Euro-zone data next week may offer policymakers the awkward combination of a shrinking economy and limited progress in getting inflation to their two per cent goal.
Annual consumer-price growth is likely to have weakened only marginally to 2.7 per cent in January, following the end of a second consecutive quarter when gross domestic product fell 0.1 per cent, according to economists surveyed by Bloomberg.
The mild recession that would imply — the first since the pandemic — will at least suggest that unprecedented tightening by the European Central Bank hasn’t inflicted too much damage on the economy. Even so, such outcomes would also highlight that the task of taming prices is incomplete.
“We need to be further along in the disinflation process before we can be sufficiently confident that inflation will actually hit the target in a timely manner,” ECB president Christine Lagarde told reporters this week, while observing that “risks to economic growth are to the downside.”
“We think the euro area stagnated in the final quarter of 2023. For the ECB’s governing council that would offer some further reassurance that the economy is not falling off a cliff and that it can afford to wait for confirmation that inflation is on track to return and stay at its two per cent target.”
Policymakers on each side of the Atlantic are confronting inconclusive data at a time when they’re also gauging when they can begin to ease constriction on the economy by cutting borrowing costs.
Numbers on Friday showed the United States Federal Reserve’s preferred gauge of underlying inflation cooled to an almost three-year low — even with robust holiday spending.
For ECB policymakers, the picture gets further muddied by divergences between individual economies. National reports in the coming week may show inflation stayed stuck at three per cent or higher in Germany, France and Spain, while it was probably below one per cent for a third month in Italy.
Similarly, economists anticipate Germany to have suffered a GDP contraction in the fourth quarter — even though a data revision for the prior three months will mean that it avoided the text-book definition of a recession. Meanwhile Italy stagnated at the end of the year, and France and Spain grew.
Whatever the outcomes next week, policymakers are downplaying the seriousness of the economy’s weakness at a time when the jobs market remains tight.
“We do still have a risk of a technical recession, but not a real, deep recession,” Croatian central-bank governor Boris Vujcic told Bloomberg Television’s Maria Tadeo on Friday. “It is more of a stagnation.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Press. All rights reserved.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
The Canadian Press. All rights reserved.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
The Canadian Press. All rights reserved.
Freeland says she’s ready to deal with Trump |
NASA astronauts won’t say which one of them got sick after almost eight months in space
43 monkeys remain on the run from South Carolina lab. CEO thinks they’re having an adventure
Freeland rallies a united front ahead of Trump’s return to White House
Deputy minister appointed interim CEO of AIMCo after Alberta government fires board
Montreal says Quebec-Canada dispute stalling much-needed funding to help homeless
S&P/TSX composite index down Friday, Wall St. extends post-election gains
Mitch Marner powers Matthews-less Maple Leafs over Red Wings
