These are stories Report on Business is following Thursday, Sept. 20, 2012.
Risk of Canadian housing bubble easing, Fitch says
Risks of a bubble in Canada’s housing market appear to be easing, a “positive development” for the country’s banks, the Fitch ratings agency said today.
“In Fitch Ratings’ view, these early signs of a cool-down in the housing market could be generally positive for the stability of the Canadian banking system and the sustainability of economic growth, though the full extent and pace of the housing correction remains unclear,” the agency said.
Fitch cited the most recent report by the Canadian Real Estate Association, which said this week that home sales fell 5.8 per cent in August from July.
New federal mortgage restrictions that went into effect in July are believed to have played a role in taming Canada’s real estate market, though consumer debt burdens remain the biggest threat for the banks, Fitch said.
“The latest sales numbers provide some initial evidence that risks of near-term overheating in the Canadian housing market may be subsiding,” the agency added.
“This could be a positive development for Canadian financial institutions as long as the labour market remains relatively stable.”
The reduced threat of a bubble will also probably take some pressure off the Bank of Canada to hike interest rates any time soon, the agency added.
- Home prices see weakest August increase in 12 years
- B.C. housing slowdown signals wider slump
- Housing market correction 'appears to be under way'
- Canada's housing market cools
Economic numbers disappoint
Fresh economic readings from China, the euro zone and Japan are weighing on the minds of investors.
The pressure on Asian markets was more severe than in Europe or North America, but investors were clearly disappointed by the news today.
The focus of the markets, said senior currency strategist Camilla Sutton of Bank of Nova Scotia, has now shifted to the “deterioration of global growth.”
This shift was largely due to purchasing managers indexes from China and Europe, and weak trade numbers from Japan.
As Carolynne Wheeler reports from Beijing, HSBC’s flash reading on manufacturing showed China’s PMI up slightly, at 47.8, but that’s below the 50 mark that separates contraction from expansion.
Separately, a reading from the euro zone, which combines both manufacturing and services, slipped to 45.9, the lowest level since the summer of 2009.
Last week, markets had taken solace from a fresh round of stimulus from the Federal Reserve, which unveiled a new bond-buying scheme dubbed QE3 because it marked the third round of quantitative easing. The European Central Bank had already moved and, yesterday, the Bank of Japan sweetened its stimulus measures
That didn’t last long, however.
"There has been very little follow-through from last week's hugely positive market reaction to the Fed's announcement of QE3," said chief economist David Rosenberg of Gluskin + Associates.
"Not even yesterday's move by the BOJ to further expand its balance sheet has exerted more than a one-day impact with the Nikkei off 1.6 per cent today to 9,086 and more than erasing yesterday's post-policy bounce (the largest slide this month," he added in a research note.
"China was off 2.1 per cent to close at a new three and one-half low, which in turn cannot be great news for the commodity sector ... Emerging markets in aggregate suffered their largest decline (1.2 per cent today) in eight weeks. Could the bloom be off the rose?"
- Weak factory data show China struggling to recover
- Euro zone business activity gloomiest in 3 years: PMI
- Loonie tumbles amid weak global signals
- Follow our Market Blog
There has to be a joke here about Apple Inc. losing its way.
From warping highways to misplacing the Statue of Liberty, Apple’s new maps application is off to a bumpy start, The Globe and Mail's Omar El Akkad reports.
The iPhone-maker unveiled its in-house maps service this week, designed to replace the ubiquitous Google maps software. The new maps application is part of a wider upgrade to the operating system software that powers all Apple phones and tablets.
But so far, it has been far from a stellar debut. Users quickly found that some of the services they had to come to rely on, such as Google’s transit-based directions, were severely limited in the new Apple software. In addition, many locations around the world were either populated with inaccurate data about local points of interest, or simply missing.
Auto labour talks grind on
Negotiators for the Canadian Auto Workers union and General Motors Co. returned to the bargaining table today as the union sought to get the auto maker to match the deal it made with Ford Motor Co. on Monday.
As of this morning, GM had still not done so, CAW president Ken Lewenza said. In addition the issue of jobs at the company’s plants and how laid off workers will be treated was still a sticking point, The Globe and Mail's Greg Keenan reports.
Talks with GM are more advanced than those with Chrysler Group LLC in what is known as pattern bargaining where an agreement with one company sets the standard on wages and other economic issues and the other companies traditionally match it.
Jobless claims steady
The number of Canadians collecting jobless benefits remained above 500,000 in July, little changed from June, but down by more than 6 per cent from a year earlier and at the lowest in almost four years.
Numbers were up in Alberta and Ontario, Statistics Canada said today, and down in Prince Edward Island and Quebec. There was little change elsewhere.
Initial and renewal claims for Employment Insurance benefits also held relatively steady at more than 232,000.
Some 1.4 million Canadians are out of work, with a jobless rate of 7.3 per cent.
Avoiding the taxman
Most Canadians have paid cash in order to avoid the sting of taxes, and they don’t feel bad about it either, according to a new poll.
The results by H&R Block Canada, found that 84 per cent of those surveyed admitted to paying cash for a product or service to avoid the sales tax, The Globe and Mail's Roma Luciw writes.
When presented with two quotes from a contractor – a cheque payment or a lower cash payment with no tax – 55 per cent of Canadians said they would choose cash.
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