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

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(Bloomberg) — 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.

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.

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

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.

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.

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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.

©2021 Bloomberg L.P.

Bloomberg.com

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Economy

CANADA STOCKS – TSX ends flat at 19,228.03

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* The Toronto Stock Exchange’s TSX falls 0.00 percent to 19,228.03

* Leading the index were Corus Entertainment Inc <CJRb.TO​>, up 7.0%, Methanex Corp​, up 6.4%, and Canaccord Genuity Group Inc​, higher by 5.5%.

* Lagging shares were Denison Mines Corp​​, down 7.0%, Trillium Therapeutics Inc​, down 7.0%, and Nexgen Energy Ltd​, lower by 5.7%.

* On the TSX 93 issues rose and 128 fell as a 0.7-to-1 ratio favored decliners. There were 26 new highs and no new lows, with total volume of 183.7 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Nutrien Ltd and Organigram Holdings Inc.

* The TSX’s energy group fell 1.61 points, or 1.4%, while the financials sector climbed 0.67 points, or 0.2%.

* West Texas Intermediate crude futures fell 0.44%, or $0.26, to $59.34 a barrel. Brent crude  fell 0.24%, or $0.15, to $63.05 [O/R]

* The TSX is up 10.3% for the year.

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Economy

Canadian dollar outshines G10 peers, boosted by jobs surge

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar advanced against its broadly stronger U.S. counterpart on Friday as data showing the economy added far more jobs than expected in March offset lower oil prices, with the loonie also gaining for the week.

Canada added 303,100 jobs in March, triple analyst expectations, driven by the recovery across sectors hit by shutdowns in December and January to curb the new coronavirus.

“The Canadian economy keeps beating expectations,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “It seems like the economy is adapting to these closures and restrictions.”

Stronger-than-expected economic growth could pull forward the timing of the first interest rate hike by the Bank of Canada, Goshko said.

The central bank has signaled that its benchmark rate will stay at a record low of 0.25% until 2023. It is due to update its economic forecasts on April 21, when some analysts expect it to cut bond purchases.

The Canadian dollar was trading 0.3% higher at 1.2530 to the greenback, or 79.81 U.S. cents, the biggest gain among G10 currencies. For the week, it was also up 0.3%.

Still, speculators have cut their bullish bets on the Canadian dollar to the lowest since December, data from the U.S. Commodity Futures Trading Commission showed. As of April 6, net long positions had fallen to 2,690 contracts from 6,518 in the prior week.

The price of oil, one of Canada‘s major exports, was pressured by rising supplies from major producers. U.S. crude prices settled 0.5% lower at $59.32 a barrel, while the U.S. dollar gained ground against a basket of major currencies, supported by higher U.S. Treasury yields.

Canadian government bond yields also climbed and the curve steepened, with the 10-year up 4.1 basis points at 1.502%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci)

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Economy

Canadian dollar rebounds from one-week low ahead of jobs data

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar strengthened against its U.S. counterpart on Thursday, recovering from a one-week low the day before, as the level of oil prices bolstered the medium-term outlook for the currency and ahead of domestic jobs data on Friday.

The Canadian dollar was trading 0.4% higher at 1.2560 to the greenback, or 79.62 U.S. cents. On Wednesday, it touched its weakest intraday level since March 31 at 1.2634.

“We have seen partial retracement from the decline over the last couple of days,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

“With oil prices where they are – let’s call WCS still at roughly $49 a barrel – I still think CAD has room to strengthen over the medium term and even over a one-week horizon.”

Western Canadian Select (WCS), the heavy blend of oil that Canada produces, trades at a discount to the U.S. benchmark. U.S. crude futures settled 0.3% lower at $59.60 a barrel, but were up nearly 80% since last November.

The S&P 500 closed at a record high as Treasury yields fell following softer-than-anticipated labor market data, while the U.S. dollar fell to a two-week low against a basket of major currencies.

Canada‘s employment report for March, due on Friday, could offer clues on the Bank of Canada‘s policy outlook. The central bank has become more upbeat about prospects for economic growth, while some strategists expect it to cut bond purchases at its next interest rate announcement on April 21.

On a more cautious note for the economy, Ontario, Canada‘s most populous province, initiated a four-week stay-at-home order as it battles a third wave of the COVID-19 pandemic.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year fell 3.3 basis points to 1.469%.

(Reporting by Fergal Smith;Editing by Alison Williams and Jonathan Oatis)

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