These are stories Report on Business is following Tuesday, Jan. 31, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Unemployment cripples Europe The scourge of unemployment across Europe underscores the toll of harsh government austerity measures and illustrates why EU leaders decided yesterday to put such a focus on job creation.
Unemployment in the 17-member euro zone held at 10.4 per cent in December, according to the Eurostat agency today, and in the wider European Union at 9.9 per cent. For the continent's youth, the problem is far worse.
"Youth unemployment is becoming a serious problem in Europe and could be a significant factor in determining the future of countries currently in the euro," said CMC Markets analyst Michael Hewson.
The statistics agency estimated that almost 24 million people are without work in the 27-nation EU, 16.5 million of them in the countries that share the common currency.
The overall number, high though it is, masks the disparity across the continent. For example, jobless rates are lower in countries such as Austria, the Netherlands and Luxembourg, at 4.1 per cent, 4.9 per cent and 5.2 per cent, respectively, but at crippling levels in Spain, Greece and Lithuania, at 22.9 per cent, 19.2 per cent and 15.3 per cent.
Europe's youth face a bleak future, with an overall jobless rate that tops 22 per cent in the EU. Again, individual countries underscore the pain of young people: Spain at 48.7 per cent, Greece at 47.2 per cent and Slovakia at 35.6 per cent.
Germany, Europe's biggest economy, today released seasonally adjusted data for January that showed unemployment dipping to a record low 6.7 per cent.
Yesterday, the EU's leaders pledged to focus on boosting job creation, particularly among young people, through apprenticeship, training and other programs. But one wonders how on the one hand countries such as Greece, Spain and Portugal can do that while on the other they are being pushed to cut deeper to bring their budgets into line.
Mr. Hewson also notes the growing role of Germany in the euro debt criss, and how that could play into job creation.
"Given Germany's place in Europe and the role they have in implementing budget discipline, it is a problem that isn't as high up their list of priorities given the low level of their unemployment, which is at a post unification low of 6.7 per cent," he said.
"This could prove costly for euro zone cohesion given that countries like Greece, Spain, Portugal and Italy are wrestling with unemployment problems in complete contrast to the German situation," Mr. Hewson told me today.
"Unless European leaders can come up with a strategy that deals with this problem of low growth and uncompetitive labour markets by cutting away some of the bureaucratic red tape that is strangling European businesses, then the problem will only get worse. Unless these issues are addressed then the future will continue to look uncertain with the result we could have a lost and disaffected generation which in turn will mean that any measures to bring down debt levels will also fail."
- Euro zone jobless rate hits highest level since birth of euro
- EU: 'We must do more to get Europe out of the crisis'
- Portugal's economic mess worsens
Economy stalls Canada's economy has now stalled for two months running.
Having registered a flat October, gross domestic product contracted by 0.1 per cent in November, Statistics Canada said today. That followed gains from June through September.
That wasn't supposed to happen. Economists had expected the economy to expand in November, by 0.2 per cent, and the stage is now set for a weak fourth-quarter reading.
Most of the trouble was in the energy sector, where oil and gas production slipped by 2.5 per cent, though partly due to maintenance shutdowns. Manufacturing, retailing and mining gained.
With so much focus on the housing market of late, it's worth noting that construction posted a decline of 0.3 per cent, but Canada's home resale market was still going strong, with a 2.2-per-cent gain for real estate agents.
"Excluding the loss in the energy sector output, GDP on the month would have been mildly positive," said Emanuella Enenajor of CIBC World Markets. "... Today’s much weaker than expected data come as a surprise, and peg Q4 GDP closer to 2 per cent, around the [Bank of Canada’s] recently revised outlook."
It's clear Canada's economy has lost some steam, which was expected.
"While most of the downside surprise was heavily concentrated in one category, no sectors stepped up to provide any offset, which shows yet again that underlying activity remains lacklustre, at best," said deputy chief economist Douglas Porter of BMO Nesbitt Burns.
Imperial Oil profit jumps Canada's Imperial Oil Ltd. posted a $1-billion fourth quarter.
The Calgary-based energy giant said today its profit climbed 26 per cent in the quarter to $1.18 a share, from $799.3-million or 94 cents a year earlier, helped by improved margins in refining.
Revenue at Imperial, which is a unit of Exxon Mobil Corp. rose to $8.12-billion.
"We are entering the third year of our decade-long growth strategy in which we will double our total upstream production to about 600,000 barrels per day," chief executive officer Bruce March said in a statement.
Catalyst to file for court protection Canada's Catalyst Paper Corp. is filing for court protection from its creditors, but saying that the course of its restructuring still hasn't been decided.
The British Columbia company had already announced a deal under the Canada Business Corporations Act, but said today its board decided to opt for a run into proceedings under the Companies' Creditors Arrangement Act, Canada's version of the Chapter 11 process in the United States.
“Our debt restructuring objective remains clear and unchanged though our path forward was altered by recent setbacks,” said chief executive officer Kevin Clarke.
"Without the new labour agreement, and without two-thirds support of 2014 noteholders, the economics of the previously announced consensual restructuring transaction was undermined," Mr. Clarke said in a statement.
"After reviewing this matter carefully with our board of directors and advisors, we have elected to begin the CCAA proceeding. The board, management and our advisors believe this approach will best facilitate the completion of a recapitalization transaction that delivers the improvements to our liquidity and capital structure which are necessary to put our company on firm financial and competitive footing in the current business and economic environment."
RIM releases report Research In Motion Ltd. released its report on corporate governance late yesterday, recommending, a little too late, that the CEO and chairman roles be separated, The Globe and Mail's Iain Marlow reports.
The report came more than a week after co-CEO and co-chairs Mike Lazaridis and Jim Balsillie stepped aside, to be replaced, indeed, by two different people in the roles, Thorsten Heins as chief executive officer and Barbara Stymiest as chair.
- Frances Woolley's Economy Lab on raising the retirement age: Consider it a done deal
- Honda slashes profit outlook on disasters
- Exxon Mobil quarterly profit rises
- Maple Group extends offer for TMX
- Mattel profit tops estimates, sales miss