Skip to main content
top business stories

These are stories Report on Business is following Wednesday, April 20. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Follow Michael Babad on Twitter

OECD warns on unemployment The Organization for Economic Co-operation and Development threw a challenge into the federal election campaign today, suggesting that Canada and some other countries maintain jobless benefit extensions for now.

Unemployment, the OECD warned in a lengthy report, remains a scourge on the global economy in the wake of the brutal recession and financial crisis.

"A main concern in countries most severely hit is that persistently high levels of unemployment - and a rising share of unemployed workers facing long spells without a job - will eventually result in widespread deterioration of human capital, discouragement and labour market withdrawal," the OECD said.

"The risk is strongest for youth and less skilled workers who have been disproportionately affected by the rise in unemployment."

Extension of jobless benefits in Canada, the U.S. and other countries should be maintained to halt a slide into poverty, the group added.

"In the United States, Canada and other countries where unemployment benefit duration has been extended, the case can be made for maintaining the extension until labour market prospects have sufficiently improved to prevent individuals from falling into persistent poverty," the OECD report said.

"Continued extension may also help avoid that the unemployed enter other benefit systems (such as disability pensions) from which exit may be less likely later on. In the meantime benefits should be made conditional on recipients satisfying job-search requirements and, where benefits are relatively high, they could be made declining with duration."

The group noted that in at least 10 countries, including Canada, the share of long-term unemployment has climbed, although Canada is in a better position than the others.

"The longer individuals remain unemployed, the more difficult it becomes for them to find a job and the less they may try, a phenomenon referred to as unemployment duration dependence or hysteresis," it said.

The OECD report comes on the same day that a new study by Toronto-Dominion Bank found that almost one-third of people surveyed say they don't have enough money to live on day-to-day, The Globe and Mail's Tavia Grant reports. Almost 55 per cent say it's tough to save money, as well.

A separate survey by Royal Bank of Canada also found a "significant rise" in the number of retirees returning to work because they need the money.

Loonie on roll, markets up The Canadian dollar cracked $1.05 U.S. today, largely because of a weaker U.S. currency and strong commodities, as it picked up on yesterday's surge.

The loonie wasn't alone. Oil , gold and other currencies and commodities also rose. Stocks also climbed sharply.

"We have a whole host of currencies and assets classes at multiyear highs," said Scotia Capital currency strategist Camilla Sutton.

Global stock markets climbed, pushed up by better-than-expected quarterly results from the likes of IBM Corp. and Intel Corp. late yesterday.

Where the weak U.S. dollar is concerned, Ms. Sutton noted in an interview the focus on the Federal Reserve's loose monetary policy and the poor fiscal outlook, particularly in the wake of the outlook downgrade by Standard & Poor's earlier in the week.

"This is a USD story as the combination of loose monetary policy and a compromised fiscal position weigh heavily against the USD," she said.

"The USD should weaken further as the combination of U.S. monetary and fiscal policy weighs heavily on the outlook," Ms. Sutton added in a report.

"Rising oil prices are being supported by several themes, including supply disruptions, emerging market demand and investor sentiment. Loose monetary policy in the U.S. is an important factor driving a search for yield and pushing investors into commodities, including oil. However, with rising oil prices dampening the economic outlook, the Fed's dual mandate will be increasingly difficult to fulfill and rates are likely to stay on hold for longer than the market is currently pricing in; in turn pushing oil (and commodities) higher and most important to [foreign exchange]traders, pushing the USD to new lows."

Yesterday, the loonie shot up markedly after a much stronger-than-expected inflation reading suggested the Bank of Canada may not wait much beyond July to hike interest rates again.

Encana profit slips Encana Corp. today posted a drop in first-quarter profit amid lower natural gas prices, to $78-million (U.S.) or 11 cents a share, from $1.49-billion or $1.96 a year earlier.

The energy company highlighted its "solid cash flow" and 4-per-cent increase in natural gas production.

After tax, cash flow was $138-million or 19 cents a share, which the company said was above what it would have been without its commodity hedging program.

"Our strategy is focused on high-growth, low-cost, margin maximization, and it's working well," chief executive officer Randy Eresman said in a statement.

"This year our supply cost, which represents the NYMEX natural gas price that delivers a return equal to our cost of capital, is expected to average $3.70 per thousand cubic feet equivalent (Mcfe) - down 25 per cent in the past three years. We expect this downward cost trend to continue as we target an average supply cost of about $3 per Mcfe for development of all our key resource plays."

UBS Securities Canada analyst George Toriola noted Encana's "increasing focus on profitable growth," how the company is chasing joint ventures, and its exploration for oil. He held his 12-month price target on Encana shares at $35, and his rating at "netural."

Japan's trade slumps Trade numbers from Japan today offer the first look at the hit to its economy from the devastating earthquake, tsunami and nuclear crisis last month.

Exports last month - the disaster hit March 11 - fell 7.7 per cent from February, and 2.2 per cent from a year earlier. Vehicle exports plunged almost 28 per cent from levels of a year ago, and electronics almost 7 per cent.

"The Japanese trade surplus collapsed in the aftermath of the earthquake and nuclear crisis last month," said Scotia Capital economists Karen Cordes Woods, Gorica Djeric and Derek Holt.

"The overall trade surplus for the nation dropped 78.9 per cent in March from a year earlier, and now sits at $2.38-billion," they said in a research note.

"Despite the anticipated impact from the disasters, the print is even lower than many analysts had expected. Exports fell for the first time in 16 months, as auto shipments were largely cut off. Despite weaker demand in earthquake-hit Japan."

Panel recommendations 'attainable' TD analysts believe the recommendations of an Ontario panel should be "fairly attainable" for TMX Group Inc. and London Stock Exchange Group PLC.

As The Globe and Mail's Karen Howlett reports today, the committee struck by the Ontario government wants Canada to have equal representation on the board of directors should the owners of the Toronto Stock Exchange and its London-based counterpart be allowed to merge.

"Many suggestions should be fairly attainable for TMX-LSEG to incorporate," TD Newcrest analyst Doug Young said of the panel's nine recommendations.

"However, the recommendation that the board representation be split 50/50 between TMX and LSEG (with no limitation in time) may get some push back given LSEG's larger market cap vs. TMX or the potential of future M&A."

Mr. Young held his 12-month price target on TMX shares at $40, and his recommendation at "hold."

In Economy Lab today

Here's something the EU's rickety bailout talks didn't need: a powerful showing by a populist, euro-sceptic party in one of its strongest member nations, Naomi Powell writes from Stockholm.

In Personal Finance today

In this week's Cash Clash, a Calgary couple has $6,000 to apply to $70,000 in debt, but they can't agree on priorities. Kelley Keehn does some financial triage. Having a cash clash of your own? E-mail cashclash@globeandmail.com.

Ensuring their children don't blow their inheritances is a growing concern among the wealthy, Grant Robertson reports. Banks are responding with new perks for clients: education.

A new breed of Canadian philanthropists are following Warren Buffett's lead, doling out charitable gifts before they die.

From today's Report on Business

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
IBM-N
International Business Machines
+0.08%190.96
INTC-Q
Intel Corp
+0.91%44.17
RY-N
Royal Bank of Canada
+0.48%100.88
RY-T
Royal Bank of Canada
+0.29%136.62
X-T
TMX Group Ltd
-1.98%35.73

Interact with The Globe