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Wealth, Housing and Retail Show How Canada's Economy Is Healing – Bloomberg

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The Yaletown neighbourhood of Vancouver. 

A year into the pandemic, Canada’s economy is showing clear signs it’s on a path to a full recovery.

The country added 259,200 jobs in February, more than three times what economists were expecting, Statistics Canada reported Friday. That follows other data this month indicating Canada’s economy is on pace to fully repair damage from the pandemic at least one year ahead of what most analysts were expecting only weeks ago.

And that’s despite lockdowns that closed large parts of the economy in December and January. In just two months, the policy debate has turned from whether to provide additional stimulus, to when to pull back on support.

Here are some highlights, 12 months after the first Covid-19 restrictions were imposed.

Wealth Keeps Climbing

The net worth of Canadian households rose 9% over the past year

Source: Statistics Canada

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In the midst of a deep economic crisis, Canadians became a whole lot richer.

The nation’s households saw their net worth jump by more than C$1 trillion ($800 billion) last year, according to a separate report Friday from the statistics agency. That’s despite a downturn that saw 3 million people lose jobs and the unemployment rate jump to historic highs.

Generous government income support during the pandemic, along with fewer opportunities to spend, resulted in stronger household balance sheets. Low borrowing costs encouraged Canadians to buy properties. Others decided to put money into stocks or other assets.

On a per capita basis, household net worth reached a record C$332,000, up about C$24,000 since the end of 2019.

Housing Heats Up

Price gains are accelerating in Canada’s biggest cities

Source: CREA, TRREB, REBGV, Bloomberg calculations

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The value of homes and land owned by households, which grew by C$642 billion last year, was the main contributor to that boost in wealth.

It was a strange year for real estate. Some saw the pandemic as the trigger for a major correction. Instead, the residential real estate market has been a bright spot in Canada’s recovery story, with sales and prices for single-family homes reaching records in many metro areas as consumers search for more space and take advantage of low borrowing costs.

To economist David Rosenberg, things have gone too far.

“This might be one of the biggest bubbles of all time,” the founder of Rosenberg Research & Associates in Toronto told BNN Bloomberg Television on Wednesday.

Labor Recovers Unevenly

Service-industry layoffs account for nearly 90% of pandemic job losses

Source: Statistics Canada

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While almost 1 million Canadians are still gravely impacted from the pandemic — either through lost jobs or substantially fewer hours — the nation’s labor market has recovered most of its losses. At its worst point, 5 million Canadians had lost jobs or were working less than half their usual hours, one-quarter of the labor force.

The lingering damage is increasingly confined to a subgroup of largely high-contact sectors: accommodation and food, retail and recreation. These are largely lower-wage workers, disproportionately young and female.

It’s a double whammy for some of these groups. Lower-waged workers are more likely to be renters rather than homeowners. Not only are their chances of being unemployed higher, they also haven’t benefited from the rise in home prices.

Shopping Habits Shift

Covid-19 reshaped how Canadians spent their money in 2020

Source: Statistics Canada

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Consumption did drop last year, but the data also show households — with confidence back at pre-pandemic levels — were spending money when they were allowed to shop. Consumption on services like haircuts fell by C$66 billion last year, while travel expenditures were down more than C$30 billion. But anything to do with housing was a blockbuster year, while spending on durable good items was down just C$4 billion in 2020.

Another case in point was retail. Most retailing sub-sectors returned to pre-pandemic levels of sales and some have more than offset losses early on in the crisis.

In aggregate, Canadian retailers recorded a 1.4% drop in sales to C$606 billion last year but that was because of a collapse in April and obscures a surge since then. In December, sales were up 4.5% from year earlier levels.

Yet the uneven nature of the rebound is evident here as well. Grocery stores and building material retailers posted double-digit annual growth. Clothiers, meanwhile, reported double-digit declines.

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    Major economies should inject 'significant' support for global economy: Yellen – TheChronicleHerald.ca

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    By Andrea Shalal and David Lawder

    WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Thursday warned of the risk of a permanence divergence in the global economy in the wake of the COVID-19 crisis, and urged major economies to inject significant new fiscal support to secure a robust recovery.

    In a statement to the steering committees of the International Monetary Fund and the World Bank, Yellen underscored the need for major economies to continue supporting developing countries as they grapple with the COVID-19 pandemic, climate change and high debt burdens.

    She urged the World Bank to help countries, particularly the world’s poorest, get timely access to COVID-19 vaccines, and backed accelerated negotiation to replenish the World Bank’s International Development Association fund for the poorest countries – a goal the bank aims to reach by December.

    The United States had pledged $4 billion to the COVAX global vaccine distribution initiative, Yellen said, urging others to join in.

    She signalled that Washington, which so far has only loaned vaccines to Mexico and Canada, could provide excess doses to other countries in the future.

    “The United States will continue to work with partners to increase vaccine supplies, explore sharing excess vaccines, and make sure financing does not become an obstacle for global vaccination,” Yellen said, without providing any details.

    Yellen’s comments reflect the Biden administration’s focus on strong international cooperation to tackle global challenges – a sharp departure from the “go-it-alone” approach pursued by former President Donald Trump’s administration.

    “The (COVID-19) crisis has exacerbated the trend of rising income inequality, raising concerns about a divergent path within and across countries. We also face the existential threat of climate change. We can only resolve these problems through strong international cooperation,” Yellen said in remarks prepared for her first meeting with the IMF’s International Monetary and Financial Committee and the World Bank’s Development Committee.

    The former head of the Federal Reserve said substantial fiscal and monetary support from major economies had improved the global economic outlook significantly, but more efforts were needed.

    Washington was implementing a $1.9 trillion COVID-19 relief plan and was working on another large infrastructure package, Yellen said, urging other major economies to take similar actions.

    “The job is not yet done, given high uncertainty and the risk of permanent scarring,” she said. “I urge major economies to not just avoid removing support too early, but to strive to provide significant amounts of new fiscal support to secure a robust recovery.”

    Yellen said developing countries should work with the IMF and World Bank on economic policies and structural reforms and seek full-fledged IMF financing programs, which carry conditions, where necessary. Some countries may need deeper debt treatment, she added.

    She called on all creditors to “fully and transparently” implement the Group of 20’s common framework for debt treatments to avoid “unnecessary delays that can prolong debt overhangs and exacerbate growth shocks.”

    She also urged the World Bank to lead on “transformative climate investments” and to continue to set an aggressive agenda on climate and the green recovery from the crisis.

    (Reporting by Andrea Shalal and David Lawder; Editing by Toby Chopra and Paul Simao)

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    Economy

    Canadian dollar pulls back from two-week high ahead of trade data

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    Canadian dollar

    TORONTO (Reuters) -The Canadian dollar weakened against its U.S. counterpart on Tuesday as concern rose about Canada‘s third wave of the COVID-19 pandemic and investors awaited domestic economic data that could offer clues on the Bank of Canada‘s policy outlook.

    The loonie was trading 0.4% lower at 1.2573 to the greenback, or 79.54 U.S. cents, having pulled back from its strongest level since March 22 on Monday at 1.2497.

    Canada‘s trade report for February is due on Wednesday, while the March employment report is due on Friday.

    “Our expectation is for a little bit stronger CAD on the back of some positive data,” said Kyle Dahms, economist at National Bank of Canada.

    He expects Canada‘s current account balance to turn positive over the coming months, helped by higher commodity prices, and that the Bank of Canada will cut its bond purchases when it makes its next interest rate announcement on April 21.

    Such a move would put the Canadian central bank at odds with some peers, including the Federal Reserve and the European Central Bank, which have said they will maintain or even increase the pace of bond-buying.

    The IMF raised its 2021 growth forecast for Canada by 1.4 percentage points to 5%, the biggest upgrade among G7 economies, while strong economic data from China and the United States helped to lift the price of oil, one of Canada‘s major exports. U.S. crude prices settled 1.2% higher at $59.33 a barrel.

    Still, Canada‘s hospitalizations are surging as a third wave of the pandemic sweeps across much of the country, Prime Minister Justin Trudeau said.

    Canadian government bond yields were lower across a flatter curve in tandem with U.S. Treasuries. The 10-year touched its lowest level since March 29 at 1.485% before edging up to 1.490%, down 6.5 basis points on the day.

    (Reporting by Fergal SmithEditing by Paul Simao and Jonathan Oatis)

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    Economy

    TSX rises 0.41% to 19,104.14

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    * The Toronto Stock Exchange’s TSX rises 0.41 percent to 19,104.14

    * Leading the index were OceanaGold Corp <OGC.TO​>, up 6.8%, Silvercorp Metals Inc​, up 6.6%, and Real Matters Inc​, higher by 6.5%.

    * Lagging shares were OrganiGram Holdings Inc​​, down 5.0%, Aphria Inc​, down 4.8%, and Denison Mines Corp​, lower by 4.3%.

    * On the TSX 163 issues rose and 65 fell as a 2.5-to-1 ratio favored advancers. There were 23 new highs and no new lows, with total volume of 205.4 million shares.

    * The most heavily traded shares by volume were Toronto-dominion Bank, Tc Energy Corp and Bank Of Nova Scotia.

    * The TSX’s energy group rose 1.14 points, or 1.0%, while the financials sector slipped 0.09 points, or 0.0%.

    * West Texas Intermediate crude futures rose 0.94%, or $0.55, to $59.2 a barrel. Brent crude  rose 0.87%, or $0.54, to $62.69 [O/R]

    * The TSX is up 9.6% for the year.

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