These are stories Report on Business is following Tuesday, May 15, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Calgary, Toronto hot Toronto's housing market remains strong as Vancouver's softens. But notable is that Calgary is pushing ahead and, according to at least one economist, could become Canada's hottest.
Overall, according to the Canadian Real Estate Association today, home sales rose 0.8 per cent in April from March, or 11.5 per cent from a year earlier - and prices climbed 0.9 per cent in the month to an average $375,810.
But, as The Globe and Mail's Tavia Grant reports, there are wide variations across the country.
"Canada’s housing market continues to look balanced and well behaved overall, but location matters greatly - and fundamentals appear to be driving most local market performance," said Robert Kavcic of BMO Nesbitt Burns.
In Toronto, sales are now up 2.5 per cent from a year earlier, and prices 8.4 per cent. But in Vancouver, which has cooled, sales are down about 19 per cent, and prices by 9.8 per cent.
"While these two cities are garnering most of the attention, Calgary is quietly becoming a market to watch," said Mr. Kavcic.
"Sales jumped 30 per cent year-over-year in April and are back above the 10-year average for the first time in about three years," he said in a research note.
"Prices have yet to gain much momentum (up 0.7 per cent year-over-year), but supply conditions are tightening rapidly across Alberta. The month's supply was down to 4.6 from a post-recession high of more than eight, and sales have far outpaced new listings in recent months. If oil prices remain high enough to continue supporting strong economic growth and migration flows, Calgary could again become Canada’s real estate hot spot in short order."
The Canadian market overall is deemed to be healthy, though it's expected to slow down further from what Toronto-Dominion Bank estimates is overvaluation to the tune of 10 per cent to 15 per cent.
"With mortgage rates still at rock bottom through the early part of this year and job creation heating up through March and April, it’s not that surprising to see continued growth in Canadian home sales," said TD economist Diana Petramala.
"Still, growth in home prices and sales will likely be limited as the overvaluation has led to a deterioration in affordability," she added. "Overall, we anticipate the Canadian housing market to remain relatively flat in the coming year with home prices to rise just another 2 per cent this year, following gains of 7 per cent in each of the last two years."
Today's report also showed there's no "smoking gun" for the Bank of Canada, said Mark Chandler, chief of fixed income and currency research at RBC Dominion Securities.
"The central bank had been expecting some moderation in housing activity this year and, while strong starts/permits data have cast some doubt about a near-term slowing, relatively small national price increases are in keeping with assumptions about the consumer wealth effect," he said.
European nations diverge Fresh numbers today highlight how Europe has deteriorated into a region of haves and have-nots.
That the 17-member euro zone overall narrowly escaped a recession – economic growth in the first quarter was flat – is virtually meaningless. The monetary union was saved from a second quarter of contraction because of a stronger-than-expected showing in Germany, the continent's powerhouse.
On a nation-by-nation basis, the differences could not be more extreme, according to the measures of gross domestic product reported by Eurostat and other statistics agencies.
Growth in Germany was strong, at 0.5 per cent, but Greece, which is in the midst of a debt crisis and struggling under high unemployment, suffered a decline of 6.2 per cent, marking the 13th quarter of contraction over more than three years.
Italy saw its economy shrink by 0.8 per cent, Spain by 0.3 per cent, and Portugal by 0.1 per cent. Growth was flat in France.
The numbers came just before talks aimed at cobbling together a coalition government in Greece failed, meaning another election in mid-June. Across the wider 27-member European Union, the Czech Republic's economy withered by 1 per cent, Hungary's by 1.3 per cent. Finland, Estonia, Latvia, Austria and Slovakia registered growth.
"The flat euro zone GDP was a bit better than consensus expectations but the fact that we haven't had confirmation of a technical recession yet, i.e. two successive quarters of contraction, is academic and doesn’t really change anything," said senior economist Krishen Rangasamy of National Bank Financial.
"The euro zone data is an average of 17 countries. One country is doing well, some are either heading for or are in recession, while a couple are bordering a depression with unemployment rates close to or above 20 per cent," he said in a research note, referring to nations such as Greece and Spain.
"The second quarter is expected to be a similar story, with Germany again leading the way as it continues to benefit from an undervalued currency, while others stagnate. Austerity in the periphery just means that the recession in those economies will persist for longer."
Going forward, Europe is expected to remain in the doldrums, though, again, with sharp differences among its individual nations.
"It is important to remember that while a better outcome than had been expected, this does not speak to the staying power of growth in the region, and concerns will continue with good reason as the year progresses," said RBC's Mr. Chandler.
The countries most in the crosshairs, of course, are Greece and Spain, where unemployment is crippling and unemployment among young people is at half the work force.
Europe's troubles, amid a debt crisis that has run for more than two years, are playing out in several ways. The region has been hit by strikes, protests and riots, while several governments have fallen.
- Euro zone avoids recession as Germany powers ahead
- How close is Greece to bolting the euro zone?
- Brian Milner's Economy Lab: Greece won't quit euro soon
CIBC, Rogers in deal Canadian Imperial Bank of Commerce has become the first bank to strike a deal with a major wireless carrier to allow customers to carry a digital wallet on their mobile phone, announcing an agreement with Rogers Communications Inc.
In what is expected to be a race among banks, who are rushing to partner with wireless companies to roll out the new technology, CIBC and Rogers announced the pact today in Toronto, The Globe and Mail's Grant Robertson and Rita Trichur report.
The new system will allow customers of CIBC who carry Rogers smartphones to pay for goods at merchants by using their mobile phone, instead of pulling out their credit cards or reaching for their wallet or purse.
Facebook boosts price Changes to Facebook's IPO pricing show just how hot the initial public offering is expected to be.
The social media powerhouse today boosted the price range for its initial public offering to between $35 and $38. That top end would put the value of the company at more than $100-billion (U.S.).
The previous range was $28 to $35.
Facebook plans to go public on Nasdaq by selling 180 million shares, while existing stockholders sell 157.4 million more.