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business briefing

Briefing highlights

  • Auto sales to fall
  • Stocks, Canadian dollar, oil at a glance
  • Canada’s trade deficit narrows sharply
  • GM forecasts flat profit
  • Required Reading

Auto sales to fall

It’s not “peak car,” but expect auto sales in Canada to slump again this year.

Rebekah Young, Bank of Nova Scotia’s director of fiscal and provincial economics, forecasts “another modest decline” in sales to about 1.91 million units in 2020. That would follow a drop of more than 3 per cent, to 1.92 million units, last year.

As a reference point, sales peaked in 2017 at 2.04 million.

"The cyclical slowdown in auto sales has been driven by affordability considerations,” with consumer confidence also a factor, Ms. Young said in this week’s forecast.

“Canada has not yet hit ‘peak car,’ but a return to 2017 highs is not imminent.”

Globally, Ms. Young projected a drop in sales of 1.2 per cent this year, to 74 million units, following the 2019 decline of 4.9 per cent.

“Continued uncertainty is likely to weigh on global auto sales in 2020 particularly in the lead-up to the U.S. presidential elections as geopolitical tensions and even risks loom large,” she added.

Markets at a glance

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Trade gap shrinks

Canada’s merchandise trade deficit narrowed sharply to just $370-million in December from November's $1.2-billion.

This came as exports climbed 1.9 per cent, largely because of oil shipments, and imports rose just 0.2 per cent, Statistics Canada said today.

For all of last year, exports gained just 1.7 per cent, compared to the heftier 6.3 and 5.4 per cent in 2018 and 2017, respectively.

Having said that, the trade gap last year came in at $18.3-billion, marking the smallest deficit since a surplus in 2014, the agency said.

On a volume basis alone, exports climbed 2.8 per cent in December, having slumped a month earlier on “disruptions in rail and pipeline transportation,” Statistics Canada said.

While the trade gap narrowed, the details were “still not encouraging,” said Royal Bank of Canada economist Nathan Janzen.

“The bulk of the 1.9-per-cent increase in exports in December came from a bounce-back in energy shipments after disruptions to a major pipeline reduced exports in November,” he said.

“Excluding energy products, export volumes (i.e. excluding price changes) were little changed, by our count, in December but were still up less than a per cent from a year ago and declined about 3 per cent at an annualized rate in Q4 as a whole.”

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GM forecasts flat profit

From Reuters: General Motors Co. forecast flat profits for 2020 and reported a better-than-expected fourth-quarter result as it kicked off a new effort to win over investors stampeding into shares of electric-car rival Tesla Inc. GM said it expects earnings per share for 2020 in a range from US$5.75 to US$6.25, excluding one-time items, taxes and interest. GM’s fourth quarter profits took a US$3.6-billion hit from a 40-day United Auto Workers strike that shut down the auto maker’s profitable U.S. operations. The company said pre-tax profits were 5 US cents a share for the latest quarter excluding certain restructuring costs, down from US$1.43 a year earlier. Including restructuring costs, GM had a fourth quarter net loss of US$194-million, or 16 US cents a share. Revenue in the quarter fell nearly 20 per cent to US$30.8-billion.

Euro zone consumers pull back

From Reuters: Consumers in the euro zone tightened their belts in December despite the Christmas shopping season, official estimates on retail trade showed, contributing to the bloc’s paltry growth at the end of last year. Eurostat said retail trade volume in the 19-country currency bloc dropped 1.6 per cent in December from the previous month, the worst fall in more than two years.

Imperial warns of profit drop

From Reuters: Tobacco group Imperial Brands forecast a 10-per-cent drop in its first-half profit and cautioned on full-year earnings because of a U.S. regulatory ban on some flavours of cartridge-based vapor devices and weaker consumer demand. Growth of Imperial’s “next generation” products has slowed and the vaping market in the United States has taken a turn for the worse after vaping-related deaths and rising popularity of e-cigarettes among teens led to an intense regulatory crackdown.

Also ...

Required Reading

Trans Mountain hurdle cleared

The federal government’s duty to consult with Indigenous peoples over resource development does not grant them veto powers, the Federal Court of Appeal says, ruling that Ottawa met its obligations for consultation before it reapproved the Trans Mountain pipeline expansion last year. Justine Hunter reports.

Vancouver home sales surge

Vancouver home sales rose 42 per cent in January compared with last year, as the market continued to strengthen after stricter borrowing and foreign buying rules slowed sales and depressed housing prices, Rachelle Younglai writes.

Unappetizing truth

Read personal finance columnist Rob Carrick on the unappetizing truth about your grocery spending.