These are stories Report on Business is following Tuesday, July 23, 2013.
Group looks at foreign temps
The Conference Board of Canada can’t fully answer the question, but it does wonder why Canada is importing so many temporary foreign workers when its own young people can’t find jobs.
In the final piece of a three-part look at the post-crisis labour market, the group cites the fact that the number of temps from outside the country reached almost 340,000 by December of last year, up from 150,000 in 2006.
This, as Canada’s unemployment rate continued to climb, particularly among young people.
The jobless rate stood at 7.1 per cent last December, with some 1.4 million Canadians out of work. Unemployment was far high for the country’s youth, at 14.1 per cent, with more than 400,000 young people without jobs.
Today, the national unemployment rate is still 7.1 per cent. For young people, it has dipped just slightly, to 13.8 per cent, with almost 398,000 kids looking for work.
“Canadian youth are struggling to secure employment,” Pedro Atunes, the Conference Board’s director of forecasting and analysis, and senior economist Alicia Macdonald wrote in their latest report.
“This, justifiably, raises the question: if the unemployment rate remains relatively high and so many young and able Canadians are unable to find work, why are still bringing in so many people under the TFW program?”
They cited three possible factors:
- A skills mismatch.
- “Labour market rigidities,” the suggestion being that higher jobless benefits in some regions of the country stop people from moving to areas where there may be work.
- The “perception” that employers can pay less for foreign workers.
The government’s TFW program is a controversial one, so much so that Ottawa recently altered it. Many businesses, however, say they need foreign workers.
“Time will tell how these changes have an impact on the labour market, exact impact of these changes, but the recently announced program changes should put downward pressure on the number of TFWs in Canada each year – leading to better alignment between domestic unemployment and foreign workers,” the authors of the report said.
- Employers fear red-tape snarl from foreign worker rule changes
- Business's cross-Canada lament: We need foreign workers
- Temporary foreign worker program lowers wages, thwarts training, economists say
Antitrust body throws out case
Jim Flaherty is taking an in-depth look at the dismissal of a major case against Visa Canada Corp. and MasterCard International Inc., raising the possibility that Canada's finance minister could attack the issue from the regulatory front.
"I will be carefully reviewing the Competition Tribunal’s decision and also monitoring any potential appeal," Mr. Flaherty said after the antitrust body today rejected the Competition Bureau's arguments against the credit card giants, alleging they impose undue fees on retailers.
"Recognizing the importance of this issue to all involved, I have also asked that a special meeting be convened of the government's FinPay committee – a consultative committee on payments issues that includes representatives from the credit card industry, small business, retailers, consumers, and many more - to discuss this matter and next steps.”
The ruling is a setback for retailers who have been fighting for the right to pass on transaction fees imposed by the credit card companies and their card providers, often Canadian banks, to customers in the form of surcharges.
In a summary of its decision, the Tribunal declared that the section of the Competition Act that the Competition Bureau used to make its case against the credit card providers did not apply to the alleged problem, and that the proposed interpretation of this section “was not supported by the legislative history of the provision or other decisions," The Globe and Mail's Tim Kiladze reports.
Apple by the numbers
Shares of Apple Inc. rose in after-hours action today as the tech giant’s third-quarter results beat the expectations of analysts. Here are the highlights:
- Profit slipped 22 per cent to $6.9-billion (U.S.) or $7.47 a share from $8.8-billion or $9.32.
- Revenue inched up to $35.3-billion from $35-billion.
- Sales of iPhones jumped to 31.2 million from 26 million.
- Sales of iPads slipped to 14.6 million from 17 million.
- Sales of Macs dipped to 3.8 million from 4 million.
- International sales represented 50 per cent of quarterly revenue.
- Gross margin came in at 36.9 per cent, compared to 42.8 per cent.
“We are especially proud of our record June quarter iPhone sales of over 31 million and the strong growth in revenue from iTunes, software and services,” said chief executive officer Tim Cook.
Apple also projected fourth-quarter revenuew of between $34-billion and $37-billion.
Mr. Cook added that the company is “laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014."
There has been speculation over an iWatch and a bigger iPhone, among things.
Cars and hockey
Canadian consumers are perking up.
Retail sales across the country climbed in May by 1.9 per cent, the fastest pace since March, 2010, Statistics Canada said.
Not only did that pick-up follow two lame months, the increases were broad-based, the federal agency said today.
Indeed, nine of 11 sectors measures posted increases, accounting for almost 95 per cent of all sales.
"Everything was selling like hotcakes in May, perhaps even hotcakes, as retail sales surged 1.9 per cent in the month, and 1.2 per cent excluding autos, both miles above consensus forecasts," said chief economist Avery Shenfeld of CIBC World Markets, referring to what analysts had expected.
Driving the increase, in dollar terms, were autos and parts, notably light trucks.
Food and drink sales also saw an impact. And, again, the beer and liquor folks have hockey to thank.
“Beer, wine and liquor store sales increased 2.2 per cent, following decline the three previous months,” Statistics Canada said.
“The gain coincided with a later start to the National Hockey League playoffs.”
What's that mean going forward?
"With sales up 1.9 per cent in real terms, forecasts for May GDP will be revised higher, as will our forecast for Q2, which sat at 1.6 per cent before the data, and will likely be a couple of ticks higher," said Mr. Shenfeld.
- David Parkinson in Economy Lab: May retail sales jump, but trend still lacklustre
- Retail sales jump 1.9% in May, most in three years
China sets growth floor
China’s premier has reportedly pledged an economic growth rate of no less than 7 per cent this year.
That raised the usual questions among observers, though still buoyed the markets.
According to reports from Beijing, Premier Li Kequiang reiterated that China’s growth target for 2013 is 7.5 per cent, and won’t go below 7 per cent. That raises the prospect of stimulus measures should growth falter.
“Now if this were the U.S. and the president were to have decreed a lower limit for growth, we’d naturally question his ability to deliver it and ask how he intends to accomplish that goal,” said Derek Holt and Dov Zigler of Bank of Nova Scotia.
“But this is China,” they added.
“Not only is the state widely thought to cook the numbers and so one might assume they’ll find a way,” they added.
Other observers also questioned the floor set by the premier.
“London-listed miners are stretching their legs this morning after some suitably sunny comments from the Chinese premier,” said market analyst Chris Beauchamp of IG in London.
“Beijing aims to keep growth above 7 per cent; commendable as this is, saying something doesn’t make it true, even if the latest economic data indicated that consumer spending in China was helping to pick up the slack.”
- China committed to reforms, to take decisive steps: Vice-Premier
- China eases bank lending rules in bid to reform financial sector
Telus doubles buyback
Telus Corp. is doubling its share buyback program, The Globe and Mail’s Rita Trichur reports.
Telus, one of Canada’s major phone companies, announced last night that it’s boosting the program to $1-billion from $500-million.
Share buybacks are aimed at boosting a company’s stock price by reducing the number of shares on the market.
Shares of Netflix Inc. slipped today after disappointing subscriber numbers, though profit still climbed in its second quarter.
Netflix profit climbed in the quarter to $29-million (U.S.) or 49 cents a share, topping the midpoint of its previous guidance of $26-million or 43 cents.
Revenue increased to $1.1-billion.
But, according to the numbers released after markets closed yesterday, it added about 630,000 U.S. subscribers in the second quarter, fewer than analysts had expected.
It now has more than 28.5 million American subscribers.
Streetwise (for subscribers)
ROB Insight (for subscribers)
- Cisco to buy IT security firm for $2.7-billion
- Dissident shareholders lose bid for special Bioniche meeting
- Wendy's tops forecasts, to sell 425 restaurants
- UPS posts lower second-quarter profit
- KPN's $11-billion deal with Telefonica tests Europe antitrust stance
- Consumers more confident, less worried about jobs: global survey
- Ryanair offers to sell Aer Lingus stake to shake off regulators