Skip to main content

Business Briefing Consumers are bummed, businesses are bummed, David Rosenberg is bummed

Briefing highlights

  • Canadians are bummed
  • Stocks, loonie, oil at a glance
  • Sunrise Records to buy HMV
  • Quadriga court hearing to start
  • WestJet profit falls on costs
  • From today’s Globe and Mail

Bummed out

Just about everyone seems bummed out in Canada these days.

From consumers and businesses to economist David Rosenberg.

Consumer confidence actually rose in January, according to the latest reading by The Conference Board of Canada.

Story continues below advertisement

But, as the group noted, “the index remains weak compared with levels in 2017 and 2018.”

Consumer confidence index

Index 2014 = 100

140

120

100

80

60

40

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

SOURCE: THE CONFERENCE BOARD OF CANADA

Consumer confidence index

Index 2014 = 100

140

120

100

80

60

40

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

SOURCE: THE CONFERENCE BOARD OF CANADA

Consumer confidence index

Index 2014 = 100

140

120

100

80

60

40

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

SOURCE: THE CONFERENCE BOARD OF CANADA

Indeed, it said, the survey done between Jan. 4 and 19 showed that even though consumers expect their personal finances and job prospects to get better in the next six months, the details of its findings “are far from positive.”

Just how far off the mark?

“The share of respondents who expect their finances to improve in six months increased to 22.4 per cent,” said Conference Board economist Cory Renner.

“This compares with 16.8 who said their finances would worsen. While this is better than the survey results from December, it is the second-worst showing since October, 2016.”

On the employment front, only 14.4 per cent expect their prospects will perk up in the next six months, while 22.4 per cent expect something bleaker. Again, this was a better showing than in December, but still the second-weakest results since February, 2018.

“Not surprisingly, given recent interest rate hikes and apparent concern over job prospects, Canadians also remain hesitant about making major purchases.”

Story continues below advertisement

A separate such confidence survey, released Monday, was similar. This one, the Bloomberg Nanos Canadian confidence index, was little changed in January, with the measures since late November near the worst in about two years.

Then there are businesses, whose confidence levels have been sinking for some time now.

“The latest results from The Conference Board of Canada’s survey of business leaders suggest that the new Canada-United States-Mexico Agreement (CUSMA), the replacement for NAFTA, has not yet led to the uptick in business confidence that we were expecting,” said economist Robyn Gibbard, noting the drop in the index in the fourth quarter to its lowest in three years.

Taken between mid-November and mid-January, it came after both the new trade pact and Ottawa’s tax measures for businesses.

“Despite the CUSMA agreement, geopolitical risks remain high,” Mr. Gibbard said in his report.

“External factors, such as China’s dramatically slower growth and the ongoing trade war with the United States, could drag down global growth, which would negatively impact a small, open economy like Canada’s,” he added.

Story continues below advertisement

Business leaders have also expressed concern with government policy, and the fall fiscal update measures did little to reduce overall tax rates or make energy projects easier to build.”

Added to that are a tight jobs market that means companies can’t find the people they need, higher borrowing costs and the pullback in consumer spending.

“Over all, firms tell us they are substantially more pessimistic about their finances going forward.”

Mr. Rosenberg, in turn, the chief economist at Gluskin Sheff + Associates, who has been downbeat for some time, wondered aloud Monday whether the Bank of Canada has gone too far.

Indeed, it has, Mr. Rosenberg said, referring to the central bank’s rate hikes, which recently came to an abrupt halt amid economic uncertainty.

“While it didn’t take much in the way of a tightening cycle, those are the vagaries of raising rates into the most leveraged household sector of all time,” Mr. Rosenberg said in his daily note to clients.

Story continues below advertisement

“In the meantime, consumers are beginning to tighten their belts, this is evident now in the multi-month deceleration in bank-wide credit growth,” he added.

“And you only know that the central bank has tightened policy sufficiently, or perhaps even gone overboard, via the behaviour of the interest-sensitive segments of the economy.”

Those sectors include housing, which has slumped, and auto sales, which also slumped in January.

“The case for the BoC to press the pause button is quite strong,” Mr. Rosenberg said.

Read more

Stocks rise

Read more

Sunrise to buy HMV

Canada’s Sunrise Records is buying the iconic, if bruised and battered, HMV.

Sunrise is buying 100 outlets out of administration, and closing 27 shops.

Story continues below advertisement

Chief executive officer Doug Putnam, who earlier acquired HMV’s operations in Canada, said he was “delighted to acquire the most iconic music and entertainment business in the U.K.,” the BBC reported.

Read more
More news
From today’s Globe and Mail
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Discussion loading ...

Cannabis pro newsletter