These are stories Report on Business is following Thursday, Sept. 19, 2013.
Number of EI recipients declines
Canada’s labour market has marked something of a milestone: The number of people collecting jobless benefits has for the first time eased to pre-recession levels.
That doesn’t mean Canada’s jobless rate isn’t still elevated – it stands at 7.1 per cent and is projected to remain around the 7-per-cent mark for some time – but it is a sign of the rebound from the slump possibly coupled with fewer people qualifying for benefits.
The number of Canadians relying on regular Employment Insurance benefits fell in July by 2.1 per cent from June, or by almost 11,000 people, to 503,900.
That also marks a drop of 5.7 per cent from a year ago.
“This decline brings the number of beneficiaries to a level similar to that observed before the start of the labour-market downturn in 2008,” Statistics Canada said today.
The latest numbers don’t indicate how many people no longer need benefits because they have found work, and how many have simply run out. As well, the Canadian government has brought in restrictions on the EI program.
The number of Canadians needing jobless benefits climbed steadily from the 506,830 in September, 2008, the month Lehman Bros. collapsed, to peak at about 840,000 in June, 2009.
It then began a slow decline.
“Compared with 12 months earlier, there were fewer beneficiaries in almost all occupation groups,” Statistics Canada said.
“The declines ranged from 3.7 per cent in management to 16.8 per cent in health occupations,” the federal agency added.
“At the same time, there was virtually no change in trades, transport and equipment operation, while the number of beneficiaries in natural and applied science occupations was up 10.3 per cent in July – the fifth consecutive month of year-over-year increases for this group.”
Having said that, the number of initial and renewal claims climbed in July for the second month in a row. That's a statistic that indicates how many people could become beneficiaries, according to Statistics Canada.
And economist Erin Weir of the United Steelworkers called it a “black day,” noting that while the number of unemployed Canadians is above the pre-recession level of 1.1 million, those receiving benefits, as a proportion, is at a record low 36.5 per cent.
Unlike many other countries, Canada has regained all of the jobs lost to the recession, though almost 1.4 million people still can’t find work.
And according to the Organization for Economic Co-operation and Development, long-term unemployment remains a problem in Canada.
“The share of the unemployed who have been jobless for a year or longer has nearly doubled since the beginning of the recession and this group needs additional assistance to be able to benefit from an improving labour market,” the OECD said in a report two months ago.
- Tavia Grant: Construction is providing the foundation for Canadian job growth
- Tavia Grant in Economy Lab: Five years after the financial crisis, Canada's recovery remains mixed
- Long-term unemployment still a blight in Canada, OECD warns
- U.S. jobless claims rise but true picture murky
Canada takes another run at single regulator
The Canadian government has struck a deal with two provinces, Ontario and British Columbia to create a new securities regulator that covers roughly two-thirds of Canadian capital markets, reigniting a long fight over a national securities regulator, The Globe and Mail's Barrie McKenna reports.
The three governments said Thursday the other provinces and territories will be invited to join the new “cooperative” regulator, slated to be operational by 2015
JPMorgan settles probes
JPMorgan Chase & Co., the largest U.S. bank, has agreed to pay nearly $1-billion (U.S.) to regulators on both sides of the Atlantic to settle probes into its “London Whale” trading disaster.
That’s a whopper of a fine. But, our New York correspondent Joanna Slater writes, don’t be distracted by the big numbers in the settlement.
The real news here is that JPMorgan has admitted that it broke securities laws. That marks a major departure from past civil settlements involving financial institutions.
- Joanna Slater in Streetwise (for subscribers): JPMorgan finally fesses up
- JPMorgan to pay $920-million to settle 'London Whale' probes
The Canadian dollar rallied to above the 98-cent (U.S.) level in the wake of the Federal Reserve’s surprise decision to hold the line on its bond-buying stimulus program.
Yesterday’s announcement drove U.S. stocks to record highs and weakened the U.S. dollar, in turn pushing up the Canadian currency, which then pulled back somewhat.
That’s because the central bank’s asset-purchase scheme, known as quantitative easing or QE, is a policy that weakens the greenback, though the Fed is trying to bolster the recovery and ease unemployment.
The loonie, as Canada’s dollar coin is known, was sitting at 97.05 cents U.S. heading into the Fed announcement yesterday afternoon.
By the time the announcement was done and Fed chairman Ben Bernanke concluded a subsequent news conference, the Canadian dollar was at 97.90 cents, noted chief currency strategist Camilla Sutton of Bank of Nova Scotia.
“Ben Bernanke had threatened to take away the punchbowl and bring the QE-party to an end,” added Kit Juckes, the chief of foreign exchange at Société Générale, as global markets continued to surge this morning.
“But he's changed his mind, found more happy juice, and told us all to 'Party on, dude!'”
Under QE, the Fed has been buying $85-billion of assets a month, and markets had expected it to announce yesterday that it was cutting back by about $10-billion.
But the Federal Open Market Committee, the central bank’s policy-setting group, said it was prudent to wait, our Washington correspondent Kevin Carmichael reports.
While some indicators of the labour market have improved, the jobless level remains high.
“Ben Bernanke's focus on the drivers of the fall in the unemployment rate, in his press conference, seem intended to weaken the link between the unemployment rate and when (or by how much) the Fed eventually raises rates,” said Mr. Juckes, referring to the fact that the central bank had pegged the inevitable rate hike to the level of unemployment.
“So he's saying the unemployment rate doesn't point unambiguously to a recovery in the labour market, and inflation is low, so he afford to continue to be the most dovish central banker in the world.”
Before yesterday, investors had been extremely anxious, fearing the Fed would cut the QE program by too much. They want to be certain the economy and the markets can handle a pullback.
Which is why the S&P 500 and Dow Jones industrial average set record closing levels. That spread today into Asian and European markets.
Tokyo’s Nikkei climbed 1.8 per cent, and Hong Kong’s Hang Seng 1.7 per cent.
In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 0.9 per cent and 1.4 per cent by about 9 a.m. ET.
New York also appeared set to celebrate a higher open.
“Given the extreme moves in financial markets overnight and this morning, some participants have been on the receiving end of a short and sharp lesson on the dangers of attempting to second guess the U.S. Federal Reserve,” said senior market strategist Brenda Kelly of IG in London.
“The Fed’s dovish message and failure to reduce its current asset purchasing program has sent the dollar reeling to a near seven-month low,” she added in a research note.
“Equity markets, on the other hand, are rallying, and the FTSE 100 has seen gains of 1.5 per cent in early trade as the mining sector soars on the metal price recovery. Gold has seen gains of over 4 per cent on dollar weakness and potentially premature fears of forthcoming inflation.”
- Follow our Inside the Market Blog (for subscribers)
- Kevin Carmichael: U.S. Fed shocks markets, stays course on stimulus policy
- David Parkinson in ROB Insight (for subscribers): Fed tapering question no longer if, but when
- Kevin Carmichael in Economy Lab: Jobless rate an imperfect measure, but not a useless one for Bernanke
Ford upgrades Canadian plant
Ford Motor Co. is pumping $700-million into a Canadian assembly plant to “meet surging global demand.”
The auto maker said today the investment would secure more than 2,800 jobs in Oakville, Ont., as it retools.
“The enhancements at Oakville Assembly are Ford’s latest step in maximizing its existing North American manufacturing assets, matching production to consumer demand as Ford’s North American sales surge to pre-recession levels,” the auto maker said, adding it will bring “several new models” to the factory.
As The Globe and Mail’s Greg Keenan reported earlier this week, the Canadian and Ontario governments are kicking in some $135-million to the Oakville overhaul, which will allow Ford to retool to assemble mid-sized crossover utility vehicles.
- Ford to invest $700-million at Oakville assembly plant
- Greg Keenan: Ford gets investment boost from Ontario, Ottawa
Streetwise (for subscribers)
ROB Insight (for subscribers)
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