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Canada’s economy grows 4.5 per cent in May: Statistics Canada – 680 News

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Statistics Canada says the economy grew by 4.5 per cent in May as businesses began to reopen after severe lockdowns of March and April.

The average economist estimate was for a 3.5 per cent increase in gross domestic product for May, according to financial data firm Refinitiv.

The national data agency says rebounds in May were seen across multiple industries with the easing of COVID-19 restrictions, including retail trade that registered a 16.4 per cent bump to mark its largest monthly increase since comparable readings began in 1961.

Motor vehicle and car sales contributed the most to the retail growth. Statistics Canada says the sector would have grown by 11.4 per cent had they been excluded from calculations.

In a preliminary estimate for June, the agency says the economy continued to pick up steam, with a five-per-cent increase for the month.

Despite the two months of growth after two months of negative readings, Statistics Canada’s preliminary estimate is that economic output contracted by 12 per cent in the second quarter compared to the first three months of 2020.

The June and second-quarter figures will be finalized late next month.

CIBC senior economist Royce Mendes says in a note that a 12-per-cent drop in the second quarter would be the largest decline ever by a long shot, even if such a decline was expected.

The Bank of Canada’s most recent economic outlook expected the second quarter of 2020 to be worse than the first, estimating a three-month drop in GDP of 14.6 per cent.

Overall, the central bank expected an economic contraction of 7.8 per cent this year, warning that after an immediate turnaround as restrictions eased, a recovery would be long and bumpy with some businesses and jobs not surviving the downturn.

Statistics Canada says economic activity still remained 15 per cent below pre-pandemic level despite the gains over May as business activity was slowly allowed to resume.

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Stronachs settle family feud – CBC.ca

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A high-profile feud among members of the Stronach family has been settled.

Under a settlement announced by The Stronach Group, control of the family fortune is basically split between two factions.

Former politician and business executive Belinda Stronach will remain chairwoman and president of The Stronach Group, with full control of its horse racing, gaming, real estate and related assets.

Her Austrian-born parents, Frank and Elfriede Stronach, will assume full ownership and control of a stallion and breeding business, all farm operations in North America and all European assets.

The family fortune was founded by Frank Stronach, who built the global Magna automotive manufacturing business — where Belinda worked for a time before entering federal politics.

Father and daughter issued a joint statement saying they were glad their disagreements had been settled.

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Bank of Canada cuts benchmark mortgage rate for 3rd time in months – Global News

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House-hunting Canadians saw their buying power increase this week as the benchmark five-year mortgage rate reported by the Bank of Canada fell for the third time this year, easing a key stress test faced by borrowers.

The central bank said the rate fell to 4.79 per cent, after decreasing to 4.94 per cent in May and to 5.04 per cent in March.

Read more:
Bank of Canada keeps key rate at 0.25%, sees 7.8% GDP drop this year

James Laird, the co-founder of Ratehub.ca and president of CanWise, said Thursday the lower rates will be a win for some.

“If you just barely couldn’t qualify (for a mortgage), you might now qualify for what you were looking for,” he said.

“It is a move that will allow you to qualify just a little more than you could before.”

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Mortgage rates have been falling in recent weeks.

While most borrowers do not pay anything close to the benchmark posted rate for a mortgage, the rate is used when assessing borrowers as part of a financial stress test.






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What you need to know before your deferring your mortgage payment


What you need to know before your deferring your mortgage payment

The check is meant to ensure homebuyers will be able to make their mortgage payments in the future if rates increase from the where they are today. The drop in the benchmark rate makes the test is easier.

According to Ratehub.ca’s mortgage affordability calculator, a family with an annual income of $100,000, a 10 per cent down payment and five-year fixed mortgage rate would have qualified for a home valued at $523,410 under the 4.94 per cent qualifying rate. Under the new rate, they can now afford $531,230.

Read more:
Coronavirus: What will happen to Canada’s housing market amid the pandemic?

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Laird said the rate drop was hardly a surprise because when underlying rates have been dropping, eventually posted rates catch up.

Though the decrease will help many, he categorized it as “not a major change.”

“Anyone was qualifying for a mortgage no problem, they are unaffected,” he said.

“Anyone who was not close to qualifying, they are also not affected.”

© 2020 The Canadian Press

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Number of new U.S. jobless claims dips below 1M for 1st time during pandemic – CBC.ca

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About 963,000 Americans filed for government jobless benefits in the week up to Aug. 8, a decline of almost a quarter of a million people from the level hit at the end of July and the first time the figure has come in below the million mark since the COVID-19 pandemic began in March.

The Department of Labour said Thursday that the continuing claims figure — which tabulates those who were getting benefits before and continued to do so — fell by more than 600,000 to just over 15.4 million people.

While the lower numbers are encouraging, they should be taken with a grain of salt because they come from the first week after the U.S. government ended a previous program that paid out $600 US to Americans left jobless because of the virus.

That’s the equivalent of $15 an hour for full-time work and is far more generous than the payout now available in most places. On Saturday, President Donald Trump signed an executive order that would make the payout $400, but it has yet to be implemented because of ongoing rancour in Washington.

So the lower number could be partly a result of fewer people filing because of the lower payout, not because they have found work. As Bank of Montreal economist Jennifer Lee put it, “Maybe there were more jobs available [or] maybe it was due to the expiration of the top-up in unemployment benefits.”

While a figure under 1 million is encouraging, it is still the 20th week in a row in which the jobless figure is higher than the previous record high of 650,000 hit back in the financial crisis in 2009. The new claims figure peaked in the fourth week of March at 6.8 million. In January, the figure started the year at 212,000.

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