Rays (plural) of good news are piercing through the gloom surrounding the Canadian economy.
And not surprisingly, the country’s resilient housing sector is among the first to report a rebound.
Home sales jumped 53.2 per cent in May month-over-month, suggesting that April’s dramatic plunge in sales may have been the market’s low point.
Another crucial statistic was new listings that rose 47.5 per cent during May, compared to April, according to the Toronto Regional Real Estate Board.
The Real Estate Board of Greater Vancouver had also reported on Tuesday that homes sales jumped an unadjusted 34 per cent in May from April, while prices remained flat month-on-month. Benchmark prices rose 2.9 per cent to $1.03 million from a year ago.
Of course, these averages look good as the economy was wallowing in complete uncertainty in April, decimating homes sales and upending market trends.
While home sales in Toronto remain 53.7 per cent lower than May 2019, the decline was less than the 67.1 per cent year-over-year decline reported for April 2020.
“The MLS Home Price Index Composite Benchmark price was virtually unchanged in May 2020 compared to April 2020,” TRREB noted. “On a year-over-year basis, the composite benchmark was up by 9.4 per cent. The average selling price for all home types combined was up by three per cent compared to May 2019 to $863,599. On a seasonally adjusted basis, the average selling price was up by 4.6 per cent month-over-month compared to April 2020.”
A May poll by TRREB showed 27 per cent of the Greater Toronto Area households were looking to purchase a home over the next year, suggesting that sales may improve further in the coming months provided the economy is not adversely hit by new waves of the pandemic.
“As we move toward recovery, the housing sector will be a key driver of growth as consumer confidence increases and more households look to take advantage of very low borrowing costs,” said TRREB CEO John DiMichele.
Investors will also be watching a key metric that indicate where prices are headed next, especially in the pricey Vancouver real estate market.
Sales-to-active listings ratio for May 2020 was 15 per cent in the Vancouver region, detached homes at 13.5 per cent, 18.9 per cent for townhomes, and 14.8 per cent for apartments.
“Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months,” noted the Real Estate Board of Greater Vancouver.
TRREB is expecting prices to remain stable over time, with some possible uptick.
“With home sales and new listings continuing to trend in unison in May, market conditions remained balanced. This balance was evidenced by year-over-year average price growth slightly above the Bank of Canada’s long-term target for inflation,” said Jason Mercer, TRREB’s chief market analyst. “If current market conditions are sustained during the gradual re-opening of the GTA economy, a moderate pace of year-over-year price growth could continue as we move through the spring and summer months.”
Another glimmer of hope that the economy is returning to some form of normalcy has come from the transportation sector.
The Canadian National Railway Co. said it saw a 4 per cent increase in volumes of good shipped in May compared to April.
While the recovery is expected to be slow, it’s a positive sign after shipments hit bottom last month, the company’s chief financial officer Ghislain Houle said Tuesday at the UBS Global Industrials & Transportation virtual conference, according to Bloomberg.
“I think we’re seeing the light at the end of the tunnel,” Houle said. “Hopefully, it will hold.”
Canadian Pacific Railway Ltd. also said it set a new record for shipping Canadian grain and grain products in May, moving 2.80 million metric tonnes in the month.
Finally, yet another sign consumers are ready to put COVID-19 behind them is the 113,224 new light vehicles sold in Canada in May, a 147 per cent jump over April’s sales, according to a report by DesRosiers Automotive Consultants Inc. Still, May 2020 car sales were down considerably compared to the same period last year.
“It’s a measure of the strange times in which we find ourselves in that a market decline of only 44 per cent can seem like a positive sign. However, following the estimated 74.6 per cent decline in April — which sent Canadian new light vehicle sales levels back in time to roughly the early 1950’s — May’s year over year decline can evoke a touch of cautious optimism as the first tentative shoots of recovery spring up from a badly damaged marketplace,” the consultants said in a statement.
“Of course, the ongoing situation remains in flux and an already trying year could prove to have a few tricks left up its sleeves yet,” the consultants warned.
They are wispy green shoots of recovery — but we will take it.
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PROTESTS GO GLOBAL: Protesters hold placards next to the statue of 19th century British Prime Minister Benjamin Disraeli outside St George’s Hall in Liverpool, northwest England, on June 2, 2020, during demonstration after George Floyd, an unarmed black man who died after a police officer knelt on his neck during an arrest in Minneapolis, USA. – The city of Liverpool lit up their civic buildings in memory of George Floyd on June 2 the death of whom in Minneapolis while in police custody has sparked days of unrest in the US city and beyond. Paul Ellis/AFP via Getty Images
- Bank of Canada to make an interest rate announcement at 10 a.m. ET
- Teck Resources Ltd. hosts a conference call to discuss its 2019 Sustainability Report and strategy
- Quebec’s Treasury Board President Christian Dube and Finance Minister Eric Girard to discuss a bill to mitigate the effects of the pandemic and quickly revive the Quebec economy
- A Papua New Guinea court is set to rule on whether Barrick Gold Corp. can proceed with a legal challenge over the government’s refusal to extend its lease on the Porgera gold mine
- Case management conference for Huawei CFO Meng Wanzhou in Vancouver
- Transport Minister Marc Garneau, CEO of Vancouver Fraser Port Authority Robin Silvester, Robyn McVicker, a vice-president at YVR and Tim Strauss, vice-president of Air Canada cargo take part in Transportation Forum 2020
- Notable Earnings: Stingray Group Inc., Canada Goose Holdings Inc., AutoCanada Inc.
Some of the biggest cannabis players when legalization took effect 20 months ago have successfully held on to their dominant positions, despite a year of bankruptcies, downsizings, revoked licences, executive firings, mass layoffs and a long market selloff, writes Vanmala Subramaniam.
It is hard enough to make money in the stock market, even without the world shut down due to a global pandemic. In fact, studies have proven that the average stock actually goes down. So how does one make money? Well, it’s all in the math. A stock can “only” decline by 100 per cent. But if you have a big winner, you can make 1,000 per cent returns, or more. A winner or two can more than make up for many losers, writes Peter Hodson.
Today’s Posthaste was written by Yadullah Hussain (@Yad_Fpenergy), with files from The Canadian Press, Thomson Reuters and Bloomberg.
Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at firstname.lastname@example.org, or hit reply to send us a note.
Resurging coronavirus biggest threat to euro zone economy: economists – The Journal Pioneer
By Shrutee Sarkar
BENGALURU (Reuters) – The resurgence in coronavirus cases is the biggest threat to the recovering euro zone economy, according to a Reuters poll of economists, who say growth and inflation are more likely to create negative surprises over the coming year than positive ones.
Around 30 million people have been infected by the virus globally, and more than 900,000 have died, triggering some of the deepest recessions on record and breaking up supply chains around the world. COVID-19 global tracker https://www.reutersagency.com/en/coverage/covid-19-global-tracker
While a strong euro zone rebound is underway as lockdown restrictions have been eased and businesses reopened, France and Spain among others in the 19-member bloc are grappling with a virus resurgence.
That is raising the possibility of renewed restrictions and lockdowns.
“A flaring in the number of COVID-19 infections over the summer months has made it very clear that if there is no effective vaccine, growth will be handicapped,” said Peter Vanden Houte, chief economist at ING.
“There is also the fear of negative second-round effects once the current recession starts to be reflected in a swelling number of unemployed…(and) we cannot exclude higher precautionary savings dampening consumption.”
A return to where the economy was before the outbreak earlier this year is not expected until at least end-2022.
That comes despite the European Central Bank’s planned 1.35 trillion euros of pandemic-related additional asset purchases and an historic 750 billion euro recovery fund from the European Union due to kick in next year.
But the concern is that no new stimulus is on the horizon, other than national governments extending worker furloughs put in place early this year as they struggle with soaring debt.
Euro zone unemployment, which finally declined just before the coronavirus struck to where it was before the last financial crisis more than a decade ago, is already rising.
Ninety percent of economists, or 37 of 41 who responded to an additional question in the Sept. 15-17 Reuters poll, said a further surge in infections was the biggest risk to the euro zone economy over the coming year.
The remaining handful of respondents cited a strong euro, and no trade deal reached between the EU and United Kingdom when the Brexit transition period expires at the end of the year.
For a graphic on Reuters Poll: Euro zone economic outlook:
The Reuters poll of over 80 economists pointed to 8.1% quarterly growth this quarter, by far the strongest on record, following an historic 11.8% contraction in Q2. That forecast was unchanged from the August poll.
Quarter-on-quarter growth is then set to slow sharply to a still-strong 2.5% in Q4, but down from 3.0% predicted last month.
In a worst-case scenario, the economy was forecast to grow 4.5% in Q3, compared to 4.0% in the last poll. The worst-case for Q4 is now just a 0.4% contraction versus a 2.0% fall in the August poll.
But over 80% of respondents said the risks to both their euro zone growth and inflation forecasts were skewed more to the downside over the coming year.
“The virus is making new waves and the economy is still far from operating at pre-COVID levels in most sectors,” said Elwin de Groot, head of macro strategy at Rabobank, who expects no growth in the final three months of this year.
“But as governments are likely to shift towards more targeted measures – rather than blanket ones – the ‘true’ economic damage may only reveal itself in the next quarters.”
Most economists have remained pessimistic about the bloc’s growth outlook since the pandemic struck, and some have lowered their inflation views even further from last month.
The consensus for this quarter was 0.1% versus 0.3% predicted a month ago, followed by stagnation the next quarter. On a full-year basis, results were broadly in line with the ECB’s staff projections, at 0.4% for 2020, 1.0% for 2021 and 1.3% for 2022.
For a graphic on Reuters Poll: Euro zone economic growth and inflation outlook:
(For other stories from the Reuters global long-term economic outlook polls package:)
(Reporting by Shrutee Sarkar and Richa Rebello; Polling by Hari Kishan and Nagamani Lingappa; Editing by Ross Finley and Alexandra Hudson)
Indian Economy Heads for Double-Digit Plunge as Virus Spikes – Yahoo Canada Finance
(Bloomberg) — India’s economic recovery prospects have gone from bad to worse after the nation emerged as a new global hotspot for the coronavirus pandemic with more than 5 million infections.
Economists and global institutions like the Asian Development Bank have recently cut India’s growth projections from already historic lows as the virus continues to spread. Goldman Sachs Group Inc. now estimates a 14.8% contraction in gross domestic product for the year through March 2021, while the ADB is forecasting -9%. The Organisation for Economic Co-operation and Development sees the economy shrinking by 10.2%.
The failure to get infections under control will set back business activity and consumption — the bedrock of the economy — which had been slowly picking up after India began easing one of the world’s strictest and biggest lockdowns that started late March. Local virus cases topped the 5 million mark this week, with the death toll surpassed only by the U.S. and Brazil.
“While a second wave of infections is being witnessed globally, India still has not been able to flatten the first wave of infection curve,” said Sunil Kumar Sinha, principal economist at India Ratings and Research Ltd., a unit of Fitch Ratings Ltd. He now sees India’s economy contracting 11.8% in the fiscal year, far worse than his earlier projection of -5.8%.
Goldman Sachs’s latest growth forecast came last week after data showed gross domestic product plunged 23.9% in the April-June quarter from a year ago, the biggest decline since records began in 1996 and the worst performance of major economies tracked by Bloomberg.
While there are some signs that activity picked up following the strict lockdown, a strong recovery looks uncertain.
“By all indications, the recovery is likely to be gradual as efforts toward reopening of the economy are confronted with rising infections,” Reserve Bank of India Governor Shaktikanta Das told a group of industrialists Wednesday.
The central bank will likely release its own growth forecast on Oct. 1 when the monetary policy committee announces its interest rate decision. In August, the RBI said private spending on discretionary items had taken a knock, especially on transport services, hospitality, recreation and cultural activities.
The plunge in GDP, as well as ongoing stress in the banking sector and among households, will curb India’s medium-term growth potential. Tanvee Gupta Jain, an economist at UBS Group AG in Mumbai, estimates potential growth will slow to 6% from 7.1% year-on-year estimated in 2017.
What Bloomberg’s Economists Say
India went into the Covid-19 pandemic already suffering a downward trend in growth potential. We expect a 10.6% contraction in fiscal 2021, rebound in 2022, and slower path for growth as scars from the virus recession drag on the remaining years of the decade.
Click here to read the full report.
Abhishek Gupta, India economist
In addition to that, corporate profits have collapsed, putting a brake on investments, which in turn, will curb employment and growth in the economy.
India is “likely to see a shallow and delayed recovery in corporate sector profitability over the next several quarters,” said Kaushik Das, chief economist at Deutsche Bank AG in Mumbai, who has downgraded his fiscal year growth forecast to -8% from -6.2%. That will “reduce the incentive and ability for fresh investments, which in turn will be a drag on credit growth and overall real GDP growth,” he said.
Still, foreign investor sentiment will likely return once the pandemic eases, said Todd Buchholz, a former White House economist and now author.
“The virus is seen as a temporary phenomenon,” he said in an interview. “Those investors who were lining up to invest in India in January 2020 will do so in 2021 also, and deregulation has to continue.”
(Updates with comment from economist in last paragraph.)
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Bangladesh economy shows early signs of pandemic recovery – News 1130
DHAKA, Bangladesh — A rebound in garment orders after demand crashed during spring shutdowns is helping to revive the Bangladesh economy.
Apparel makers, the country’s main export industry, say they are looking ahead to Christmas orders from the U.S. and other major markets.
Remittances from Bangladeshi workers employed overseas have also recovered, helping to relieve pressures from a pandemic quasi-shutdown during the spring.
The Asian Development Bank reported this week that the economic comeback was encouraging. It is forecasting the economy will grow at a robust 6.8% annual pace in the fiscal year that ends in June if current conditions persist.
That’s a much brighter outlook than in April-May, when global clothing brands suspended or cancelled orders worth more than $3 billion, affecting about 4 million workers and thousands of factories.
“At the moment we can say that the ready-made garment industry has been able to regain its growth trajectory upward compared to March-May,” Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA, told The Associated Press.
“As economies in the West were turning around we were successfully able to get the buyers back to the negotiating table, which is why 80% to 90% of the $3.18 billion in cancelled orders have been reinstated,” she said.
Bangladesh earns about $35 billion annually from garment exports, mainly to the United States and Europe. The industry is the world’s second largest after China’s.
Bangladesh’s exports rose 0.6% to $3.9 billion in July, after plummeting 83% to $520 million in April. Imports, which are reported on a quarterly basis, began recovering earlier, rising 36% in May-June.
In August, exports rose 4.3% from a year earlier, to $2.96 billion, mostly driven by apparel shipments, according to the government’s Export Promotion Bureau. Garment shipments totalled $5.7 billion in July and August.
“The garment sector is making a good comeback. Our agriculture is doing well. Remittances are coming. These all are good signs for the economy,” said Ahsan H. Mansur, executive director of the Policy Research Institute, a think-tank in Dhaka.
“The pace of the recovery is clearly visible. But challenges have been there too. The pace of the recovery will depend on how the pandemic behaves in the West over the next few months,” Mansur said.
That’s the inestimable question facing everyone.
As of Thursday, Bangladesh had reported more than 342,000 confirmed coronavirus infections and 4,823 deaths. The country confirmed its first positive case on March 8.
Some experts say the actual number of infections is higher than the official count. The garment industry says few workers in its factories have fallen ill thanks to precautions such as employing fewer people on the production lines and imposing safety guidelines. The government imposed a nationwide lockdown on March 26, and the garments sector was closed for nearly three months, reopening only gradually.
The country director for the ADB, Manmohan Parkash, said the government has managed the crisis well, “with appropriate economic stimulus and social protection measures.”
“We are encouraged by the increase in exports and remittances, and hope the recovery will be sustained, which will help in achieving the projected growth rate,” Parkash said.
Julhas Alam, The Associated Press
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