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These are stories Report on Business is following Thursday, Nov. 1, 2012.

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Toronto condo market slows
Toronto's condo market is taking it on the chin, though that compares to a strong 2011.

Condominium sales in Canada's biggest city plunged 30 per cent in the third quarter from the second, leading developers to delay launching projects, Urbanation Inc. said today.

Sales of new condos fell to 3,317 in the latest quarter, the research firm said. In the first nine months of the year, sales slipped to 14,156, and are on track to close out the year with a 35-per-cent decline from last year's record level of 28,190.

"With slowing sales and a record level of unsold inventory in the market in the second quarter, condominium developers reacted quickly by delaying their project launches, especially in the  '416' area," said executive vice-president Ben Myers, referring to one of the area codes used in the Toronto area, the other being further from the city core.

"Just five projects launched in Toronto in Q3-2012, as developers choose to review their pricing assumptions and unit mix."

Resales also sank in the third quarter, by 32 per cent to 3,413 from 5,050 in the second quarter.

"The change in the mortgage insurance rules may have forced many buyers to settle for smaller units then they had previously desired," Mr. Myers said, referring to the latest round of restrictions from Finance Minister Jim Flaherty that took effect in July.

"The number of resale transactions for units priced over $400,000 fell 40 per cent compared to last quarter, while there was a 38-per-cent quarterly drop in units traded over 1,000 square feet."

Slowing sales in the city, where observers, including the finance minister, feared a condo bubble, are taking their toll on projects.

"The number of unit completions in 2012 are well below our forecasts, as construction delays have pushed back occupancy on a number of projects," said Mr. Myers.

"The average project that completed construction in 2012 took 3.85 years from sales launch to occupancy. Compare that to 2003, when they average took just 2.68 years for a similarly sized project (205 units vs. 197 units)."

Unsold inventory in the city had reached a record 18,123 in the second quarter, but that has since slipped to 17,182.

And, noted Urbanation, starts have eclipsed completions for the eighth quarter in row, leaving a record 207 projects, with more than 56,300 units, under construction.

"The 28,000-plus completions next year could add as many as 14,000 new condominium rental units to the Toronto [census metropolitan area] via private landlords, which would represent a whopping 25-per-cent increase in condominium rentals in the metropolitan area," it added.

Resource sector in lower gear
Bank of Montreal's Douglas Porter today takes an intriguing look at Canada's resource sector and finds it has shifted "from growth leader to laggard."

The findings by the deputy chief economist of BMO Nesbitt Burns are troubling given how crucial resources are to the broader economy, particularly as economic growth stumbles.

Mr. Porter built on yesterday's Statistics Canada report, which showed the economy stumbled in August as gross domestic product slipped by 0.1 per cent, a far poorer showing than the growth of 0.2 per cent expected by economists.

As The Globe and Mail's Tavia Grant reports, it marked the first decline in six months.

"The mantra for the Canadian economy in recent years has been how it's performed relatively well largely thanks to the resource sector," said Mr. Porter.

"Both parts of that mantra got blown out of the water with the August GDP report."

The broader economy, he noted, has now gained just 1.2 per cent over the course of a year, or about half of the annual pace the United States chalked up in the third quarter.

The resource sector, in particular, which takes in mining and oil and natural gas, has slipped by 3.7 per cent year over year.

"Resources have seen the biggest output drop and are one of only three sectors in the red in the past year (along with government and utilities)," Mr. Porter said.

The economy's stumble in August was largely due to lower output in the manufacturing, mining and energy sectors.

Mining output dropped 2.8 per cent, with dips in copper, nickel, lead, zinc, gold, silver ore and potash mines.

Much of the decline in the mining and energy sectors was due to maintenance and the sector should bounce back. But Mr. Porter takes a more in-depth look.

"In fact, while the resource sector was solid in 2010 and 2011, it has actually grown less quickly than the broader economy on average for the past decade," he added in his report.

"The Canadian economy has benefited from higher prices (and earnings) in the resource sector, but not necessarily higher output."

For Mr. Porter's research, see the accompanying infographic here.

Suncor pinched
It was just after Mr. Porter issued his findings that Suncor Energy Inc. said its expansion plans are being pinched by the wave of new tight oil production in North America.

Steve Williams, Suncor's chief executive officer, said the company's Voyageur upgrader project is "struggling" to meet its hurdle rate given the light oil boom in Canada and the United States, The Globe and Mail's Carrie Tait reports.

The proposed Fort Hills and Joslyn oil sands mines are also under pressure but not to the same extent, he said on the company's third-quarter conference call Thursday.

Barrick profit slides
Barrick Gold Corp. today posted a steep drop in third-quarter profit, and reiterated its promise to focus on returns.

Barrick earned $618-million (U.S.) or 62 cents a share in the quarter, down from $1.37-billion or $1.37 a year earlier.

"We are on track to achieve our production guidance with higher production expected in the fourth quarter," said chief executive officer Jamie Sokalsky. "Despite some cost pressures, Barrick remains the lowest cost senior producer."

He cited the fact that the gold giant has "cut or deferred" some significant capital spending that had been budgeted, adding that "as I have said, returns will drive production; production will not drive returns."

As The Globe and Mail's Pav Jordan reports, the cost overrun at Barrick's Pascua-Lama gold project, the company's largest and most complicated endeavour ever, will be even greater than expected.

The massive project in the southern Andes mountain range between Chile and Argentina is now expected to cost as much as $8.5-billion to build as it targets first production in the middle of 2014. That is even more than the approximately $8 -billion Barrick estimated Pascua-Lama would cost to develop in July.

BCE profit slips
Canada's BCE Inc. posted a $569-million profit in its third quarter as its wireless and Olympic-driven media division more than compensated for weakness in its traditional home phone business, The Globe and Mail's Steve Ladurantaye reports.

The profit of 74 cents a share was down from $642-million or 83 cents a year earlier.

The Montreal-based company said profit slipped 12 per cent from the same quarter last year "mainly due to lower income tax expense" in 2011, and revenues increased 1.8 per cent to $4.3-billion.

The company's Bell Media media division – which recently had its $3-billion bid for Astral Media shot down by regulators – had a particularly strong quarter thanks to advertising sales for the London 2012 Games. Revenue in the division was up 25 per cent to $546-million, although the company warned that advertising across the rest of its properties hasn't fared so well.

Hopeful signs from China
Fresh numbers suggest Chinese manufacturers are recovering, though at a modest pace.

The government's purchasing managers index rose to 50.2 for October, putting the sector back into expansion mode. That's up from September's reading that was just shy of the 50 mark, which separates expansion from contraction.

A separate, private reading by HSBC/Markit indicated the same thing, moving to 51.2 from an earlier estimate of 49.7.

"The pick-up in China's two manufacturing PMIs provides further signs of recovery in October, with particular strength in new orders," said Mark Williams and Qinwei Wang of Capital Economics.

"Over all, the two PMIs add to the evidence that the economy is recovering," they added in a research note.

"So far at least though, the rate of recovery remains slow. The PMIs have improved relative to a couple of months ago but this has just returned them to where they were around the middle of the year. In other words, China's manufacturing sector has picked itself off the floor but it is not moving with anything like the speed we've been used to over the last few years."

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