Economy

U.S. economy sped up at the end of 2019

Published

5 years ago

January 7, 2020

AFP/Getty Images

The U.S. economy seemed to get a second wind at the end of the year.

The numbers: The huge service side of the U.S. economy sped up at the end of 2019, coinciding with solid holiday sales and reduced trade tensions with China.

The Institute for Supply Management’s survey of service-oriented companies such as banks retailers and restaurants rose to a four-month high of 55% in December, from 53.9% in the prior month.

Numbers over 50% are viewed as positive for the economy and anything above 55% is seen as exceptional. The index is still well below its postrecession peak of 60.8%, however, that was reached just a little over a year ago.

Service-oriented companies that derive most of their sales in the U.S. have been better shielded from the conflict with China than more internationally oriented manufacturers.

The ISM’s manufacturing gauge fell to a more than 10-year-low of 47.2% in December, staying below the key 50% cutoff line for the fifth straight month.

What happened: The index for business production in the service sector rebounded in December, rising 5.6 points to 57.2%. Production has dropped in the previous month to a nine-year low.

New orders grew more slowly, however, as did employment. Both indexes were still positive, though.

“The respondents are positive about the potential resolution on tariffs,” said Anthony Nieves, chairman of the services survey.

Altogether, 11 of the 17 industries tracked by ISM said their businesses were expanding. A year ago all but one were growing.

“Growth remains steady,” said an executive at a hospitality company.

“Business activity and growth in our business continues to expand,” said an executive at a management firm.

What they are saying? “There was trepidation ahead of the U.S. nonmanufacturing ISM report after its manufacturing cousin hit a 3-year low in the same month,” said senior economist Jennifer Lee of BMO Capital Markets. “Thankfully, there was no need for it. And this is arguably more important as it accounts for 80% of the private sector economy.”

Big picture: The most of Americans now work for service-style companies and that is why the economy is still growing despite a slump in manufacturing.

Sales inside the U.S. have held up well, negating the need for companies to reduce payrolls. Firms say one of their biggest problems is finding enough skilled labor to fill empty positions, forcing them to either raise wages, retrain new hires or invest more in automation.

A strong service sector bodes for the economy in 2020, especially if the U.S. and China continue to ratchet down tensions.

Market reaction: The Dow Jones Industrial Average

DJIA, -0.42%

and S&P 500

SPX, -0.28%

fell in Tuesday trades on ongoing worries about tensions in the Middle East after the U.S. killed a top Iranian general in Iraq.

The 10-year Treasury yield

TMUBMUSD10Y, -4.87%

slipped 1.80%.

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

1 day ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

5 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

6 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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