Economists had expected a flat GDP reading for November, a month beset by a major rail strike and oil pipeline disruptions. Instead growth edged up 0.1% from October.
One of the biggest drivers was a 2.1% surge in utilities, thanks to November’s really cold weather. That sector, along with construction, that was up 0.5%, was enough to counter the 1.4% drop in mining and oil and gas, said Brian DePratto, senior economist at TD Economics.
Capital Economics says the rise in GDP supports its view that the Bank of Canada is being too pessimistic about the economy. “We think that an even stronger monthly gain in GDP in December will ensure that the Bank keeps policy on hold in the coming months,” said Capital’s Canada economist Stephen Brown.
But while DePratto now thinks a fourth quarter contraction looks off the table, he cautions that growth is still pretty much at a standstill.
“The list of temporary factors weighing on the Canadian economy seems to grow longer every day, with the novel Coronavirus the latest addition,” he wrote in a note. “The tests of Canada’s economic resilience continue.”
Josh Nye, senior economist at RBC Economics, agrees that the GDP surprise does little to change the narrative that Canada’s economy stagnated in the fourth quarter.
Nye said despite the many transitory factors that hit growth in the second half of 2019, it was clear that Canada’s economy geared down, especially in Q, and that, as the Bank of Canada said last week, has opened the door for a rate cut.
RBC is sticking with its forecast of an April rate cut for now.
“What could tip the balance, though, is the evolving economic impact of the coronavirus (both here and abroad), and how much of a rebound we see in December’s activity indicators,” Nye wrote.
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The United Kingdom will leave the European Union at the stroke of midnight Brussels time today, after which the country will no longer be an EU member state and will be considered a third country. There will be a transition period until Dec. 31, 2020 in which Britain will continue to apply EU law but will no longer be represented in EU institutions — Reuters
Here’s what you need to know this morning:
Britain officially leaves the European Union
Prime Minister Justin Trudeau will visit Vetements Peerless Inc. in Montreal, and meet with employees to discuss the benefits of the new NAFTA for workers and the economy
Ontario Premier Doug Ford will be joined in Brampton by Prabmeet Singh Sarkaria, Associate Minister of Small Business and Red Tape Reduction, Monte McNaughton, Minister of Labour, Training and Skills Development, and Ross Romano, Minister of Colleges and Universities, to make an announcement
Ontario Minister of Finance Rod Phillips holds a budget consultation ahead of Ontario’s 2020 budget
CIBC hosts 23rd annual Western Institutional Investor Conference. in Banff, Alberta
Notable Earnings: Imperial Oil, Exxon, Chevron, Caterpillar, Honeywell International
Today’s Data: Canada GDP, U.S. personal income, consumer spending, Chicago PMI, consumer sentiment
Canadian companies were snapped up by foreign entities in 2019 at the fastest pace in a decade, according to Financial Post data. International firms bought 247 domestic companies last year for a total value of $59.6 billion, at least a 10-year high for value and the number of deals. The financial sector proved the most popular hunting ground. Fifty-eight M&A deals totalling $50.8 billion was a record for the sector. Thomson Reuters’ sale of data and analytics company Refinitiv to the London Stock Exchange topped the list with its $16 billion price tag. Toronto-Dominion Bank followed with its sale of TD Ameritrade Holding Corp to U.S. brokerage Charles Schwab for $14.9 billion. Both deals are subject to regulatory approvals. The biggest completed deal was mining giant Newmont’s acquisition of Canadian miner Goldcorp for $13.3 billion. Other Canadian companies going abroad include Cineplex, to be bought by U.K.’s Cineworld, and The Stars Group, to be acquired by U.K.’s Flutter Entertainment.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
