These are stories Report on Business is following Friday, Aug. 16, 2013.
Don't ignore geopolitical issues: Economist
The debate over a west-east Canadian oil pipeline must take geopolitical issues into account amid the "energy revolution" under way in the United States, National Bank of Canada's chief economist says.
Stéphane Marion was referring to TransCanada Corp.'s plans for the Energy East pipeline that would carry about 850,000 barrels of oil daily from Western Canada through to New Brunswick.
The pipeline – the decision to move ahead was announced earlier this month – would transport crude to three refineries in Quebec and New Brunswick and serve as another route for export markets.
Eastern provinces now have to import, and National Bank questions why they have to do that.
There are of course environmental and political concerns, but Mr. Marion has another, interesting argument.
"Looking ahead, one should not forget that the energy revolution that is taking place in the U.S. has greatly reduced that country's dependence on oil from the Middle East," he said.
"Under these circumstances, we cannot help but wonder about the impact of a diminishing role for the U.S. in that region of the world," he added in a research note.
"For eastern Canada, this could potentially mean a less secure source of supply for its oil imports. The current pipeline proposal of around 1.1-million barrels a day would eliminate the need to purchase oil from the rest of the world."
What he means is that surging energy production in the United States could prompt the Americans to pull back from ensuring oil supplies from overseas.
Five years ago, Mr. Marion said in an interview, the idea of the United States reducing military spending in that region was unthinkable. But "all of a sudden, it's an option."
He noted that Canada imported 723,000 barrels a day in 2012, or $30-billion worth, about half from OPEC countries. That was the second-largest total on record.
"As many Canadians continue to question the rationale for an oil pipeline between Alberta and New Brunswick, geopolitical considerations should not be forgotten," Mr. Marion said.
- TransCanada to push ahead with major new oil pipeline to Eastern Canada
- Oil’s new Arctic passage to Europe
Canadian factory sales fall again
Statistics Canada said Friday that Canadian manufacturing sales fell 0.5 per cent in June to $48.2-billion.
The drop marked the fourth decline in six months.
"Manufacturing sales have been on a slow decline since the spring of 2012," the agency said.
The decline in sales were concentrated in the miscellaneous manufacturing, fabricated metal product and wood product sectors.
Sales were higher in the petroleum and coal product industries, Statscan said.
U.S. housing starts climb, but by less than expected
U.S. housing starts and permits for future home construction rose less than expected in July, suggesting that higher mortgage rates could be slowing the housing market's momentum.
The Commerce Department said on Friday that housing starts increased 5.9 per cent to a seasonally adjusted annual rate of 896,000 units. June's starts were revised up to show a 846,000-unit pace instead of the previously reported 836,000 units.
Economists polled by Reuters had expected groundbreaking to rise to a 900,000-unit rate last month.
Permits to build homes rose 2.7 per cent in July to a 943,000-unit pace. Economists had expected permits to rise to a 945,000 unit pace.
Wall Street flat after selloff
U.S. stocks were little changed Friday following the largest one-day drop in almost two months a day earlier, with main indexes on track to post their largest weekly decline in months on worries over the health of consumer spending and corporate profits.
Nordstrom Inc. on Thursday joined the list of consumer companies reporting lower-than-expected revenue, and the luxury department store chain cut its full-year sales and profit forecasts. Its shares had dropped 3.4 per cent by midday.
From Wal-Mart and Gap to Macy's and McDonald's, chains that cater to middle- and lower-income Americans are feeling the pinch of an uneven economic recovery.
Investors are concerned the economic recovery is slower than they had hoped as corporate revenue growth has disappointed even as companies' bottom-lines have hit the mark.
Adding to concerns, a survey showed U.S. consumers were a bit less optimistic in August as sentiment retreated from last month's six-year high.
The Dow Jones industrial average ticked up 9.32 points to 15,121.51, the Nasdaq rose 11.01 points to 3,617.12 and the S&P 500 inched up 0.34 of a point to 1,661.66 near midday.
In Canada, the S&P/TSX composite index lifted 45.12 points to 12,749.64 near midday.
With The Associated Press and Reuters
Note: Michael Babad will return in September