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February GDP report shows the Canadian economy losing steam – BNN Bloomberg

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The Canadian economy lost momentum after a roaring start to the year, reinforcing economists’ expectations that the Bank of Canada is on track to cut interest rates in the coming months. 

Statistics Canada reported Tuesday that real gross domestic product rose 0.2 per cent in February. That followed a 0.5 per cent gain in January. 

“Today’s GDP report confirmed our expectations that the January surge in output was temporary, and in no way marked an inflection point for the growth backdrop in Canada that remains very weak,” said RBC economist Claire Fan in a client note.

Looking ahead, the federal agency says its advance estimate for March indicated that real GDP was essentially unchanged for the month.

Based on the preliminary figure, the Canadian economy grew at an annualized rate of 2.5 per cent in the first quarter of 2024.

Although the economy continues to expand, economists say the latest data reinforces the idea that the growth is sluggish as higher interest rates weigh on consumer and business spending decisions. 

That will likely land as good news for the Bank of Canada, which is looking for continued evidence that the economy and inflation are responding to tighter monetary policy.

Governor Tiff Macklem said earlier this month that the central bank is already seeing the right conditions to begin lowering its policy rate from five per cent. But he said he wants to see those conditions sustained to ensure inflation is in fact heading down to the bank’s two per cent target. 

“The loss of momentum as the quarter progressed is the bigger takeaway from this report. That puts additional pressure on the BoC to begin cutting as soon as June,” wrote BMO’s Benjamin Reitzes, managing director of Canadian rates and macro strategist.

The sluggishness in the Canadian economy is also evident in the labour market, where job creation has lagged population growth. In March, the unemployment rate jumped to 6.1 per cent. 

Reitzes cautioned in his client note, however, that a June rate cut still depends on April inflation data, which is set to be released in a few weeks. 

Canada’s inflation rate came in at 2.9 per cent in March, up slightly from the previous month. 

Statistics Canada’s report on Tuesday shows 12 of 20 sectors showed growth in February. 

Services-producing industries increased 0.2 per cent, helped by the transportation and warehousing sector which increased 1.4 per cent, as rail transportation grew 5.5 per cent with activity returning to normal after freezing temperatures in January in Western Canada.

Air transportation also increased 4.8 per cent in February, driven by growth in international travel as some airlines increased capacity to Asia. 

Statistics Canada said goods-producing industries were essentially unchanged.

The mining, quarrying, and oil and gas extraction sector grew 2.5 per cent in February as oil and gas extraction increased 3.3 per cent, partially offsetting a contraction in January. Mining and quarrying (except oil and gas) rose 1.9 per cent.

The utilities sector contracted 2.6 per cent, while the manufacturing sector fell 0.4 per cent.

This report by The Canadian Press was first published April 30, 2024.

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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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All Magic Spells (TM) : Top Converting Magic Spell eCommerce Store

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