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 – 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
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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