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business briefing

Briefing highlights

  • What the fiscal numbers show
  • Stocks, loonie, oil at a glance
  • National Bank profit rises slightly
  • Inflation eases to 1.4 per cent
  • From today’s Globe and Mail


The federal Liberal government has more money to play with.

Or, as Bank of Montreal chief economist Douglas Porter put it: “Suffice it to say that Ottawa has plenty of room to manoeuvre to cut the deficit, spend on new programs, or (gasp!) cut taxes.”

Don’t take that to mean that Finance Minister Bill Morneau will cut your taxes in his March 19 budget, though I could point out that he’s always talking about making life better for the middle class. And – just sayin’ – it is a pre-election budget.

Mr. Porter scoured the latest fiscal numbers released by the Liberal government, which showed that “underlying finances are improving markedly.”

And so, he added, the budget “will thus be a true litmus test of where their priorities lie.”

Ottawa chalked up a surplus of $2.5-billion in December alone, a far better showing than the $500-million in the same month of 2017.

Open this photo in gallery:

Source: Department of Finance

That came as revenues surged 9.8 per cent, or $2.6-billion, on more tax money coming in, pumped up by money from employment insurance premiums and other sources. At the same time, program expenses rose $400-million, or 1.8 per cent, on transfers, while public debt costs rose 13.7 per cent or $200-million.

Now, look at the 2018-19 fiscal year so far, and you’ll see a modest surplus of $324-million. Modest, yes, but it’s a sharp turnaround from the $8.9-billion deficit in the same nine-month period of the previous fiscal year.

Open this photo in gallery:

Source: Department of Finance

”While there is a lot of seasonality to monthly budget figures, the 12-month rolling tally has also strengthened by over $9-billion (0.4 per cent of GDP) – a remarkable pace of improvement,” Mr. Porter also noted.

“For example, the fall update just three months ago called for this year’s deficit to be almost unchanged from last year ($18.1-billion versus $19-billion),” he added.

“The big surprise has been on the revenue side – they are currently thundering along, up 8.7 per cent year to date, versus the update estimate of 4.9 per cent.”

That 8.7 per cent, by the way, translates to $19.3-billion, according to the Department of Finance, citing the same reasons as in December for the better showing.

Program expenses rose 3.9 per cent in the nine months, or $8.4-billion, again for the same reasons, while public debt charges increased 10.3 per cent or $1.7-billion.

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Markets at a glance

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National Bank profit rises

National Bank of Canada posted a slight increase in first-quarter profit today as it pointed to “a strong Quebec economy” and “excellent” credit quality, among other things.

The bank earned $552-million, or $1.50 a share, diluted, compared to $550-million or $1.46 a year earlier.

Return on equity declined to 17.2 per cent from 18.7 per cent.

“We continue to benefit from the diversification of our business, a strong Quebec economy and our prudent approach to risk,” chief executive officer Louis Vachon said in releasing the numbers.

“Credit quality remains excellent, and the bank posted solid capital ratios.”

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Inflation eases to 1.4 per cent

Well, if you don’t get a tax cut in Mr. Morneau’s budget, at least you can take some solace in today’s reading of consumer prices.

Annual inflation eased in January to just 1.4 per cent, down from December’s 2 per cent.

Energy costs fell 6.9 per cent as prices at the gas pump declined 14.2 per cent from a year earlier, Statistics Canada said today.

Indeed, if you strip out gas, consumer prices rose 2.1 per cent.

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