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Thread: Recession is over: Bank of Canada

  1. #1
    One of the old guys
    Join Date
    Sep 2003
    Eastern Canada

    Recession is over: Bank of Canada

    Challenge is to now make our economy healthy once more

    By Paul Vieira and Derek Abma, Canwest News Service

    Canada's first recession in nearly 20 years has come to an end, according to the Bank of Canada, with the economy set to return to growth in the coming months as business and consumer confidence improves.

    Canada's economic downturn, which had been ongoing for three-quarters of a year, is giving way to renewed growth in the current quarter as a result of improved credit markets and higher levels of consumer confidence, the central bank said in its monetary policy report on Thursday.

    "We believe the economy will grow this quarter," bank governor Mark Carney told reporters at a media conference Thursday. "The rate of growth will pick up to the end of the year and into 2010."

    The Bank of Canada's latest forecast is for economic growth of 1.3% for the current quarter ending Sept. 30, followed by a healthy 3% gain for the final three months of 2009.

    In its previous forecast in April, the Bank of Canada anticipated the economy would shrink 1% in the current three-month period.

    "It is there in black and white, that the recovery has effectively begun," said Douglas Porter, deputy chief economist at BMO Capital Markets. "I think it is astonishing how quickly the economy turned to the good in the last four or five months."

    Finance Minister Jim Flaherty was also upbeat about an economic rebound,: "Recent news economically is more encouraging than it's been in recent months."

    The Bank of Canada's latest ray of economic sunshine follows results of its business survey released last week that showed 61% of respondents expected their sales levels to improve in the coming 12 months. That was up from 30% when the same survey was taken three months earlier.

    On Thursday, Carney said Canada -- along with the rest of the world -- is recovering largely because of extraordinary monetary and fiscal stimulus measures governments and central banks have implemented since the start of the financial crisis last fall.

    For example, the Bank of Canada's key policy rate as low as it can go at 0.25%, and it has pledged to keep it there until June of next year.

    "It is early days, and it is a long road," Carney said. "But things are unfolding as we broadly expected them to -- a little faster in terms of some of the recovery of confidence in financial conditions."

    Carney warned the labour market would be slow to adjust to the pickup in momentum. Between October and June, the Canadian economy has lost 454,000 jobs, pushing the unemployment rate from 6.2% to 8.6%.

    BMO's Porter said unemployment can expect to be at an elevated rate for some time.

    "One of the last things to turn around is employment," he said.

    Porter said the time lag between economic recovery and labour-market recovery is a result of employers waiting "to make sure the recovery is for real."

    And as they see the need to boost production, companies will take initial steps such as moving part-time workers to full-time positions and having employees work overtime before they actually hire new staff.

    Also Thursday, the Conference Board of Canada said its monthly consumer-confidence index was up for the fifth straight month. The measure rose 0.8 points to 82.9 in July, with a particularly positive change in consumers' attitudes toward the current period being a good time to make major purchases.

    The Ottawa-based think-tank said although the July increase was marginal, the gradual improvement in sentiment indicates "consumers do indeed see a light at the end of the tunnel."

    That report came one day after a Statistics Canada said retail sales rose a better-than-expected 1.2% in May, led by a 2.4% increase in automotive products.

    And earlier this week, in its monthly monetary policy announcement, the Bank of Canada revised its forecast, saying the economy would contract 2.3% this year and grow 3% in 2010.

    It had previously expected a 3% decline this year and 2.5% growth next year.

    On Thursday, the Bank of Canada specified that some of the elements helping the economy recover this year would be better-than-expected improvements in consumer spending and housing sales.

    Despite the upward revisions, however, the central bank suggested household spending is expected to remain "cautious" for the remainder of this year and next in light of a weak labour market, and stock-market losses sustained late last year and during the early part of 2009. The savings rate, meanwhile, is expected to remain "elevated" for the next several years.

    The Bank of Canada said inflation, which influences its interest rates, has come in higher than expected as wages continue to increase despite weak productivity and an excess supply of goods.

  2. #2
    Wow. Finally, somewhat of a good sign. Lets all just hope for the best

  3. #3
    Statistics Canada reports that unemployment rose by 0.4% to 8.4% in May, the highest in 11 years. This reflected an increase in unemployment of 42,000 - with manufacturing in Ontario hardest hit. 363,000 jobs have been lost since the peak in the job market last October. However, Manitoba, Nova Scotia and Saskatchewan had job increases over the month.

    Seasonally adjusted, unemployment rates vary from 15.1% (Newfoundland and Labrador) to 4.6% (Manitoba).

    Rates for all the provinces were (previous month in brackets):

    * Newfoundland and Labrador 15.1% (14.7%)
    * Prince Edward Island 13.1% (12.4%)
    * Nova Scotia 8.9% (9.2%)
    * New Brunswick 8.8% (8.9%)
    * Quebec 8.7% (8.4%)
    * Ontario 9.4% (8.7%)
    * Manitoba 4.9% (4.6%)
    * Saskatchewan 4.9% (5.0%)
    * Alberta 6.6% (6.0%)
    * British Columbia 7.6% (7.4%)

    Ken Georgetti, president of the Canadian Labour Congress said:

    "We have now lost 406,000 full-time jobs since October 2008, and 1.55 million Canadians are unemployed. Forecasts are that the unemployment rate will continue to increase over the next 12 months and a lot of Canadians without work will be left to fend for themselves. The Harper government has to fix Employment Insurance now.

    According to Georgetti, in March 2009 only 46.8% of those who were unemployed were actually receiving EI benefits. "This is a scandal," he said. "These workers contributed to Employment Insurance in good faith and now they are being left to fend for themselves. They will not be able to take their kids on a holiday this year or send them to summer camps, and when families don't have money to spend the entire community feels the pinch."

    Canadian Labour Congress Senior Economist Sylvain Schetagne analyzed the situation:

    * "The post-September 2008 job crisis continues. In May 2009 a net of 41,800 workers lost their jobs. In fact, 58,700 full-time workers were laid off in May 2009 but other part-time jobs were created. Overall, 406,100 full-time jobs have disappeared since last October.
    * "The manufacturing sector, especially in Ontario, continues to be disproportionately hit by job losses. In Canada, 541,400 jobs in manufacturing have been eliminated since November 2002, but 337,000 of those manufacturing jobs were in Ontario. The number of workers in manufacturing in Ontario is now at its lowest level since at least the mid-1970s.
    * "Canada's unemployment rate increased from 8.0 % in April to 8.4 % in May, the highest level in 11 years. In May, the number of unemployed Canadians increased by 83,800. The total number of unemployed has increased by almost 400,000 since October 2008. This represents an increase of 34.5% since last October. Canada now has 1,548,400 unemployed men and women.
    * "The unemployment rate for workers aged 15 to 24 is rising rapidly, reaching almost 15% in May 2009. The labour market for students is much worse than last year. When compared to May 2008, 59,000 full-time jobs usually performed by students aged 20 to 24 years old have disappeared. The unemployment rate for these students was 18.3% in May 2009, up from 15.4% last year. These figures do not take into account the fact that many students decided not to enter the labour market this year. The participation rate for these students fell from 75.2% last year to 68.6% this year.
    Tell that to those who just lost their job.

  4. #4
    There will be many ups and downs before the economy gets better.

  5. #5
    Unfortunately, there's a disconnect between Wall Street & Main Street.

  6. #6
    One of the old guys
    Join Date
    Sep 2003
    Eastern Canada

    Canadian dollar continues its climb

    Loonie reaches levels not seen since last October

    TORONTO - The Canadian dollar had another winning day Monday, staying above 92 cents US and briefly cracking the highest level it has hit in nine months.

    Increasing energy prices, particularly higher crude oil, have been a major driver of support for the dollar, which has gained about five per cent over the past two weeks.

    "Generally speaking, the Canadian dollar has been very closely tied to how global stock markets have done since the crisis broke open last fall,"said BMO Capital Markets economist Doug Porter.

    "Commodity prices have also gone hand-in-hand with that trend. We've seen a real turnaround in energy prices in the last couple of weeks, which has helped the currency turn course again."

    The loonie closed at 92.5 cents US, up 0.16 cents, but earlier in the day rose as high as 92.78 cents US, its highest level since last October.

    The dollar has also benefited from solid economic data at home as well as weakness in the American dollar, Porter said, rising about five per cent over the past two weeks.

    That has been more than could be expected, given the supporting fundamentals, he added.

    Nevertheless, Porter said the dollar could move higher still, and while it may backtrack from time to time, the underlying trend is towards a stronger currency - possibly again hitting parity with the U.S. dollar by the end of next year.

    "Generally we do think it will keep going higher," Porter said.

    "Whether it can do it without a break is a bit more of a debatable point. At some time the currency will pause for breath, but we certainly think parity is within is grasp."

    The bank is predicting the dollar could again hit parity no earlier than the end of next year, though he cautioned that is "really a lifetime away, from a financial market perspective."

    "But I think the main point is that we do believe the underlying trend will be towards a stronger currency over the next year and a half."

    The loonie was last at parity with the American dollar in May 2008. It rose to its all-time high of 110.31 cents US in November of 2007.

  7. #7
    Canada exports more products to the United States when its dollar is weaker than when its dollar is at par or close to par. If you can get something for 30% less in Canada, why buy it in the States? Well, this is gone when you can get the same item at an equal price from either home or Canada....then the question is "Why buy from Canada and deal with the border issue's when we can buy this down the street?".

    Lower dollar hurts the hobbiest but not the US economy.

  8. #8

    Pole Tax

    By Kristi Keck

    This year, lawmakers in Georgia turned not to pot but to poles as a possible source of additional revenue.

    Republican state Sen. Jack Murphy's proposed "pole tax" would have charged patrons of strip clubs a $5 entrance fee. The bill was not approved.

  9. #9
    One of the old guys
    Join Date
    Sep 2003
    Eastern Canada
    The irony in this whole dollar affair is that what causes the Canadian dollar to rise in value is the fact the price of crude oil has risen. The greatest exporter of crude oil to the US comes from Canada (and not Saudi Arabia). The irony is that the US purchasing Canadian oil is one of several reasons why the gap is closing between the two currencies. Eventually, this will mean higher gas prices, which Canadians (and Americans) absolutely despise. On the other hand, it gives Canadians more purchasing power when buying from the US, but travelling to Canada becomes more costly for Americans (and sps more costly with the decreasing exchange rate). In a hobby-related perspective, not much changes for Canadians when travelling across the country to hobby, other than the fact they'll pay less for hotels purchased via Hotwire or Priceline.

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