These are stories Report on Business is following Friday, July 8. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
TGIF Here's how things stand as we close out the week: Stocks are ending off on a sour note, more than 14 million Americans are jobless, Washington is no closer to solving its debt fight (not that the Europeans are doing any better), someone is probably on strike somewhere in Greece, and Nouriel Roubini (known in some quarters as Dr. Doom) is warning that the U.S. economy is in "a deep ugly swamp."
I don't know about anybody else, but I'm ready for the weekend.
The day didn't start off that bad.
Canada's jobs report at 7 a.m. was actually upbeat, and then TD warned it couldn't last. Then the U.S. jobs report was horrible.
Then Greece said it's going to hire a bunch of lawyers and accountants to chase down the top 10,000 tax deadbeats in the country.
Two things here: First, the fact that 10,000 tax cheats represent only the top tier, and, second, that hiring a group of lawyers may not be the smartest move for a country in financial crisis.
And to top it all off, a U.S. appeals court has overturned a ruling that would have lifted the NFL lockout.
U.S. report disappoints Today's U.S. jobs report is downright ugly, highlighting again the crisis faced by the United States on the employment front. The U.S. economy created just 18,000 jobs in June and the unemployment rose to 9.2 per cent. This was not what economists were expecting, and fell far short of what's needed.
"June's U.S. employment report doesn't have a single redeeming feature," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. "It's awful from start to finish."
More than 14 million Americans who want to work can't find a job, the legacy of the brutal recession.
To make matters even worse, the job gains that were believed to have been made in April and May were revised down.
In June, the private sector created 57,000 jobs, while governments cut back.
The details of the report were also cause for despair.
"The average duration of unemployment rose to new highs of 39.9 weeks, while the 'all-in' jobless rate (that considers the underemployed and discouraged job seekers) climbed back above 16 per cent," said senior economist Sal Guatieri of BMO Nesbitt Burns.
"The employment and participation rates continued to probe quarter-century lows. The index of aggregate weekly hours fell in the month ... Wage growth remains benign, with hourly earnings up 1.9 per cent year over year, less than inflation and a real bite on consumer spending power."
Nouriel Roubini, the New York University professor and chairman and co-founder of Roubini Global Economics, said today's report dashes hopes that what the U.S. is experiencing now is just a "temporary soft patch."
"It is rather a deep ugly swamp," said the man who predicted the financial crisis.
Canada pumps out jobs Canada's labour market continues to outpace those of other major industrialized countries, though the jobless remains stubbornly at 7.4 per cent.
The economy pumped out more than 28,000 jobs in June, Globe and Mail economics writer Jeremy Torobin reports today. Employment has rebounded sharply from the depths of the recession, though observers believe the unemployment rate will stay above the 7-per-cent mark for an extended period.
"If you blinked, you may have missed the slowdown in Canada's employment growth," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
"While the details of the release may not be as impressive as the sturdy headline gain, there is no denying that the Canadian job market continues to make impressive progress. In the first half of 2011, the economy added 192,000 jobs, a faster pace than seen through 2010."
Gains in part-time jobs led the June gains, according to Statistics Canada, up by more than 21,000, though there were still 7,300 full-time jobs created. Even the public sector, which is in restraint mode, created work, though some of that is believed to have been due to temporary work on the census.
The shift from self-employment suggests an improvement in the "overall quality" of jobs, said CIBC World Markets economist Emanuella Enenajor.
Alberta and Ontario led the job gains.
"Regrettably, the recent strong performance will subside in the coming months," said Criag Alexander, the chief economist at Toronto-Dominion Bank.
"TD Economics expects the trend rate of growth in the economy to slow to ... 2 per cent to 2.5 per cent over the next year, which is likely to support monthly job gains of roughly 15,000 and an only modest decline in the national unemployment rate. The bulk of future job creation is expected to be in the private sector, as governments across the country turn their attention towards deficit elimination."
What we earn, and what that means Yes, the jobs report was strong, leading some observers to again wonder whether the Bank of Canada will move earlier rather than later in hiking interest rates again. But, Scotia Capital notes today, the central bank will look deeper for any evidence of inflationary pressures from wage growth. Well, there aren't any, say Karen Cordes Woods and Derek Holt.
"Wages for permanent employees decelerated for a third consecutive month to 2.2 per cent year over year, the lowest print since December 2010, with wages for all employees down to 2 per cent year over year," they said in a report today after the jobs numbers were released.
"Adjusted for inflation, real wages are declining, and that has sapped consumer spending power in a manner that overwhelms the positive influences of job growth. In addition, hours worked fell to 1.2 per cent year over year, the slowest pace of growth since March 2010. It is hours worked times wages that gets people paid, so the fact that both wage growth and hours worked are moderating offers a very different take on what is influencing household spending that any upbeat perspectives on the headline job prints."
Zynga strikes deal for Five Mobile Zynga, the world's biggest developer of Facebook games, has purchased Five Mobile Inc., a Canadian mobile apps developer that gives the company a foothold in Toronto's booming technology community, Globe and Mail technology writer Omar El Akkad reports.
Zynga said today it is acquiring Five Mobile and re-naming the firm Zynga Toronto. Five Mobile has previously developed mobile applications for several big-name customers, including Rogers Communications Inc. and Cineplex Inc.
BSkyB deal in jeopardy A dark cloud hangs over Rupert Murdoch's empire and Britain's media industry today in the wake of the phone-hacking scandal and the shutdown of the News of the World tabloid.
Britain today called an inquiry into the allegations that the tabloid hacked into the voice mails of murder victims and their families, and indicated a proposed multibillion-dollar takeover of British Sky Broadcasting PLC by Mr. Murdoch's News Corp. won't get a quick seal of approval.
Indeed, Britain's Prime Minister David Cameron said it would take some time to decide on the proposed deal for the 61-per-cent of BSkyB Mr. Murdoch doesn't already own.
Britain's culture, media and sport department also said it would look at a wide range of factors, including "whether the announcement regarding the News of the World's closure has any impact on the question of media plurality."
- BSkyB plunges as British PM signals delay on News Corp.'s bid
- Former Cameron spokesman Coulson arrested in U.K. phone hacking scandal
- The end of the News of the World
- News of the World advocated truth, but published whatever it liked
Don't forget about Europe I thought it was worth sharing some comments today from Michael Hewson, the CMC Markets analyst, after yesterday's rate hike by the European Central Bank. It's easy to forget there's a European debt crisis still raging when markets are tanking on the latest U.S. jobs report.
ECB chief Jean-Claude Trichet hiked his benchmark rate by one quarter of a percentage point, and signalled the central bank may not be done yet, as it focuses on inflation rather than the troubles of the basket cases of the 17-member euro zone. However, the central bank also extended some help to Portugal by saying it would accept its debt as collateral for loans no matter how it's rated.
Here's what Mr. Hewson said:
"As expected the European Central Bank raised interest rates again, while also signalling another one sometime in the autumn, despite the risks that in so doing they are increasing the pressure on those economies that can least absorb it, namely Spain and Italy, who appear to now be suffering significant slowdowns in growth, and whose populations, particularly Spain, have a significant number of variable rate mortgages.
"Trichet would no doubt argue that now that the ECB has removed the minimum rating requirement for Portuguese bonds in the wake of the Moody's downgrade he has effectively neutered the ratings agencies, as well as effectively clearing the way for the ECB to accept any type of collateral in exchange for credit.
"He may find out soon enough that this extremely risky and some would say foolish rate policy will bring these two 'too big to fail' economies into the cross hairs of the bond markets, which in turn will blow away the so-called 'fire break' that policy makers thought they had built around the problems of Greece, Ireland and Portugal.
"The fear is that this rate policy by the ECB will bring about the very contagion that the market is so concerned about, by increasing the interest burden on those economies that can least afford it. It does make you wonder if the ECB and EU politicians are even trying to pull in the same direction."
In International Business today Dismissed as foolish fantasy a year ago, the prospect of Greece leaving the euro zone has become a topic worthy of serious discussion among experts handling the crisis in recent weeks, Philip Blenkinsop of Reuters writes.
In Economy Lab today In the Alice-in-Wonderland debate about U.S. tax policy, it's just as easy, if not more so, to hear that the real problem is that too many Americans "pay no taxes," while the rich are soaked. David Milstead reports.
In Personal Finance today A few investors looking to abuse a tax loophole may have created significant collateral damage for the rest of us, says Preet Banerjee.
Are you in the top tax bracket? Is your spouse in a much lower tax bracket? If so, a spousal loan could save you money.
Coupons reduce the cost of a product or service, but are the savings really worth the time it takes?
From today's Report on Business
- Internet firms and broadcasters square off
- In U.S. debt fight, a nation on the brink
- Cogeco pinched as Portuguese customers pull the plug
- Regulators turn their gaze on smaller banks