These are stories Report on Business is following Friday, May 9, 2014.
Well, that didn't last long.
The Canadian dollar tumbled after this morning's weak report on the country's labour market, pulling back from what had been a recent pick-up.
The loonie, as Canada's dollar coin is known, hit a high point of almost 92.5 cents (U.S.) today, but sank fast after Statistics Canada reported that the country lost almost 29,000 jobs last month.
The currency fell to about 91.8 cents within several minutes of the report.
While the Bank of Canada won't be applauding the dismal jobs showing, it will be pleased by the decline in the currency.
Indeed, as the loonie hit its earlier high, some questioned how of a gain central Bank Governor Stephen Poloz would tolerate. That's still an issue, given that the currency remains near the 92-cent level, and could easily top that mark again.
The loonie has gained markedly since the days of the 88-cent range not that long ago.
And if it were to move significantly higher, said chief currency strategist Camilla Sutton of Bank of Nova Scotia, there could be some “pushback” from central bank Governor Stephen Poloz.
That could come within another penny or so, she added, and would likely take the form of the Bank of Canada chief publicly highlighting the importance of a weak loonie for the economic recovery.
Comments from Mr. Poloz have driven down the currency before. The central bank denies it has attempted to “talk down” the dollar, though some economists believe otherwise.
The loonie’s fortunes have changed dramatically since the “safe haven” days after the financial crisis. While up more than 4 per cent from its low point a couple of months ago, it’s still down sharply over the last year, and 1.8 per cent since the beginning of 2014.
“A big factor behind that softening is simply that Canada is not seeing the same tidal wave of foreign capital inflows that were washing ashore after the crisis,” said chief economist Douglas Porter of BMO Nesbitt Burns.
“At one point, more than $100-billion of net purchases of bonds were pouring into Canada per year,” he added in a recent research note.
“But while inflows to Canada’s bond market are drying up, non-resident investors have suddenly found an appetite for Canadian stocks – to the tune of a $32-billion inflow in the past year, the highest in almost a decade and greater than inflows to Canadian bonds.”
- Oops, he did it again: Stephen Poloz knocks down the loonie
- How speculators made a killing on the Canadian dollar
- Video: Did Poloz engineer a lower loonie?
Canada loses jobs
Canada’s uncertain labour market continued its see-saw ways last months, with a loss of almost 29,000 jobs.
The unemployment rate held at 6.9 per cent, however, amid a hefty drop in the number of people looking for work, The Globe and Mail’s Tavia Grant reports.
Notably, the participation rate slipped to just above 66 per cent, its lowest since late 2001, according to Statistics Canada data released today.
The country’s jobs market has been up and down for some time now, but the bottom line, according to the federal agency, is that there has been little in the way of gains since last summer.
“The loss in jobs came despite a rise in self-employment, and was pretty broad based between goods and service sectors,” said Nick Exarhos of CIBC World Markets.
“The six-month average in job gains now stands at a paltry 3,000, well below what we would expect given recent GDP growth.”
The number of full-time jobs plunged last month- by almost 31,000 – while some 2,000 part-time positions were created.
Jobs were lost in both the public and private sectors, but more so in the latter.
“The drop in private sector and full-time employment is bad news, although we’ll wait for more data before concluding that this isn’t just a giveback after the prior month’s massive gains,” said senior economist Krishen Rangasamy of National Bank.
“Despite the weak April [labour force survey] report, we remain optimistic. Canada’s employment prospects are good given the expected pick-up in the pace of growth on both sides of the 49 parallel after a weather-related slowdown in Q1. Improving corporate profits also bode well for hiring.”
There are now more than 1.3 million Canadians who can’t find work.
Talk about mad men. As in angry.
As The Globe and Mail’s Susan Krashinsky reports, a planned merger is in tatters today after the two companies couldn’t agree on who would control the ad world’s biggest agency.
“I have not been able to convince John that balance is balance,” Maurice Levy, the chief executive of Paris-based Publicis Group SA, told Reuters.
He was referring to John Wren, the chief of New York’s Omnicom Group Inc., in the wake of the death of the proposed $35-billion (U.S.) deal.
“Omnicom wanted their people to fill the CEO, CFO and general counsel jobs,” Mr. Levy told the news agency.
“I thought that went too far. I was not ready to cede on this point.”
Mr. Wren, in turn, said there was no one issue that killed the deal, but rather several complex matters.
Global markets are mixed this morning as investors play it safe.
Tokyo’s Nikkei gained 0.3 per cent, and Hong Kong’s Hang Seng 0.1 per cent.
But in Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were down by between 0.4 per cent and 0.7 per cent by about 7:45 a.m. ET.
“U.S. markets look set to open lower today after a divergence saw the Dow close higher but the S&P and Nasdaq lower yesterday after improving weekly employment data but a poor earnings outlook from Tesla and Priceline.com,” said analyst Jasper Lawler of CMC Markets in London.
“With limited U.S. economic data and company earnings from Ralph Lauren we may see another Friday of profit-taking ahead of the Ukrainian referendums at the weekend.”
CFIB on TFW program
Canada’s small business lobby is ramping up its campaign in support of the Temporary Foreign Workers program.
The Canadian Federation of Independent business today released the results of a survey taken last fall, which it says is meant to correct several myths about the controversial scheme.
The program is at the centre of a storm amid allegations of abuse, concerns over low wages and a jobless rate of 6.9 per cent.
The CFIB says there is indeed a labour shortage, small businesses in fact look first to fill their jobs with Canadians, temporary workers are more expensive than Canadians, and foreign temps actually help preserve Canadian jobs.
Its members also believe that abuse of the program should not be tolerated, it said.
The group, however, did not mention what I believe is also a CFIB myth, that Canadian workers are unreliable and rude.
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