wants “good quality jobs” that pay a “proper wage that people can raise a family on”.
Ministers say they are “levelling up” the UK to rebuild the economy.
The lifting of Covid restrictions has sparked a debate about inequality and the future of work in the UK.
Research conducted by the TUC found one in nine workers – 3.6 million people – had no pay or job security and three quarters of those on zero-hours contracts lost shifts during the pandemic.
Labour leader Sir Keir Starmer has said the pandemic revealed that “millions of workers don’t have the dignity and security they deserve from their job”.
After the party’s poor results in the English local elections in May, Ms Rayner was appointed to the newly created future-of-work role, saying it was time for a “new deal” as people adjusted to the “new normal”.
She will be joined by Mr Starmer and and other members of the shadow cabinet over the summer on a campaigning tour to set out Labour’s vision.
It is based on five principles:
- Security at work – outlawing fire and rehire, a new right to work flexibly and strengthened trade unions
- Quality jobs – buy, make and sell more in Britain and invest in well-paid, high quality “green” jobs
- A fairer economy – a level playing field on tax between the multinational giants and local businesses and tackling harassment and discrimination at work
- Opportunity for all – A jobs-promise for young people with a guarantee of quality education, training or employment; creating tens of thousands of apprenticeships
- Work that pays – real living wage of at least £10 an hour and more workers covered by collectively agreed deals that boost pay.
Ms Rayner said Britain was “at a fork in the road” as it rebuilt from the pandemic.
She said: “Under the Conservatives we have a broken economic model defined by insecure work, low wages and in-work poverty and a lack of opportunity for people who want to get on and find good work to support themselves and their families.”
She said Labour would “fundamentally change our economy to make it work for working people” and create jobs that were a source of “pride, security and dignity”.
Amanda Milling MP, co-chairman of the Conservative Party, said the Tory government had brought in an “unprecedented” furlough scheme which had paid the wages of 10 million workers during the pandemic; in addition to rising the National Living Wage and “taking millions of the lowest paid out of paying income tax”.
She added: “While Labour carp from the sidelines, we’re continuing to support business while taking the tough decisions needed to rebuild from the pandemic and protect people’s jobs and livelihoods.”
Earlier this month, the prime minister set out what he called the “skeleton” of a plan to “level up” the country by spreading power and opportunity more evenly.
Ministers say it involves investing in transport, skills and businesses to address regional disparities, with more details expected in September.
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