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Canadian economy stalls in second quarter: StatCan

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OTTAWA –

Economists say the latest GDP data from Statistics Canada showing a contraction in the economy suggests the Bank of Canada’s rate hiking campaign may be coming to an end.

The Canadian economy appeared to stall in the second quarter as investment in housing continued to fall, led by drop in new construction. The economy contracted at an annualized rate of 0.2 per cent in the second quarter, Statistics Canada reported, far weaker than forecasters had expected.

The decline in the second quarter came as housing investment fell 2.1 per cent to post its fifth consecutive quarterly decrease. New construction dropped 8.2 per cent in the quarter, while renovation spending fell 4.3 per cent.

The drop in spending came as Canadians face higher borrowing costs fuelled by interest rate hikes by the Bank of Canada, which is trying to bring inflation back to its target of two per cent.

Tu Nguyen, an economist with accounting and consultancy firm RSM Canada, said the cooling economy should be enough evidence for the central bank to forgo further rate hikes unless there is another major external shock that sends inflation upward.

“The bank’s goal is eventually to restore price stability, to taper an overheated economy. Their goal is not to incur a recession. So it looks like the bank is achieving their goal,” she said.

“They’re certainly going to continue monitoring the data because there has been quite a lot of noise. The reason why I’m fairly confident that this is the end of it is we don’t expect spending to really go up towards the end of the year.”

Nguyen said this is the first time since the early days of the pandemic that spending on services did not grow, which she noted is a powerful signal of a cooling economy. This, despite household savings going up, suggests “people actually have more money in their pockets but they’re choosing to save it and not spend it because they’re anticipating a recession.”

The Bank of Canada’s next interest rate decision is set for next week.

The central bank raised its key interest rate by a quarter of a percentage point to five per cent in July as it said it remained concerned that progress toward its two per cent inflation target could stall.

Nguyen predicted the Bank of Canada likely won’t cut rates until at least April 2024.

“The bank needs to see sustained evidence of inflation going at least towards two per cent. It probably won’t get to two per cent until 2025 but it needs to stay below three per cent for long enough,” she said.

“If the bank cuts rates too early, it’s encouraging businesses and households to go out and borrow again, sort of heating up the economy again, and we really need a period of cooling down.”

Statistics Canada also revised its reading for growth in the first quarter to an annual pace of 2.6 per cent, down from 3.1 per cent.

“The surprise contraction in second-quarter GDP leaves little doubt that the Bank of Canada will keep interest rates unchanged next week,” wrote Stephen Brown, deputy chief North America economist for Capital Economics, in a note to clients.

“With the fall in monthly GDP in June and the apparent stagnation in July setting a weak foundation for the third quarter, the Canadian economy may already have fallen into a modest recession.”

The weakness in the second quarter was also attributed to lower inventory accumulations, as well as slower growth in exports and household spending.

Exports of goods and services crept up 0.1 per cent in the second quarter compared with a 2.5 per cent increase in the first quarter.

Growth in real household spending slowed to 0.1 per cent in the second quarter compared with 1.2 per cent in the first quarter.

Meanwhile, business investment in non-residential structures gained 2.4 per cent in the second quarter, boosted by a 3.3 per cent gain in spending on engineering structures.

The overall pullback in the second quarter came as the economy contracted by 0.2 per cent in June.

Services-producing industries dropped 0.2 per cent in June, while goods-producing industries contracted 0.4 per cent for the month.

Statistics Canada also said its early estimate for July suggested real GDP was essentially unchanged for the month, though it cautioned the figure would be updated.

 

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Duke’s Cooper Flagg makes preseason AP All-America team as ACC, Big 12, SEC each place 2 players

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Alabama’s Mark Sears and North Carolina’s RJ Davis looked into the possibility of leaving for the NBA before deciding to return for another college season.

Their decisions helped their teams earn top-10 rankings in the AP Top 25 and earned both players some preseason honors, too.

Sears was a near-unanimous selection for The Associated Press preseason All-America men’s basketball team released Monday, earning all but one vote from a 55-person national media panel. Davis was right behind him, nabbing 51 votes.

They were joined by Kansas big man Hunter Dickinson, Auburn forward Johni Broome, Arizona guard Caleb Love and Duke freshman Cooper Flagg. Love and Flagg tied for the final spot, creating a six-man team that includes only the ACC, Big 12 and SEC.

Alabama twin bill

Sears was a key cog in the Crimson Tide’s first trip to the Final Four a year ago, orchestrating one of college basketball’s highest-scoring teams.

The 6-foot-1 guard was named a second-team AP All-America after averaging 21.5 points, 4.2 rebounds and 4.0 assists. He was the first Division I player in 31 years to have 795 points, 150 rebounds, 145 assists and 95 three-pointers in a single season while breaking the Alabama single-season record with 26 games with at least 20 points.

Sears worked out for NBA scouts during the offseason before deciding to return to Alabama, earning the Crimson Tide a No. 2 ranking in the preseason AP Top 25.

“I saw the team that we had and I wanted to be a part of it, and bring home Alabama’s first national championship in basketball,” Sears said.

Across the state at rival Auburn, Broome made a quick decision about his future, announcing in April that he would be back for a fifth season.

The 6-10 forward was a third-team AP All-American last season after averaging 16.5 points and 8.5 rebounds while shooting nearly 55% from the floor. With an eye on an NBA future, Broome worked hard on his perimeter shooting during the offseason and his return earned Auburn a No. 11 preseason ranking.

“My main goal is a team goal, which is to win the national championship, to make it as far as I can in March Madness,” Broome said. “When a team shines, everyone shines individually.”

Along Tobacco Road

Like Sears, Davis has similar aspirations after opting to return for his fifth season at North Carolina.

The 6-foot guard was an AP All-American last season and the ACC player of the year after averaging 21.1 points, 3.6 rebounds and 3.5 assists on a team that reached the Sweet 16 of the NCAA Tournament. Davis enters this year within reach of former North Carolina big man Tyler Hansbrough’s all-time ACC scoring record.

“I know there’s more work to be done,” Davis said. “I know my jersey’s not going up until I leave. So there’s some more records to break and some more work to be done. I’m satisfied but I’m not satisfied, if that makes sense.”

Up the road at Duke, Flagg was the only underclassman on the preseason All-America team after arriving with tons of hype. The 6-9 swingman was the No. 1-rated high school recruit out of Newport, Maine and has been projected as the No. 1 overall pick in the NBA draft.

Flagg has the skills of a guard, but can also play inside and has worked hard on his perimeter shooting, giving him the potential to be one of college basketball’s most versatile players. He’s part of a stellar recruiting class that has No. 7 Duke eyeing a deep March run.

Big 12 duo

Dickinson was the biggest move in the transfer portal last spring after leaving Michigan for Kansas. The 7-2 center lived up to the billing, averaging 17.9 points and 10.9 rebounds while leading the Jayhawks back to the NCAA Tournament.

With Dickinson’s return and an influx of talented transfers, Kansas is ranked No. 1 going into the season that begins Nov. 4.

Love’s decision to return for a second season at No. 10 Arizona has ratcheted up expectations in the desert for the Big 12 rival of Kansas.

The athletic 6-4 guard had a high-scoring career at North Carolina and continued it after transferring to Arizona last season. He was the Pac-12 player of the year and a third-team All-American after averaging 18 points per game and making 92 3-pointers.

Love tested the NBA waters this summer before deciding to return.

“He’s had a very successful college career thus far,” Arizona coach Tommy Lloyd said. “He’s kind of this last generation of player that’s going to get better with this extra year, and so I just encourage him to take advantage of it.”

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Browns QB Deshaun Watson ruptured his Achilles tendon and is out for the season, AP source says

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CLEVELAND (AP) — Browns quarterback Deshaun Watson will miss the rest of Cleveland’s season after rupturing his right Achilles tendon on Sunday against Cincinnati, a person familiar with the situation told The Associated Press on Monday.

Watson was injured on a non-contact play in the second quarter of Cleveland’s 21-14 loss to the Bengals.

Watson will soon undergo surgery, said the person who spoke on condition of anonymity because the team has not announced the results of imaging tests taken on his leg.

It’s the second significant injury in two seasons for Watson, who broke the glenoid (socket) bone in his throwing shoulder last year.

The 29-year-old Watson went down without being touched on a draw play late in the first half. His right leg buckled and Watson collapsed to the turf. TV replays showed his calf rippling, consistent with an Achilles injury.

As he laid on the ground, there was cheering by some Cleveland fans, leading to some of Watson’s teammates criticizing that behavior during the team’s fifth straight loss.

The injury is yet another twist in Watson’s divisive stay with the Browns.

Cleveland traded three first-round draft picks to Houston and signed him to a fully guaranteed $230 million in 2022. The deal came amid Watson being accused by more than two dozen women of sexual assault and harassment during massage therapy sessions. He settled civil lawsuits in all but one of those cases.

Watson was suspended by the NFL for his first 11 games with the Browns and then made just six starts last season before hurting his shoulder.

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AP NFL:

The Canadian Press. All rights reserved.



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Canada’s Diallo up 31 spots to No. 87 in ATP rankings after reaching Almaty final

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LONDON – Canada’s Gabriel Diallo moved into the top 100 of the ATP Tour rankings for the first time Monday, rising 31 spots to No. 87 after reaching the final of the Almaty Open.

Diallo upset four top-100 players — including 21st-ranked Alejandro Tabilo of Chile and 30th-ranked Francisco Cerundolo of Argentina — to reach his first career ATP Tour final.

The 23-year-old from Montreal forced a decisive third set against 24th-ranked Karen Khachanov of Russia before dropping a 6-2, 5-7, 6-3 decision on Sunday.

Two other Canadians were in the top 100.

Felix Auger-Aliassime of Montreal rose two spots to No. 19 and Denis Shapovalov of Richmond Hill, Ont., fell three positions to No. 95.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.



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