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US business-equipment orders tame amid investment downshift – BNNBloomberg.ca

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Orders for U.S. capital equipment barely increased in November, consistent with a downshift in corporate investment throughout the year that’s weighed on economic growth.

Bookings for non-military capital goods excluding aircraft — a proxy for business investment — rose 0.1 per cent, matching projections, after a 1.1 per cent jump in October that followed consecutive monthly declines, according to Commerce Department figures issued Monday.

Orders for all durable goods, or items meant to last at least three years, unexpectedly dropped two per cent, reflecting a slump in military aircraft and a drop in civilian planes.

Key Insights

• Combined with a decrease in core shipments, the figures highlight a lack of appetite for capital expenditures, with profit growth cooling and business sentiment still subdued amid global demand concerns. Despite a thawing in the U.S.-China trade war after this month’s phase-one agreement, a more sweeping deal that could spark greater investment and re- charge world growth prospects is a bigger challenge.

• Other recent reports have showed manufacturing, while no longer suffering larger setbacks, remains weak. The Federal Reserve Bank of Philadelphia’s factory index dropped in December to a six-month low, while the New York Fed’s manufacturing gauge barely expanded.

• The headline durable-goods figure was pressured by a decline in orders of commercial aircraft despite Boeing Co. reporting earlier this month that it received 63 orders in November compared with just 10 in October. Orders for motor vehicles and parts rebounded, likely reflecting the effects of the end of the auto workers’ strike at General Motors Co.

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• Shipments of non-defence capital goods excluding aircraft — a measure used in gross domestic product calculations — fell 0.3 per cent after a 0.7 per cent increase. The report showed core business- equipment shipments fell 2.9 per cent on a three-month annualized basis through November.

• Excluding transportation equipment, which tends to be volatile, durable-goods orders were little changed after a 0.3 per cent gain. Bookings for military hardware plunged 35.6 per cent, the most since February 2017, while defence aircraft orders slid 72.7 per cent.

• Durable goods inventories expanded 0.4 per cent for a second month.

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Opinion: It's not just vaccines. We trail the U.S. on business investment, too – Financial Post

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We now have data on the fourth quarter of 2020, and the picture for the full year is one of extreme weakness

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As we emerge from the COVID crisis, attention is shifting to the economic recovery. How quickly can Canada’s economy grow, replace lost jobs, raise incomes, and support government programs and suddenly higher public debt?

A critical growth driver is business investment. Capital spending on buildings, engineering infrastructure, machinery and equipment, and intellectual property creates demand as it occurs. Even more important, once complete, the buildings, infrastructure, machinery, R&D and software equip workers with the tools they need to produce, compete and earn higher wages.

Unhappily, GDP numbers released Tuesday by Statistics Canada reinforce a bleak message from recent C.D. Howe Institute research. We now have data on the fourth quarter of 2020, and the picture for the full year is one of extreme weakness. In real (price-adjusted) terms, investment in non-residential structures was down more than 11 per cent from 2019, while investment in machinery and equipment was down more than 16 per cent. Investment in intellectual property products, notwithstanding the spur COVID has given the digital economy, was also down, by almost four per cent.

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Meanwhile, existing capital has been wearing out. Other recent data from Statistics Canada show an outright decline in Canada’s capital stock in 2020 — the first in more than a decade. Canadian workers are starting 2021 much less well equipped to produce and compete than they were. Forecasters, including the Bank of Canada, are marking down their estimates of how fast Canada’s economy can grow in coming years. Lower productive capacity as a result of weak business investment is a major reason.

It is no surprise that investment was weak during a year when COVID curtailed so much economic activity. But 2020 reinforced two ominous trends.

Business investment in Canada has been weak for years. Weak markets and policy obstacles ended a boom in the resource sector that had buoyed investment in non-residential structures before 2015. Canada’s stocks of machinery, equipment and intellectual property products have been lagging growth in the workforce for the past five years as well.

Equally striking, and not in a good way, is that other countries have done better. In the United States, our foremost trading partner and competitor, business investment fell by only a third as much as it did in Canada in 2020. U.S. investment in both non-residential structures and machinery and equipment held up better than Canadian investment did. U.S. investment in intellectual property products actually rose.

Nor is U.S. outperformance in investment a new story. It means the average U.S. worker is increasingly better equipped than her or his Canadian counterpart. Only in non-residential structures does Canada’s more resource-oriented economy give us an edge. For every dollar of that type of new capital the average U.S. worker enjoyed in 2020, the average Canadian worker enjoyed 1.33 cents. But in machinery and equipment, U.S. workers have a bigger edge: for every dollar of new capital the average U.S. worker enjoyed in 2020, the average Canadian worker enjoyed only 41 cents. And in intellectual property products — the R&D and software so central to competitiveness in the digital era — the gap is a chasm. For every dollar of new intellectual property the average U.S. worker enjoyed in 2020, the average Canadian worker got a paltry 24 cents.

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What these numbers tell us is that the U.S. is on its way to a faster pandemic recovery than Canada, and that its growth from then on will be more robust.

It does not have to be this way. Investment in Canada was much stronger during the 2000s and early in the 2010s. Capital per worker rose, and the gap between investment per worker in Canada and in the United States and other countries narrowed. More-competitive taxes, less competition for saving from deficit-ridden governments, and more efficient and stable regulation all helped improve businesses’ willingness to spend on capital. Since then, however, businesses have found Canada a less congenial place to invest.

The upshot is that Canadian workers are not getting the tools they need to prosper and compete. Improving that situation should be a top priority for the upcoming federal budget and for governments at all levels.

William Robson is president and CEO of the C.D. Howe Institute, where Miles Wu is a research assistant.

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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Winnipeg-based Islamic investment firm prioritizes ethics over economics – CBC.ca

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A Winnipeg-based company is touting itself as Canada’s first halal investment firm.

Last year, Jesse Reitberger and Sheraz Ali co-founded Canadian Islamic Wealth, an wealth management company that solely practises halal investing — a form of investing that aligns with values from Islamic law.

Reitberg, a financial investor for nearly 10 years, came up with the business idea while working for a national bank. He had converted to Islam in 2014 and was trying to help members of the Muslim community finance their futures — but he was having trouble.

“Muslims are prohibited from investing in ways that compromise their values,” said Reitberger, CEO of Canadian Islamic Wealth.

“I kept getting into conversations with people who said, ‘I can’t invest with you because your investments don’t align with my values.'”

Reitberger took classes in Islamic finance and is now certified in that field. But he was still having trouble gaining Muslim customers while working for large firms, because it seemed like the interests of the firm and those of the client seldomly aligned.

Information Radio – MB7:39One Winnipeg-based investment firm is offering the first halal-style investment option for people who care that their wealth management portfolio is selected in ethical ways.

Making choices that secure your financial future can be intimidating. Making financial choices that also make you feel good, does that even exist? Can values and money-making really go together? One Winnipeg-based investment firm believes that values and wealth management can work together. Jesse Reitberger the CEO of Canadian Islamic Wealth tells Marcy he has created halal-style investment options for his Muslim clients. 7:39

Canadian Islamic Wealth — which claims to be the country’s first firm focused solely on halal investing — allows Reitberger to comply with Sharia beliefs and the values of the customer, he said.

Halal investing prohibits investors from putting money toward from anything that deals with interest, such as some bonds and mortgages. It also prohibits investing in companies that profit more than five per cent from something non-permissible to Islamic values, such as tobacco, weapons, or alcohol.

Investors could put money into stocks of tech companies like Apple or Microsoft, for example, but might avoid Air Canada because alcohol is served on flights, said Reitberger, adding that his company also screens for excessive amounts of debt and accounts receivable.

‘Investing with their conscience’

Paul Bates, former professor and a semi-retired corporate adviser, is not surprised to hear of a firm devoting itself to halal investing, but does find it “quite innovative.”

Since the 1970s, many investors have been screening companies to learn more about their activities, Bates said. But right now there is an even greater focus on a company’s environmental impact and social responsibility, and there are many banking systems looking for ways to issue halal bonds.

“More and more people, regardless of whether they are of Muslim faith — or any other faith for that matter — are starting to really think about investing with their conscience as well as with their pocketbook,” he said.

“I’m not at all surprised to hear that a firm has decided to focus entirely on this matter, particularly as our country becomes more multicultural and also very much aware of environmental, social and governance matters.”

Bates is unaware of another firm that focuses on halal wealth management, he said.

Reitberger notes that his firm is not exclusive to the Muslim community. Anyone who likes the notion of ethical considerations when choosing investments is welcome.

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Edmonton company receives boost from Indigenous investment fund – Edmonton Journal

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An Edmonton tech startup aimed at tracking the social impact of a company’s hiring processes has been awarded funds from an Indigenous entrepreneur grant.

Social Awareness Group began in 2017 and recently received $250,000 from the Raven Indigenous Impact Fund, an investment fund that bridges investors with Indigenous entrepreneurs.

President and CEO Aaron Lambie said the money he has received will help expand his company’s technology that integrates with a company’s payroll to assess their hiring practices when it comes to Indigenous people and other visual minorities.

“Industry and vendors and suppliers in the industrial market hold themselves out as having impacts with Indigenous communities. They make a lot of grandiose claims,” said Lambie. “We integrate with payroll and accounting systems and we believe that the evidence that speaks to the credibility of strong corporate social policies is buried in the transactions of your organization or company transaction.”

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For example, Lambie said if a company says they prioritize hiring Indigenous workers, that should be shown in their payroll records.

Paul Lacerte, a managing partner, said they have raised $25 million over the past year and a half and have now assisted six Indigenous companies in their growth.

“We created the Raven Indigenous Impact Fund and said to investors, here is an opportunity to put your money towards reconciliation and the reconciliation economy, and support Indigenous entrepreneurs who might otherwise not being able to access the kind of capital that they need from the bank,” said Lacerte.

After closing the account they have begun to issue grants ranging from $250,000 to $3 million. Lacerte said they plan to cap the portfolio at 13 or 14 companies.

“We want to be able to grow with them and make sure to continue to provide the capital they need as they scale up the size of their business,” said Lacerte.

Lambie said the investment is important because it will help his company expand, but also noted the significance of receiving a vote of confidence from Lacerte’s team.

“It really speaks to the credibility behind some of the actions that industry participates in,” said Lambie. “As much as we’re developing a product that we sell in the market, there’s a lot of research and development that goes into sort of furthering the social impact market, and what that means, and so these dollars helped fund those initiatives.”

dshort@postmedia.com

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