Briefing highlights
- BoC holds firm: What it would take for rates to rise
- Microsoft to slash jobs in Finland, take hit
- BMO hikes dividend as profit dips
- Video: Why rudeness at work is contagious
Markets await BoC
It’s going to take a lot to move the Bank of Canada off its game plan.
As The Globe and Mail's Barrie McKenna reports, Governor Stephen Poloz and his central bank colleagues held their benchmark rate at 0.5 per cent, and pointed to much weaker-than-expected economic growth in the second quarter of the year because of the wildfires that devastated the area around Fort McMurray, Alta.
“The bank's preliminary assessment is that fire-related destruction and the associated halt to oil production will cut about 1.25 percentage points off real GDP growth in the second quarter,” they said in today's statement.
“The economy is expected to rebound in the third quarter, as oil production resumes and reconstruction begins.”
Economists project no rate hike for months, if not years.
So what will it take to move Mr. Poloz?
He can already see evidence of certain things, notably stronger non-energy trade, more stable oil prices, an expected boost from fiscal stimulus, and more shopping at home by Canadians given the weaker loonie, said Emanuella Enenajor, the North America economist at Bank of America Merrill Lynch.
But several things still need to happen, according to Ms. Enenajor’s “checklist” for the central bank:
Stability in the commodity provinces: “It’s not clear how much more job loss/pain is in the pipeline, but the BoC likely won’t hike while those regions are in outright decline.”
Strong business creation: “The indicator nearest and dearest to the BoC Governor is new business creation ... Until we see an accelerating business population driven by non-energy exporting firms, it’s too soon to talk about BoC rate hikes.”
A pickup in capital spending: “Governor Poloz has highlighted weak capital spending as a key headwind in the economy ... Export-oriented and tourist-oriented sectors intend to invest more in the future, but it’s not clear if these sectors will be enough to drive overall [capital spending] higher and support growth.”
Stronger employment: “Employment rose at a 1-per-cent pace in 2015 in Canada, roughly half the pace of the U.S. ... Employment growth will need to speed up and broaden out for the BoC to feel comfortable with hikes.”
A scene I'd love to see ...
“It'll cost me how much to buy a house in Vancouver?”
BMO profit slips, dividend up
Bank of Montreal boosted its dividend today as it posted a dip in second-quarter profit.
The dividend goes up 2 cents to 86 cents.
Profit at the Canadian bank slipped 3 per cent to $973-million or $1.45 a share, BMO said.
“In the quarter, we were encouraged to see a more positive tone in the market environment for interest rates, currencies and commodities, while economic fundamentals remain healthy,” chief executive officer Bill Downe said in a statement.
Microsoft cuts deep
Microsoft is overhauling its phone hardware operations, cutting up to 1,850 jobs and taking a hit of about $950-million (U.S.) in its fourth quarter.
About $200-million of the restructuring and impairment charge will be for severance, the tech giant said today.
Finland will be hit hard, with up to 1,350 jobs lost at Microsoft Mobile Oy.
“We are focusing our phone efforts where we have differentiation,” chief executive officer Satya Nadella said in a statement.
Today’s move is the latest in Microsoft’s smartphone business after the acquisition of the Nokia phone operations a couple of years ago.