These are stories Report on Business is following Friday, Nov. 9, 2012.
Consumers scale back
Canadians, it seems, got the memo after all.
Consumers are still borrowing, but clearly pulling in their horns, according to Royal Bank of Canada, which released a study showing that the rate of growth in household credit fell in the third quarter to its slowest since early 2002.
Growth in consumer debt – that takes in everything from mortgages to credit cards and lines of credit – fell in the quarter to 5.6 per cent.
That was down from 6.3 per cent a year earlier, matching the pace of the first quarter of 2002, said RBC economist David Onyett-Jeffries.
This comes after months of warnings from Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty, who has tightened mortgage rules four times to cool things off. The ratio of debt to disposable income is now above 160 per cent.
The message is getting through.
“The easing in credit growth reflected a deceleration in mortgage growth, which fell to a three-year low,” Mr. Onyett-Jeffries said.
“The indications of a pullback in residential real estate activity likely mean that a further slowing in the pace of mortgage growth is in the cards over the coming months, consistent with our expectation that the over all pace of household debt growth will slow through the end of the year and into 2013.”
Canada’s housing market has been cooling rapidly, though, Mr. Onyett-Jeffries said, mortgage levels still “remained buoyant,” rising 7 per cent in September from a year earlier. Growth of other credit slowed, however, for the second consecutive month, rising 2.6 per cent.
- Fewer housing starts bring little comfort to Carney
- Kevin Carmichael's Economy Lab: Mark Carney's battle - Household debt vs. growth
- Mark Carney digs in heels on consumer debt
- Housing starts to slow, existing home sales steady: CMHC
The daily deal: Another 30% off Groupon shares
Shares of Groupon Inc. plunged today in the wake of another miss on its quarterly results.
Remember that the 52-week high for this online daily deal company is almost $28 (U.S.), and you get a sense of how its fortunes have declined since its IPO a year ago.
Groupon actually boasted a gain of more than 30 per cent in revenue when it reported third-quarter results late yesterday, to $568.6-million, but that fell shy of estimates.
The company lost $3-million in the quarter – that’s zip per share – compared to a loss of $54.2-million or 18 cents a share a year earlier.
Groupon also fell short in its projection for fourth-quarter revenue, which it put in a range of $625-million to $675-million.
Like many companies these days, it partly blamed the troubles in Europe, where one might have thought everyone was looking for a deal.
"Our solid performance in North America was offset by continued challenges in Europe," said chief executive officer Andrew Mason, as the company also announced it’s cutting 80 jobs.
"Groupon Goods has evolved into a second major category that our customers clearly love. With deals on everything from designer sunglasses to big-screen televisions to most-wanted toys, we think it will be a great gifting destination this holiday season."
Rona chief to leave
These have been busy days for Robert Dutton, who announced today he's stepping down as chief executive officer of Rona Inc., the Canadian home improvement retailer.
First, Rona fended off a bid by Lowe's Cos., an offer that sparked a political backlash in Quebec that send the U.S. company packing.
Then, this week, it posted a sharp drop in third-quarter profit.
Mr. Dutton is leaving after leading the company for two decades, The Globe and Mail's Bertrand Marotte reports, to be replaced by chief financial Dominique Boies on an interim basis.
Telus hikes dividend
Telus Corp. boosted its quarterly dividend today after reporting a jump of 7.7 per cent in third-quarter profit, The Globe and Mail’s Rita Trichur reports.
Telus, one of Canada’s major telecommunications companies, hiked that quarterly payout by 3 cents to 64 cents.
Telus earned $351-million or $1.07 a share, diluted, in the quarter, compared to $326-million or $1 a year earlier.
It also stood by its projections for the full year.
China on better path
Beijing’s incoming leadership team has been given something of a breather from China’s economic pressures, with statisticians reporting a further dip in inflation last month and creeping increases in other measures of the country’s economic health, Carolynne Wheeler reports.
An inflation rate of 1.7 per cent in October was lower than anticipated, and down 0.2 percentage points from the previous month; deflation in the producer-price index measuring factory costs also eased, to –2.8 per cent. Industrial production, fixed-asset investment and retail sales all recorded modest gains over the previous month.
“China’s October activity data provide the strongest signs so far of economic recovery,” said Mark Williams and Qinwei Wang of Capital Economics in London.
“Given that they have been published while the Party Congress is in session, some skeptics have questioned whether they can be believed. In our view, there is solid evidence of a turnaround but not of a strong rebound.”
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