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Inflation in Canada likely slowed again in April, but economists say wage growth a top concern



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A person shops at a grocery store in Toronto, on Nov. 22, 2022.Carlos Osorio/Reuters

Canadians’ wages are finally growing faster than prices as inflation continues to ease, but that isn’t necessarily good news for economists who worry high wage growth might stand in the way of bringing inflation back down to the two per cent target.

Statistics Canada’s consumer price index report set to be released Tuesday is expected to show inflation slowed once again in April.

A combination of easing global pressures and higher interest rates have brought inflation down significantly since last summer in both Canada and the U.S. Here in Canada, the inflation rate has been nearly halved, slowing from a peak of 8.1 per cent to 4.3 per cent in March.

TD is forecasting the annual inflation rate was 4.0 per cent in April. The commercial bank also expects food inflation, which has strained people’s finances considerably, eased last month.


The slowdown in inflation gave the Bank of Canada justification to pause its aggressive rate hiking cycle earlier this year and opt for a wait-and-see approach.

The Bank of Canada is forecasting inflation will fall to about three per cent in the coming months. The path to two per cent inflation is expected to be much longer, however, as the central bank expects inflation to return to target by the end of 2024.

Its key interest rate sits at 4.5 per cent – the highest it’s been since 2007. Higher borrowing costs caused by the rate hikes are expected to nearly halt economic growth this year.

But the Bank of Canada has said it won’t be satisfied until inflation comes back to its two per cent target. To gauge what the path to two per cent inflation will look like, the central bank is keeping a close eye on a specific part of the economy: the labour market.

The performance of the Canadian labour market has been somewhat of a mystery to economists. Forecasters have been surprised time and again by stronger-than-expected job gains, while the unemployment rate holds steady at five per cent.

The strength in the labour market is partly explained by strong population growth in the country that’s adding to the number of workers available to firms. Meanwhile, vacancies have eased from last summer as firms report fewer labour shortages.

But with an unemployment rate just above the country’s record low of 4.9 per cent, economists says the labour market is clearly still very tight.

That tight labour market, the central bank argues, is a sign of an overheated economy that’s fuelling inflation.

A key element of the central bank’s worries is how the tight labour market is affecting wages. After lagging inflation for much of the run-up in prices, wage growth has now surpassed inflation, rising 5.2 per cent in April from a year ago.

For workers who have been squeezed by the rising cost of living, this wage growth spells good news.

TD’s director of economics, James Orlando, says wages are now playing catch-up as workers seek compensation for inflation.

“After a long period of time of workers getting real pay cuts, because their wages have not kept up with inflation, you’re having offsetting effects where now this wage growth is, is starting to cause real wage gains,” said James Orlando, TD’s director of economics.

Recently, thousands of federal workers who walked off the job secured tentative agreements with the federal government that include significant wage increases meant to compensate for inflation. These workers, represented by the Public Service Alliance of Canada, will receive a 12.6 per cent compounded raise over four years in addition to a $2,500 lump-sum payment.

Orlando says unionized workers usually see their wages adjust after private sector workers, which means wages may continue to rise rapidly as more collective agreements are negotiated.

BMO’s chief economist, Douglas Porter, says wage growth above inflation is normally not a problem if the economy is also experiencing productivity growth. But productivity growth has not been keeping up with wages, and in fact, has been on the decline recently.

“Unfortunately, Canada hasn’t had much productivity growth in recent years. So, it is a bit of a challenge for the inflation outlook,” Porter said.

Economists say higher wages are feeding into higher prices for services, which continue to rise rapidly even as goods prices have moderated. Wage growth won’t lead to higher inflation, Porter said, but it could make it harder to bring inflation down.

The Bank of Canada’s nervousness about the labour market and sticky inflation led its governing council to consider raising rates last month. It ultimately decided to remain on pause, but Governor Tiff Macklem sent a message to financial markets that they shouldn’t expect rate cuts any time soon.

Rate hikes, Macklem has said, are far more likely.



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Suncor to cut 1500 jobs by end of year, employees informed Thursday – CTV News Calgary



Suncor Energy Inc. says it will cut 1,500 jobs by the end of the year in an effort to reduce costs and improve the company’s lagging financial performance.

Spokeswoman Sneh Seetal confirmed the cuts, saying they will be spread across the organization and will affect both employees and contractors.

Seetal says employees were informed of the cuts in a companywide email from Suncor CEO Rich Kruger earlier this afternoon.


Suncor has been under pressure from shareholders – including activist investor Elliott Investment Management – to improve its financial and share price performance, which has lagged its peers.

Kruger, the former CEO of Imperial Oil Ltd., took the reins at Suncor earlier this spring and has been tasked with turning around the oilsands giant.

Suncor employs people across the country, in the U.S., and the U.K. Its corporate head office is located in Calgary.

This report by The Canadian Press was first published June 1, 2023.

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Amazon ordered to pay more than $30M for privacy violations related to Alexa, Ring devices – CBC News



Amazon agreed Wednesday to pay a $25 million US civil penalty to settle Federal Trade Commission (FTC) allegations it violated a child privacy law and deceived parents by keeping for years kids’ voice and location data recorded by its popular Alexa voice assistant.

Separately, the company agreed to pay $5.8 million US in customer refunds for alleged privacy violations involving its doorbell camera, Ring.

The Alexa-related action orders Amazon to overhaul its data deletion practices and impose stricter, more transparent privacy measures. It also obliges the tech giant to delete certain data collected by its internet-connected digital assistant, which people use for everything from checking the weather to playing games and queueing up music.


“Amazon’s history of misleading parents, keeping children’s recordings indefinitely, and flouting parents’ deletion requests violated COPPA (the Child Online Privacy Protection Act) and sacrificed privacy for profits,” Samuel Levine, the FTC consumer protection chief, said in a statement. The 1998 law is designed to shield children from online harms.

FTC Commissioner Alvaro Bedoya said in a statement that “when parents asked Amazon to delete their kids’ Alexa voice data, the company did not delete all of it.”

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The agency ordered the company to delete inactive child accounts as well as certain voice and geolocation data. That order will apply to Canadian customers, as well, the company confirmed in an email to CBC News. 

Amazon kept the kids’ data to refine its voice recognition algorithm, the artificial intelligence behind Alexa, which powers Echo and other smart speakers, Bedoya said.

The FTC complaint sends a message to all tech companies who are “sprinting to do the same” amid fierce competition in developing AI datasets, he said.

Amazon said last month that it has sold more than a half-billion Alexa-enabled devices globally and that use of the service increased 35 per cent last year.

A black device with the word Amazon on it hangs beside a door
Amazon has agreed to pay $5.8 million US in customer refunds for alleged privacy violations involving its Ring doorbell camera. . (Jessica Hill/The Associated Press)

Hackers able to access Ring accounts

In the Ring case, the FTC says Amazon’s home security camera subsidiary let employees and contractors access consumers’ private videos and provided lax security practices that enabled hackers to take control of some accounts.

Amazon bought California-based Ring in 2018, and many of the violations alleged by the FTC predate the acquisition. Under the FTC’s order, Ring is required to pay $5.8 million US that would be used for consumer refunds.

Amazon said it disagreed with the FTC’s claims on both Alexa and Ring and denied violating the law. But it said the settlements “put these matters behind us.”

“Our devices and services are built to protect customers’ privacy, and to provide customers with control over their experience,” the Seattle-based company said.

In addition to the fine in the Alexa case, the proposed order prohibits Amazon from using deleted geolocation and voice information to create or improve any data product. The order also requires Amazon to create a privacy program for its use of geolocation information.

The proposed orders must be approved by federal judges.

FTC commissioners had unanimously voted to file the charges against Amazon in both cases.

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Stocks slide as debt ceiling vote looms, jobs data stays hot : Stock market news today



US stocks closed lower Wednesday as investors kept a watchful eye on the prospects for the debt-limit deal in an expected House floor vote. Meanwhile, strong US jobs data and China’s economic woes pressured global markets.

The S&P 500 (^GSPC) fell 0.60% while the Dow Jones Industrial Average (^DJI) dipped 0.40% or more than 130 points. The technology-heavy Nasdaq Composite (^IXIC) slipped 0.63%.

US bond yields weakened as investors fretted over the potential impact of the debt-limit deal and reviewed the release of fresh jobs data. The yield on the benchmark 10-year Treasury dropped to 3.62%. The two-year note yields, which are more rate sensitive, slipped to 4.3%, while that on the 30-year bond dropped to 3.84%.

Equities lost steam as the Labor Department reported the number of job openings rose to over 10.1 million, up from economists’ expectations of 9.4 million openings.


The figures underscores “the tightness in the labor market is unlikely to fall off a cliff but rather continue downward on a bumpy path,” Oxford Economics wrote in a note on Wednesday. “While there are some concerns over the veracity of the JOLTS survey due to historically low response rates, the upshot remains that labor market strength remains robust.”

In light of recent economic data, markets are pricing in an increase of 25 basis points in interest rates from the Fed at policymakers’ meeting on June 13-14. On the commodities side, the dollar index rose, while crude oil slid below $70 a barrel.

Still, investors are still very keen on the latest developments in Washington. The debt ceiling agreement negotiated by President Joe Biden and House Speaker Kevin McCarthy passed its first key test on Tuesday when it gained approval from the Republican-led House Rules Committee despite opposition from hard-liners. That cleared the way for the deal to go before the House on Wednesday.

The clock is ticking down, as Congress must race to pass the deal to avoid a catastrophic default by June 5. That so-called X-Date is when the US will run out of money to pay its bills, Treasury Secretary Janet Yellen has warned.


Republican House Speaker Kevin McCarthy speaks to the press after a meeting with President Joe Biden on debt ceiling in Washington, D.C., the United States, May 22, 2023. The United States is Republican House Speaker Kevin McCarthy speaks to the press after a meeting with President Joe Biden on debt ceiling in Washington, D.C., the United States, May 22, 2023. The United States is
Republican House Speaker Kevin McCarthy speaks to the press after a meeting with President Joe Biden on debt ceiling in Washington, D.C., the United States, May 22, 2023. (Photo by Aaron Schwartz/Xinhua via Getty Images)

Meanwhile, both Federal Reserve Governor Philip Jefferson and Philadelphia Federal Reserve President Patrick Harker signaled Wednesday that the central bank could pause rate hikes at its next policy meeting. Separately, the economy showed signs of cooling as hiring and inflation slowing, the Federal Reserve said in its Beige Book survey of regional business contacts.

Elsewhere, China’s factory activity slumped to its weakest level for a second straight month, another sign its post-pandemic economic recovery is losing steam. Asian markets tumbled after the release of the data.

On the housing front, mortgage demand dropped to its lowest level since March, while refinancing activity also dampened to another low, the MBA data showed Wednesday.

Meanwhile, in corporate news, Hewlett Packard Enterprise Company (HPE) sank more than 7% after the company posted a revenue miss in its second quarter earnings and slashed its full-year sales guidance.

Still, the run-up in stocks linked to AI was losing momentum, after the buzz around the technology helped boosted the Nasdaq 100 Index (^NDX) on Tuesday. Shares of ChargePoint Holdings, Inc. (CHPT) was flat, while, Inc. (AI) dipped more than 8% Wednesday.

In single-stock moves, SoFi Technologies, Inc. (SOFI) shares rallied more than 15% in the wake of the debt ceiling deal. The bill would reinstate government student loan repayments, benefiting the online personal finance company.

Shares of HP Inc. (HPQ) sank more than 5% after the computing giant posted better-than-expected quarterly earnings on Tuesday, but reported sales that fell more than analysts estimated.

Intel Corporation (INTC) shares rose more than 4% after the chipmaker said current quarter revenue is on track to be at the high end of its guidance.


Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv



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