The global economy is entering the final quarter of its worst year in living memory in a precarious state with the coronavirus threatening to wreak yet more destruction on labor markets.
The darkening outlook for U.S. employment, the impending halt to a U.K. furlough and the expiry of a moratorium on German insolvencies provide a glimpse of the trouble in store. The International Labour Organisation estimated recently that the world would lose working hours equivalent to 245 million full-time jobs in the last three months of 2020.
The quarter began with a portent as blue-chip employers from Walt Disney Co. to Royal Dutch Shell Plc and Continental AG announced tens of thousands of staff cuts within a 24-hour period. Then on Friday, the U.S. Labor Department revealed slowing job gains in September, with many Americans giving up on looking for work.
Adding to those omens, the U.K.’s main furlough program will end later this month, and a group representing the country’s events industry predicts more than 90,000 people will be made redundant in coming weeks.
Renewed clusters of infections underscore the vulnerability of already battered economies to further damage that could ultimately hit livelihoods. The latest outbreak in Paris may force bars and restaurants to close, while London is at a “tipping point,” according to a local health official.
What Bloomberg’s Economists Say…
“A second wave of infections, major corporate layoffs in the U.S. and the end of the furlough scheme in the U.K. flag the risk unemployment will rise into year-end. Bad news for the immediate outlook is also bad news for the medium term, with deeper labor market scars threatening to drag on the recovery — even after a Covid-19 vaccine is eventually found.”
–Tom Orlik, chief economist
Click here for what happened last week and below is our wrap of what is coming up in the global economy.
U.S. and Canada
On Wednesday, the Federal Reserve will release minutes of its Sept. 15-16 meeting of the Federal Open Market Committee. It could be especially fruitful for Fed watchers, beginning with details of the debate over the committee’s new guidance on the conditions that will be necessary to trigger a rate increase.
The minutes may also reveal whether policy makers discussed increasing asset purchases and continuing to restrict bank dividends. There may also be a separate section summarizing discussions that preceded a special Aug. 27 vote on the new framework, under which the Fed will allow inflation to run higher and unemployment to go lower than officials previously had tolerated.
#lazy-img-365067553:beforepadding-top:56.25%;
In terms of economic data, traders will be looking at the latest reports on trade and the weekly jobless claims.
In Canada, Bank of Canada Governor Tiff Macklem is set to speak Thursday and the jobs report for September is due Friday.
Asia
With China shut for its Golden Week holidays, attention shifts to the rest of the region. It’s a busy week in Australia, with the central bank announcing its interest-rate decision on Tuesday, hours before the government unveils its budget plan. Prime Minister Scott Morrison’s government will likely outline additional fiscal stimulus, including infrastructure spending and tax cuts, to pull the economy out of its first recession in nearly 30 years.
Central Bank Rate Decisions This Week
.chart-js display: none;
Bank of Japan Governor Haruhiko Kuroda will speak at events in the coming week. His remarks on the economic recovery and the outlook for prices will be closely watched for any signs of less gloom as the central bank prepares for a meeting later this month. Japanese wage and household spending data will offer the latest indication of how the economy is picking up after recent patchy signals.
Europe, Middle East, Africa
For European Central Bank policy makers including President Christine Lagarde and Chief Economist Philip Lane this week will be a chance to offer any clues on whether the latest disappointing inflation data are enough to move the needle in the debate for extra stimulus. Minutes of the ECB’s September meeting will be published Thursday.
Investors will also be listening closely to remarks by Bank of England officials for signs of any divergent views on the economic rebound and the potential use of negative rates. Monthly U.K. GDP numbers are due Friday.
U.K. Rebound
August is likely to mark the last big surge in monthly GDP
Sources: ONS, Bloomberg survey of economists
.chart-js display: none;
In the Nordics, Norwegian central bank chief Oystein Olsen speaks after surprising markets last month with a more dovish forward guidance than anticipated. Later in the week, Norway published its economic output data for August.
Central banks in Poland, Serbia and Uganda are expected to keep interest rates unchanged, while Botswana may have room to cut.
Latin America
Monday’s reading of Mexico’s consumer confidence may show a fourth month of improvement.
Shaken in Mexico
Consumer, business confidence had been falling before the outbreak
Source: Instituto Nacional de Estadística y Geografía
.chart-js display: none;
In central banking, Peru on Wednesday will pause at 0.25% for a sixth month as the economy begins to turn around, while the minutes from policy makers’ Sept. 24 meeting out Thursday may cement bets that Mexico’s comfortable holding at 4.25%.
Initial Rebound
Brazil retail sales recovered sharply at first, seen slowing up in August
Sources: Instituto Brasileiro de Geografia e Estatistica; Bloomberg survey
Note: August 2020 figures represent median estimates.
.chart-js display: none;
Price data this week will show inflation coming off pandemic-lows in Mexico, Brazil and Chile, while still well under target in Colombia. Brazil’s retail sales report for August will show monthly and annual gains with some loss of momentum.
— With assistance by Alaa Shahine, Nasreen Seria, Robert Jameson, Benjamin Harvey, Christopher Condon, and Theophilos Argitis
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
