Canadian GDP plunges record 38.7% in second quarter - Financial Post | Canada News Media
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Canadian GDP plunges record 38.7% in second quarter – Financial Post

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Almost every single component of the economy used to calculate GDP was at its lowest point over April, May and June — driven largely by widespread lockdowns in April.

Economic output rebounded in May by 4.8 per cent, and the agency says June posted an increase of 6.5 per cent.

The agency’s preliminary estimate for July indicates a three-per-cent increase in real GDP.

The second quarter of 2020 was largely expected to be the worst three-month stretch for the economy this year before the country begins what is expected to be a long, bumpy road to a recovery.

Even with the gains in June, economic output is about nine per cent below pre-pandemic levels, Statistics Canada says.

On Thursday, Bank of Canada governor Tiff Macklem told an international gathering of central bankers that not all small and medium-sized businesses are going to be able to reopen even as restrictions to contain COVID-19 are rolled back.

That will be especially the case in sectors such as restaurants and hospitality, where people are in close proximity.

“We are seeing now some very impressive rebound numbers as the economy reopens,” Macklem said on a virtual panel hosted by the Federal Reserve Bank of Kansas City.

“That’s a really good thing, but not all parts of the economy are going to be able to reopen for some time, and so we expect that after this first phase, it’s going to be a pretty long, bumpy phase.”

We expect that after this first phase, it’s going to be a pretty long, bumpy phase

Tiff Macklem, Bank of Canada Governor

The record decline in output over the last quarter, which was the worst posting for the economy over six decades of comparable data, was fuelled by record drops in spending as businesses stayed closed, Canadians ordered to stay home and millions out of work.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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