Economy

China's Property Crisis Likely Dragged Economy Down in November – BNN

Published

3 years ago

December 13, 2021

(Bloomberg) — Economic activity in China likely slowed in November due to the worsening downturn in the property sector and still subdued consumption.

Growth in fixed-asset investment probably weakened last month, dragged down by sluggish property investment, according to the median estimate in a survey of economists ahead of data due to be released Wednesday morning.

The economy’s slowdown has prompted Beijing to shift policy direction this month, with the central bank easing monetary policy and the Communist Party ordering more fiscal spending in 2022. It’s unclear though whether that support will be enough to reverse the effects of the crackdown on real-estate, which triggered defaults at China Evergrande Group and other developers and led to a plunge in sales.

“The worst of the policy tightening is behind us, but I am not sure we can say the worst of the financial or economic fallout is behind us,” Logan Wright, director of China markets research at Rhodium Group, said in an interview on Bloomberg TV. There’ll be more emphasis on easing of monetary rather than fiscal policy, given the financial pressures local governments are under, he said.

While Beijing is expected to make more credit available and signaled some easing of controls on the property market to support “stability,” officials last week maintained the basic stance that “houses are for living in, not speculation.”

Data on the price of new homes will show whether the prices falls of September and October continued. The end of the year is usually a busy season for home sales and a continued slump in sales will worsen the already precarious financial position of many developers.

Read more: Abandoned Projects Shatter Confidence in China’s Home Market

Infrastructure investment growth may have accelerated from the 1% expansion in the first 10 months of this year, as local government stepped up their sale of special bonds in the final months of the year after a slow start. That boost may continue into 2022 with Beijing allowing local governments to start selling next year’s bonds from Jan. 1 to speed up spending, according to 21st Century Business Herald.

Still, the Central Economic Work Conference called for local governments to avoid taking on more hidden debt, suggesting it will be difficult for them to maintain high levels of fiscal spending over the longer term and that will make it harder to fully offset the slowdown in property investment.

What Bloomberg’s Economists Say…

China’s economy likely continued to stabilize in November but remained stuck in low gear. Stronger exports provided support. Slowing activity in the real estate sector may have applied a drag to investment, although any slowdown may be mainly due to a higher base last year.

Chang Shu and David Qu, economists

See here for full note.

Retail sales may have increased at a slower pace of 4.7% in November, compared with a 4.9% rise in October, according to a survey of economists. Although there was still strong sales around the “Singles Day” shopping festival in November, the consumption of services, restaurant and catering sales, and purchases at physical shops may have moderated due to outbreaks of Covid-19 during the month. Passenger car sales also likely fell.

Industrial output is expected to pick up on strong export demand and an easing of curbs on production introduced after power shortages earlier in the year.

The surveyed jobless rate likely stayed stable at 4.9% in November, a reading around the pre-pandemic levels, the survey showed. But other indicators showed the job situation continuing to worsen in November. The average number of hours worked per week is worth watching — this surged to a record high in October, indicating that companies likely made existing employees work longer hours instead of hiring new workers.

Pressures on the job market will continue into 2022, with a record number of nearly 11 million college graduates entering the labor market. Regulatory crackdowns on industries ranging from education, property and the internet mean reduced job opportunities, while the government’s Covid-zero approach will continue to curb employment in services industries. If exports slow from their record-breaking gains this year, that will further add to labor-market pressures.

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

3 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

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

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

1 week ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

1 week ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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