These are stories Report on Business is following Friday, Nov. 29, 2013.
How GDP fared
Canada's economy expanded at an annual pace of 2.7 per cent in the third quarter of the year, perking up after two lacklustre years.
The third-quarter showing far outpaced the 1.6 per cent of the previous three months, and was just shy of U.S. economic growth of 2.8 per cent at its latest reading.
Canada’s economy has been generally just chugging along with modest performances for the past two years.
In the latest quarter, Statistics Canada reported Friday, most of the country’s major industry’s boosted production. The goods-producing sector expanded by 0.9 per cent, and the services sector 0.6 per cent.
Notably, Canada’s manufacturing sector also turned in a better performance.
Consumers were still doing their part in the quarter, still spending though at a slower pace than during the second quarter. Business spending also rebounded. An inventory build-up also played a role.
And as expected, trade was a drag as exports slumped.
The economy was recovering from two major setbacks, the massive Alberta flooding and a construction strike in Quebec.
“Digging into the details, business capital spending ramped up, in part supported by re-starts to non-residential construction following the end of the Quebec construction strike,” said economist Emanuella Enenajor of CIBC World Markets.
“Over all, a firmer than expected reading,” she added, noting that the pace of growth in the quarter was almost a full percentage point better than what the Bank of Canada had forecast.
The inventory build-up, half of it from the country’s farms, means the Statistics Canada report isn’t quite as strong as it appears on the surface.
Still, said chief economist Douglas Porter of BMO Nesbitt Burns, that reversed the second-quarter showing.
“Elsewhere, consumer spending, government, and business investment were all (weirdly) up at just over a 2-per-cent annual rate in Q3, reinforcing the point that the underlying trend for the economy is right around that 2-per-cent mark,” he said.
“While headline growth for Q3 was flattered by special factors, there are some modestly encouraging signs in today’s results which suggest the economy could indeed pick up the pace slightly in the coming year,” Mr. Porter added in a research note.
“Today’s sturdy results, while somewhat flawed, should nevertheless temporarily quite some of the rampant bearishness on the Canadian dollar, and may also quell some of the growing dovishness on the Bank of Canada outlook.”
At its last meeting, the central bank dropped from its decision a signal that the next move in its benchmark rate would be up, suggesting a longer-than-expected period of an ultra-low rate.
Governor Stephen Poloz and his Bank of Canada colleagues aren’t expected to deviate much from that at next week’s meeting.
On the personal front, Statistics Canada noted that employee pay rose 0.8 per cent, picking up from the second-quarter increase of 0.4 per cent.
In the goods-producing sector, pay increased 1.4 per cent for the fastest pace in more than a year. Among service workers, gains were more muted, at 0.5 per cent.
Note, too, that the household saving rate, which is being watched given the record debt burden among Canadian families, climbed to 5.4 per cent in the third quarter, above the 4.9-per-cent average of the previous 10 quarters.
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Here’s my take on Black Friday madness, with apologies to Carl Douglas, who had a one-hit wonder in 1974 with this novelty song:
Everybody was Kung Fu fighting
Those kicks were fast as lightning
In fact, it was a little bit frightening
But they fought with expert timing
“Black Friday in America will no doubt see shops packed to the rafters as the U.S. spends following the Thanksgiving festivities,” said market analyst Alastair McCaig of IG in London. “This barometer of retail spending power will be closely monitored as analysts try to gauge the likely spend over the month of December.”
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Japanese prices climb
Chalk up another win for Abenomics.
Named for Prime Minister Shinzo Abe, whose team came into power with a pledge to juice Japan’s economy and end a long spell of deflation, Abenomics has been working in fits and starts.
Today, however, the key reading on consumer prices showed inflation running at its fastest in some 15 years.
That measure, which strips out energy and food costs, was 0.3 per cent in October.
Industrial output also gained, while Japan's jobless rate came in at 4 per cent for October.
“Tiny steps,” said senior economist Jennifer Lee of BMO Nesbitt Burns. “But all in, Abenomics is still working. You won't see it every month, but so far, it is working.”
Euro economy looks brighter
Rising prices are also fuelling hopes in the euro zone, as is marginally lower unemployment.
According to the Eurostat agency today, inflation in the 17-member monetary union ticked up to 0.9 per cent in November, compared to the 0.7 per cent of October that fueled fears of deflation.
“However, this is not yet the end of the disinflation story in the euro area, as we believe the euro area [harmonized index of consumer prices] should decelerate moderately in Q1 2014 and then average 1 per cent next year and 1.4 per cent the year after,” said Herve Amourda of Société Générale.
“For the monetary policy makers due to meet next week, the price developments of November should not trigger any policy action.”
The region’s unemployment rate, meanwhile, dipped to 12.1 per cent from 12.2 per cent. That, however, masks the diverse nature of the labour market across the 17 countries.
Fire hits factory
A massive blaze apparently set by angry workers swept through a garment factory outside Bangladesh’s capital, The Globe and Mail's Bertrand Marotte reports.
The fire is the latest in a series of incidents – including the collapse of an eight-storey factory that killed more than 1,100 people in April – related to troubles and strife in Bangladesh’s apparel sector.
There were no reports of death or injuries in the fire that was reported Friday at a 10-storey building in Gazipur, 40 kilometres north of Dhaka.
A Reuters photographer on site said burnt garments found at the scene sported brand names from U.S. retailers such as American Eagle Outfitters Inc., Gap Inc. and Wal-Mart Stores Inc. Brands for Sears Canada Inc. were also spotted, according to Reuters.
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