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How COVID-19's latest wave will hit our economy – TheChronicleHerald.ca

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When Ontario Premier Doug Ford ordered the closure last Friday of restaurants, fitness centres, cinemas and performing arts until at least Nov. 6, he understood the consequences.

Since the beginning of the pandemic, employees in these sectors had already suffered disproportionately. In the national capital region, the first COVID-19 lockdown stripped employment in hotels & restaurants by more than half. With the gradual re-opening of the economy employers started rehiring. But as of September, employment in hospitality-heavy sectors was 25 per cent below where it was in February — compared with a net decline of just five per cent for the rest of the local economy.

Retailers, with the exception of big box stores such as Costco and Walmart, have also been forced to make substantial trims to staff levels. These remain nearly 10 per cent below where they were in February. And that doesn’t begin to cover the economic pain because so many of these employees are working fewer hours.

Restaurants and retailers comprise thousands of small businesses that are the bedrock of Ford’s political base. The premier had vowed earlier in the week not to shut down people’s livelihoods unless he was presented with solid evidence that such a move was necessary.

Such evidence apparently arrived in the form of “alarming public health trends that require immediate attention”, to use Ford’s words.

To some extent this was inevitable: COVID-19 has been spreading rapidly, especially here and in Peel and Toronto.  Across the province, the number of confirmed cases over the past week or so has averaged 700 per day — roughly 25 per cent higher than during the peak of the pandemic last April. Over the same period, the tally of active cases in the province climbed seven per cent to 5,540.

Even so, Ontario’s health officials had been somewhat reassured by the fact the number of COVID-19 patients being treated in hospital had actually tumbled 76 per cent to about 200 in early October.

So where’s the alarming trend? Almost certainly, part of it has to do with an accelerating “positivity” rate. While some of the rise in new confirmed cases of COVID-19 is the result of sharply increased testing, the city’s health authorities have been disturbed by the steep climb in the percentage of positive tests.

The ratio during the week ended Oct. 4 was 2.6 per cent. That was well short of the situation last April, when more than 15 per cent of COVID-19 tests were positive — in large part because tests were being allocated for obviously sick people.

Nevertheless, it’s still a marked deterioration from last July, when typically fewer than 0.5 per cent tested positive.

The percentage of positive tests has been rising rapidly in Ottawa since Labour Day — and health officials were keen to avoid another holiday-inspired acceleration.

The other trend being watched carefully by Ottawa Public Health is the rate of infection in the community, otherwise known as R (t) — which measures how many times a single infected individual will forward the pathogen. The last bit of public data from OPH described a seven day average of 0.8 as of Oct. 5.  At first glance this suggests a community that is getting control of things, especially compared with the situation immediately after Labour Day, when infected people were passing along the illness to an average of 1.5 people each.

What we don’t know is what happened between Oct. 6 and 11 — transmission data for this period has been suppressed thanks to a larger than normal backlog. This needs to be sorted out before statisticians can properly calculate the new ratio.

Bottom line: the province and OPH alike would like to use the next four weeks to reverse some key trend lines.  Which of course leaves many of the region’s small businesses once more in limbo, with many owners hanging on by the thinnest of margins, despite promised financial help from Ontario, Quebec and the federal government. Ontario, for instance has earmarked $300 million to assist businesses affected by the latest shutdowns with fixed costs such as property taxes and energy bills.

The economy for the region as a whole has fared relatively well compared with the country’s other big cities. Indeed, the capital region’s jobless rate in September was 8.6 per cent — making it the only major metropolitan area in single digits. The unemployment rate in the other cities ranged from 10.7 per cent in Montreal to 12.8 per cent in Toronto.

Part of this distinction has to do with our region’s supremely unbalanced economy. Fully 24 per cent of the region’s employment base is in public administration. Of the other big urban centres, only Edmonton, with a 6.2 per cent ratio, relies on government for more than four per cent of its workforce.

Add in a couple of other strong sectors — health services (13.6 per cent of the capital’s employment last month) and education (7.3 per cent) — and it seems likely the capital region’s economy should have sufficient shock absorbers for some time to come.

That’s not much solace for workers in hotels & restaurants (4.6 per cent of employment) and culture & entertainment (3.6 per cent), who must contend with a hugely unequal result from COVID-19.

Nor will it protect Ottawa and Gatineau from the inevitable retracing that will occur down the road, when the federal government must finally address its massive debt.

Copyright Postmedia Network Inc., 2020

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Losses mount for oil companies as pandemic grips economy – OrilliaMatters

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NEW YORK — Exxon Mobil reported its third consecutive quarter of losses as the global pandemic curtailed travel and crippled global economic activity.

The energy giant on Friday posted a $680 million third-quarter loss and revenue tumbled to $46.2 billion, down from $65.05 billion during the same quarter last year.

The string of losses and what by almost all counts will be a money-losing year is new territory for Exxon Mobil, which has not posted an annual loss since Exxon and Mobil merged in 1999.

“This is a business that’s made a billion dollars a quarter on average from 2011 to 2018 and it’s had a rough go,” said Peter McNally, global sector lead for industrials, materials and energy at Third Bridge, a research firm.

Already struggling with weak prices from oversupply, the pandemic has intensified the pain for oil and gas companies. The price of U.S. benchmark crude has fallen 40% since the start of the year. The cost for a barrel of oil tumbled 10% just this week as coronavirus infections surged in the U.S. and abroad.

Commuting to work has largely ended for millions of people. Air travel this year fell to levels not seen in the jet age and the economy suffered its worst contraction in decades as factories and other big energy consumers shut down. All indications point to a Thanksgiving celebrated close to home, and in smaller numbers this year.

Exxon has begun slashing costs to offset falling energy demand, and that means jobs.

A day after announcing 1,900 job cuts, Exxon said on Friday that it plans to cut 15% of its global workforce by the end of next year, about 11,250 jobs. The company employed 75,000 people at the end of 2019.

Chevron also announced job cuts Thursday after closing on its acquisition of Noble Energy earlier this month, saying it would trim the headcount at that company by about a quarter.

“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend,” said Exxon Mobil CEO Darren Woods in a prepared statement.

Exxon said Friday that it may divest $25 billion to $30 billion in North American dry gas assets, and that it would cut capital expenditures to between $16 billion and $19 billion next year.

That would follow a year in which Exxon reduced capital spending by 30%, to $23 billion.

“We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle,” Woods said.

Those planned reductions might not be enough to appease some investors. Exxon was the only one of the super-majors to post a loss this quarter, and is behind its peers in cost-cutting, said Jennifer Rowland, senior analyst at Edward Jones. “Everyone else either stayed in the black or got back into the black from the abyss of the second quarter. I think it’s telling that they’re the only ones still running in the red.”

The Irving, Texas, company produced 3.7 million barrels of oil per day in the third quarter, up 1% from the second quarter. But production is down slightly from the same period last year.

“We are not cancelling any projects that are in execution or in the funding process,” said Andrew Swiger, chief financial officer, in a conference call Friday.

Several analysts on the call questioned why Exxon will continue paying a dividend given the losses it’s suffering.

“Our objective is to maintain the dividend, advance the highest value investments, and maintain the debt at a cost- competitive level,” Swiger said.

“It’s not going well,” McNally said about Exxon. “You have to squint at some of the things to find things that are good.”

And the third quarter was an improvement compared with the last, when oil futures crashed below zero. Exxon and Chevron lost a combined $9 billion.

Chevron on Friday swung to a loss of $207 million after a quarterly profit of $2.9 billion last year. Revenue fell by $11 billion, to $24 billion.

Oil prices appeared to stabilize during the third quarter, however, and better conditions enabled Exxon to recover some of the production it had curtailed, the company said.

Demand for refined products also improved, and chemical sales volumes rose as demand for packaging increased and automotive and construction markets recovered, Exxon said.

Oil demand is expected to fall 8% globally this year, according to the International Energy Agency. While some demand has recovered since oil futures fell below $0 a barrel in April, countries are again locking down as the coronavirus surges anew across Europe and the U.S.

Exxon’s stock fell almost 3% Friday, and it’s down more than 50% this year. Chevron was relatively unchanged, but its shares are down about 40% in 2020.

The energy sector is the only one in the S&P 500 to fall since President Donald Trump took office. Energy stocks in the index have lost nearly 57%, and the five worst-performing stocks since Trump’s presidency began were energy companies.

Cathy Bussewitz, The Associated Press


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Canada’s economy beat expectations in August but likely slowed in September – Global News

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Statistics Canada says the pace of economic growth slowed in August as real gross domestic product grew 1.2 per cent, compared with a 3.1 per cent rise in July.

The August figure was stronger than the average forecast of 0.9 per cent for August provided by economists polled by financial data firm Refinitiv.

READ MORE: When did you last work? 1.3M jobless Canadians have passed critical 6-month mark

But in a preliminary estimate, Statistics Canada says growth for September slowed to about 0.7 per cent.

The agency says overall economic activity was still about five per cent below the pre-pandemic level in February.

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© 2020 The Canadian Press

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Losses mount for oil majors as pandemic grips global economy – CTV News

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Exxon Mobil reported its third consecutive quarter of losses as the global pandemic curtails travel and cripples global economic activity.

The energy giant on Friday posted a $680 million third-quarter loss and revenue tumbled to $46.2 billion, down from $65.05 billion during the same quarter last year.

The string of losses and what could be a money-losing year is new territory for Exxon Mobil.

“This is a business that’s made a billion dollars a quarter on average from 2011 to 2018 and it’s had a rough go,” said Peter McNally, global sector lead for industrials, materials and energy at Third Bridge, a research firm.

Already struggling with weak prices from oversupply, the pandemic is taking a heavy toll on oil and gas companies. The price of U.S. benchmark crude has fallen 40% since the start of the year. The cost for a barrel of oil tumbled 10% just this week as coronavirus infections surged in the U.S. and abroad.

“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend,” said Darren Woods, CEO in a prepared statement. “We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle.”

The The Irving, Texas, company produced 3.7 million barrels of oil per day in the third quarter, up 1% from the second quarter. But production was down compared to the third quarter of 2019, when Exxon pumped 3.9 million barrels of oil per day.

Also on Friday, Chevron reported losses of $207 million after turning in a profit of $2.9 billion last year. It brought in $24 billion in revenues, down from $35 billion during the same period last year.

“It’s not going well,” McNally said. “You have to squint at some of the things to find things that are good.”

And the third quarter was an improvement compared with the last, when oil futures crashed below zero. Exxon and Chevron lost a combined $9 billion.

Oil prices appeared to stabilize this quarter, however, and better conditions enabled Exxon to recover some of its production curtailments, the company said.

Demand for refined products also improved, and chemical sales volumes rose as demand for packaging increased and automotive and construction markets recovered, Exxon said.

On Thursday Exxon announced 1,900 job cuts in its U.S. workforce and Chevron, after closing on its acquisition of Noble Energy earlier this month, said it would cut a quarter of that company’s jobs.

Oil demand is expected to fall 8% globally this year, according to the International Energy Agency. While some demand has recovered since oil fell below $0 a barrel in April, countries are again locking down as the coronavirus surges anew across Europe and the U.S.

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