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Trudeau defends his economic track record as new data shows GDP contracted last quarter

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Prime Minister Justin Trudeau defended his government’s economic performance Thursday by touting investments in housing and dental care when asked about new data that shows the economy actually contracted in the last quarter.

Statistics Canada reported this morning that the Canadian economy shrank at an annualized pace of 1.1 per cent in the third quarter — a performance much worse than what some forecasters expected for the July through September period.

In October, the Bank of Canada forecast that the economy would actually grow by roughly 0.8 per cent in that quarter.

Finance Minister Chrystia Freeland’s fall economic statement, tabled last week, cited a September survey of private sector economists projecting the economy would grow at least a little in the third quarter. The weak economic performance could undermine that document’s fiscal projections.

The new StatsCan data suggests the economy is underperforming even the relatively pessimistic growth projections from the central bank and others.

The slump was driven in part by reduced exports, including a steep decline in refined petroleum energy products, StatsCan said.

The U.S. GDP grew by 5.2 per cent in the same period.

Conservative Leader Pierre Poilievre pounced on the poor data, saying Trudeau has “led the economy into a ditch.”

The negative economic growth comes after the Bank of Canada went on an aggressive rate-hiking campaign to drive down red-hot inflation.

Trudeau addresses shrinking Canadian economy in 3rd quarter

 

Featured VideoPrime Minister Justin Trudeau said the government is investing in housing and affordability after Statistics Canada reported the country’s GDP shrank 0.3 per cent in the third quarter.

The intended effect of this effort — an economic slowdown to restore price stability — appears to be panning out.

“We know that Canadians are facing challenging times and have for a long stretch now,” Trudeau said.

“That’s why we’ve been stepping up with direct supports for Canadians,” he said, citing past GST rebates and rental relief for low-income Canadians.

Trudeau said Ottawa would push ahead with a housing accelerator fund, a program that floats money to cities that cut building-related red tape to get more units built.

Prime Minister Justin Trudeau and Deputy Mayor of Ajax Marilyn Crawford arrive for a housing announcement
Prime Minister Justin Trudeau and Deputy Mayor of Ajax Marilyn Crawford arrive for a housing announcement in Ajax, Ont. on Thursday, Nov., 30, 2023. (Christopher Katsarov/Canadian Press)

He said the government would come through with more low-cost loans for homebuilders to get affordable rental homes built to help deal with the country’s acute housing crunch.

He also said the federal dental care program for children, and a forthcoming expansion of rhe program for eligible seniors, will save families money when every extra dollar counts.

Trudeau claimed that Ottawa is managing its finances in “a fiscally responsible way” and the federal government could come through with more relief for Canadians if the economy slips into a recession and unemployment rates move higher.

“We have room to respond if there is more to do,” Trudeau said.

“We have the lowest deficit in the G7, the best debt-to-GDP ratio in the G7.”

He accused Poilievre of planning to quickly eliminate the federal deficit through harmful cuts to public services. “Conservatives propose cuts in services and programs as a way of creating growth, which makes absolutely no sense,” Trudeau said.

Poilievre warns of ‘stagflation’ risk

While Canada’s debt servicing costs are lower than those faced by some other countries, Freeland’s fall economic statement warns that they are expected to balloon.

With interest rates at a 20-year high, the cost to borrow to carry the federal government’s $1.2-trillion debt has spiked from $20.3 billion in 2020-21 to $46.5 billion in this fiscal year.

Poilievre said Canada could be facing “stagflation” — high inflation combined with high unemployment and slack demand for goods and services.

 

Poilievre, Anand spar over new economic numbers

 

Featured VideoConservative Leader Pierre Poilievre said the U.S. economy is ‘roaring’ while Canada’s is ‘snoring.’ Treasury Board President Anita Anand dismissed what she called ‘trite rhymes’ and touted the Liberals’ economic plan.

The inflation rate has levelled off in recent months and the country’s unemployment rate is still relatively low at 5.7 per cent.

And while the third quarter GDP figure was a big miss, Statistics Canada did revise up its numbers for the second quarter.

The statisticians at the federal agency now say the economy grew by 1.4 per cent in the April-June period, higher than the figure they previously reported.

But Poilievre said Canada’s record just doesn’t compare to what’s transpired in the U.S.

“Why is it that the American economy is roaring while the prime minister’s economy is snoring?” Poilievre said in question period.

Treasury Board President Anita Anand said the International Monetary Fund (IMF) projects that Canada will have the highest economic growth in the G7 next year.

Rachel Bendayan, the parliamentary secretary to the minister of Finance, said the Conservatives are “talking down” the economy while the Liberals are focused on their economic plan, which includes delivering more homes and boosting climate-friendly industries.

Industry Minister Francois-Philippe Champagne also responded to Conservative criticism by touting a recent multi-billion dollar investment by Dow, a U.S. chemical company, in Fort Saskatchewan, Alta.

“There’s one number the Conservatives never mentioned. We’re third for foreign direct investment,” Champagne said. “This is how you lead a country. This is how you lead an economy.”

 

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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