News

Stories Report on Business is following today :

GM signals beginning of turnaround

General Motors Co. is showing signs of a turnaround since its rebirth after bankruptcy protection. The embattled U.S. auto maker said this morning it lost $1.2-billion (U.S.) since it emerged from Chapter 11 proceedings in early July through to the end of September. GM also said it will start repaying government loans in December, and could pay off what it owes four years ahead of schedule. While $1.2-billion is a hefty loss, it is a far better showing than in previous quarters, and a sign that the auto maker is doing much better. "We have significantly more work to do," chief executive officer Fritz Henderson said in a statement, "but today's results provide evidence of the solid foundation we are building for the new GM."

It's the first sense of how GM is performing after its dip into bankruptcy protection. One analyst told Bloomberg News the company is basically providing "general, overall" guidance and "to a certain extent … trying to position themselves with the government and the consumer." Read the story

U.S. economy continues to rebound

Retail sales numbers in the United States this morning suggest the U.S. economy continues to recover. And to a certain extent, the Commerce Department report eases fears that consumers will shy away as emergency government measures end. Retail sales jumped 1.4 per cent in October, far better than economists had projected, though that was largely driven by auto sales. Stripping out cars, sales rose just 0.2 per cent and, while smaller than expected, still marked the third consecutive gain. "This was the third advance in a row, a string we haven't seen in over one year," BMO Nesbitt Burns said, adding the October gains were fairly broad-based. "... Note that it was during the latter part of the month that various big retailers launched their versions of 'Toy Wars' or "Book Wars,' with price cuts to 000s of toys. So another strong gain in the last couple of months of the year for general merchandisers may be in store." Read the story

Autos drive Canadian manufacturing

Cars and car parts are also helping Canadian manufacturers. Manufacturing sales in Canada rose 1.4 per cent in September to $41.7-billion, marking the third increase in four months, a good sign for a sector that has been battered by the recession and a stronger dollar. Sales in the sector fell to a recent low of $38.5-billion in May, Statistics Canada said this morning, so the rebound is an optimistic sign, although they remain almost 19 per cent below the levels of September 2008. TD Securities economics strategist Ian Pollick warned, however, that "in the near term, we do not believe this pace of advance to be sustainable, and continue to highlight that the manufacturing sector in Canada has many headwinds still to face, with a rising currency and tepid pickup in final demand." Read the story

Home sales show another gain

The Canadian Real Estate Association boosted its home sales forecast for the year by 6.6 per cent, and projected average prices will climb 4.2 per cent to a record $317,900. The group, which tracks sales via its MLS, expects 460,200 units will sell in 2009. Earlier this year, it expected the year to be flat. The new forecast puts housing sales on pace to match levels seen in 2004, but below 2005 through 2007. Meanwhile, housing sales in October rebounded 41 per cent from a year ago, setting new records in Toronto, Montreal and Ottawa. "It is clearly evident from this report that after the brief respite in August, the fire in the Canadian housing market has clearly been rekindled as homebuyers take advantage of very favourable mortgage rates and the various fiscal incentives," said TD Securities economics strategist Millan Mulraine. "Needless to say, with the economy slowly regaining its footing, we expect the recent strong gains in the housing market to remain largely intact, though we suspect that the back-to-back double-digit advance in sales this year may not be repeated."

All of which begs the question: Is there a housing bubble? Many economists reject this notion, although Scotia Capital said today this is probably the case. "But low rates, mortgage innovation and a relative shortage of new supply are likely to keep it going for a while yet," said Scotia economists Karen Cordes and Derek Holt. "… Now that last fall's pent-up demand has been released, the three forces of low interest rates, transferring future sales to the present via mortgage innovation, and modest new supply can keep Canadian housing markets humming for some time yet before the eventuality of a softer market on rising rates in a future relative demand vacuum set in."

Lowe's sees signs of improving real estate market

Some optimistic news this morning from Lowe's Cos., the second-largest home improvement retailer in the United States. True, profit slumped 30 per cent in the quarter to $344-million or 23 cents a share, but the company noted that some of the worst real estate markets are beginning to improve. "We are beginning to see signs of improved performance in some of the hardest-hit housing markets, including California, Florida and areas of the desert Southwest," chief executive officer Robert Niblock said, though he noted that consumers are still delaying big purchases. Read the story

Intel raises dividend

Intel Corp. today boosted its quarterly dividend by 12.5 per cent, to 15.75 cents U.S., beginning with the first quarter of next year. "Intel's industry-leading product portfolio, outstanding execution and focus on the next wave of innovation and growth set the company up solidly for the future," chief executive Paul Otellini said.

UTS asks for patience on Fort Hills

UTS Energy Corp. chief executive Will Roach says shareholders need to have "some patience" on the Fort Hills oil sands project. Mr. Roach told analysts on a conference call today that crude won't begin flowing at the project until 2015 at the earliest. "I understand from the shareholder perspective that's not always very attractive. But these oilsands assets are long-term in nature, very high capital intensity and you have to spend the right time to get the right technologies and the right strategy to develop them." Read the story

Japan's economy rebounds sharply

Stimulus measures in Japan helped power the Japanese economy to growth of 1.2 per cent in the third quarter, much more than expected and the sharpest increase in more than two years. Economists say, though, that weakness in consumer spending and industrial output remain. The Reuters news agency reported that the government could announce up to $30-billion (U.S.) in new stimulus spending later today. One of the stronger signs from today's report on gross domestic product was that exports jumped 6.4 per cent in the quarter. Japan's Strategy Minister Naoto Kan told reporters that the economy is expected to continue to rebound along with those of other countries but that "at the same time, the employment situation remains very bad." A little stumble with the numbers this morning as Trade Minister Masayuki Naoshima leaked the data before the official embargo time. Read the story

Bernanke to speak this afternoon

Federal Reserve Chairman Ben Bernanke speaks this afternoon on the economy to the Economic Club of New York. Economists expect the Fed chief to continue the "dovish" remarks made by other U.S. central bank officials this month, indicating interest rates will remain at historic lows for some time yet.

Britain to unveil financial legislation

Reports from Britain this morning indicate the government is poised to unveil legislation that would allow class action lawsuits against banks that mislead their customers. The Reuters news agency says Britain's Financial Services Authority will give consumers more power, a move that would keep the financial industry in line.

From today's Report on Business

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Onex ready to cash in on IPO thaw

Spirit of giving takes a bashing in Canada