(Bloomberg) — A gauge of service-sector activity in China weakened last month, underscoring the precarious nature of the nation’s recovery.
Separate data showed the euro-area economy barely expanded in the second quarter, which may feed policymakers’ worries about stagflation taking hold. Meantime, South Africa’s economy grew by more than expected in the period, driven by finance and manufacturing.
China’s housing crisis has engulfed the country’s private developers, producing record waves of defaults and leaving a shrinking group of survivors. Out of the nation’s top 50 private-sector developers by dollar bond issuance, 34 have already suffered delinquencies on offshore debt, according to Bloomberg-compiled data.
Japan’s households cut back spending in July as persistent inflation continued to erode purchasing power, adding pressure on the government to ramp up aid when it unveils a fresh batch of economic measures in coming weeks.
Europe
Britain’s residential property market slump deepened, with figures from two of the top mortgage lenders indicating home prices falling at the fastest pace since 2009 and warnings of worse to come.
The euro-area economy barely grew in the second quarter as new data showing a dismal performance for exports forced a downward revision in overall growth numbers for the region. The report provides the European Central Bank with harder evidence of the weakness taking hold in the euro-zone economy, a week before policymakers prepare to decide whether another interest-rate increase is warranted to tame inflation.
South Africa’s economy grew faster than expected in the three months through June. Finance and manufacturing, which make up more than a third of GDP, were the main drivers of the growth, supporting the view that many big businesses are adapting and insulating themselves from the nation’s chronic shortage of electricity.
Mexico’s annual inflation eased roughly in line with expectations in August, as the central bank says it’s not yet ready to discuss lowering record high borrowing costs given the “complex and uncertain” global outlook.
US
US employment gains will slow significantly and be more concentrated across few sectors in the decade through 2032 as population growth moderates, fresh government estimates show. The Bureau of Labor Statistics sees the economy adding almost 4.7 million jobs, or 0.3% annually. That’s well shy of the 1.2% annual increase in the decade that ended in 2022.
The extraordinary wage growth enjoyed by Americans who switched jobs during the pandemic has finally disappeared. Wages for so-called “job switchers” rose 5.6% over the last year, while those for “job stayers” rose 5.2%, according to Atlanta Fed data. The difference between the two was narrowest since September 2020, before a tightening labor market sent wages for both groups soaring.
The return-to-office debate is far from settled, leaving questions about the role of offices, the integration of work and life, and the measurement of productivity and pay. How it plays out carries significant economic consequences: McKinsey Global Institute estimates that pandemic shifts could erase as much as $1.3 trillion of real estate value in big cities around the world by 2030.
Poland delivered a bigger-than-expected rate cut ahead of an election, while Chile’s central bank slowed the pace of its easing cycle as inflation heads toward target. Israel’s central bank kept interest rates unchanged, breaking with the US Federal Reserve’s last decision to tighten policy. Officials in Australia, Canada and Malaysia also held.
—With assistance from Eamon Akil Farhat, Matthew Boesler, Matthew Boyle, S’thembile Cele, Max de Haldevang, Emma Dong, Shuiyu Jing, John Liu, Dorothy Ma, Yoshiaki Nohara, Zoe Schneeweiss, Alex Tanzi and Fran Wang.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
The Canadian Press. All rights reserved.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
The Canadian Press. All rights reserved.
HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.
Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.
The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.
Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”
Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.
Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.
This report by The Canadian Press was first published Sept. 10, 2024.
The Canadian Press. All rights reserved.
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