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business briefing

Welcome to Guelph

The folks at the Vienna Restaurant in downtown Guelph, Ont., were too to busy to talk to me when I phoned around brunch time yesterday to get some information about the diner, asking me nicely to call back later.

I could tell from the background noise alone.

But that told me a lot about what I already suspected were the good times in this small city about an hour away from Toronto, depending on how fast you drive.

It’s a cute city, crime is low and there are a lot of university kids. And, notably, it leads the country on the jobs front.

Guelph has generally had lower unemployment. But a rejigged ranking of Canadian cities by BMO Nesbitt Burns puts it in top spot, with jobs growth of more than 9 per cent in December compared with a year earlier, an employment rate of 72 per cent that’s the best in the country, and a jobless level that is among the lowest and now down almost a full percentage point from late 2014.

“Guelph tops the list with robust job growth, population inflows, a puny 4.2-per-cent jobless rate and the highest share of the population that is working,” BMO senior economist Robert Kavcic noted as he released the rankings after Statistics Canada’s latest labour market report on Friday.

As The Globe and Mail’s Rachelle Younglai reports, that national report showed Canada churned out almost 23,000 new jobs last month, though unemployment held firm at an uncomfortably high 7.1 per cent.

Ontario gained about 35,000 jobs, and its unemployment rate eased to 6.7 per cent.

Which brings us back to Guelph, pop. 121,688 at the last official census count a few years ago.

Mr. Kavcic believes Guelph is benefiting from “broadening growth” outside the Greater Toronto Area, as are other nearby communities.

“Plus, they have a more stable and diverse job base (university, health care, etc.) than some others further south/west.”

Guelph’s economy is dependent on no one thing, unlike Oshawa and Windsor where the auto industry rules, though manufacturing has a dominant presence.

The city is also big in life sciences, biotechnology and agriculture-related industries, with a big university presence, boosted by the Guelph-Wellington Business Enterprise Centre and Innovation Guelph.

“I really want to embrace the entrepreneurial spirit,” Mayor Cam Guthrie said in an interview.

The young mayor, who has been in the position since 2014, sells his city well, citing not just the business opportunities, the land available, the five-year transformation of downtown, but also what new businesses are looking for in terms of the feel, from arts festivals to cafés to music “spilling onto the streets.”

Mr. Guthrie – you can call him “Mayor Cam” but please not “Your Worship” – said he sells businesses not only on the amenities you’d find in big cities, but also on “that small-town community feel and community spirit that is just difficult to find anywhere else.”

Major private employers in the city include auto-parts maker Linamar, The Co-operators insurance group and RWDI, a wind and environmental engineering firm headquartered in Guelph that Mr. Guthrie said is looking to double its work force.

The mayor and his council are juggling a lot: Among other things, there’s a 200-acre business park under development, with the first phase already serviced.

And along with the efforts of the Guelph economic development department, there’s a business retention team aimed at helping existing employers expand.

They sell diversification, and there’s a new tourism strategy to focus on just a couple of areas that the stakeholders believe they’re good at.

Guelph’s official plan projects 45,000 to 50,000 more people by 2031, and there’s now construction under way to house an estimated 9,000 in the downtown core, where it’s important to work and live.

From the banker to the butcher, as Mr. Guthrie put it.

And the folks at the quaint Vienna, which has been around in various forms for about a century, offers bottomless coffee, buys locally and is home to “the famous Vienna breakfast.” And the mayor dined there just last Friday.

You’d know the type of place as soon as you saw it.

An (upper-crust) scene I'd love to see ...


“0.25 of a Suncor share for my Canadian Oil Sands stock?”

COS claims victory

Canadian Oil Sands is claiming victory today after fending off hostile suitor Suncor Energy.

As The Globe and Mail’s Jeff Lewis reports, Suncor couldn’t get what it needed as its offer was running out late Friday, so it extended the bid to Jan. 27 and is under pressure to up the ante.

“Our board has heard the message Canadian Oil Sands shareholders have sent loud and clear in overwhelmingly rejecting Suncor’s hostile bid and the value you place on the assets you own,” chairman Donald Lowry said in a statement today.

Survey bleak

The fallout from the commodities price collapse is now spreading far beyond the oil patch, souring the mood of Canadian businesses and derailing their plans to hire and invest, The Globe and Mail’s Barrie McKenna reports.

The Bank of Canada’s quarterly business survey, released today, shows hiring and investment plans at their lowest levels since the aftermath of the last recession in 2009.

“The negative effects of the oil price shock are increasingly spreading beyond the energy-producing regions and sectors,” the central bank said in the survey.

What to watch for this week

Hopefully, it will be a bit less hectic than last week.

But among other things, as The Globe and Mail’s John Heinzl writes, it’s the kickoff to a new round of corporate earnings reports that could well fuel investor angst.

Major companies reporting results this week include Alcoa, Intel and several big U.S. banks from JPMorgan Chase to Citigroup.

The week’s economic reports are generally in the second-tier category, beginning with Canada Mortgage and Housing Corp.’s latest look today at construction starts in December and, on Friday, a report on U.S. retail sales in the key holiday period.

Today also brings the Bank of Canada’s outlook and senior loan officers survey for the fourth quarter, and a talk by Finance Minister Bill Morneau to the Halifax Chamber of Commerce.

“The Bank of Canada’s business outlook survey will garner significant attention,” said Paul Ferley, Royal Bank of Canada’s assistant chief economist.

“The continued slide in oil prices in the fourth quarter will likely keep downward pressure on the outlook of energy companies; however, the survey will be an important gauge of whether Canadian companies outside the oil patch are still seeing the benefits of the currency’s depreciation in their order books,” he added.

“Also of interest will be comments regarding the currency’s impact on the cost of imported goods, both from the perspective of retailers and wholesalers, as well as those companies looking to invest in machinery and equipment produced outside of Canada.”

There are also two reports that promise to fuel bubble talk where the Vancouver and Toronto housing markets are concerned.

Not only will we get the latest look at the Teranet-National Bank house price index, but also the December report on sales and prices from the Canadian Real Estate Association, expected Friday.

BMO Nesbitt Burns expects the CREA report to show that sales rose 8 per cent from a year earlier, and average prices 10 per cent.

“Our call would mean 2015 was the second-strongest year on record for unit sales, next to only 2007,” said BMO senior economist Benjamin Reitzes, noting the strength in Vancouver and Toronto.

“With mortgage rates likely to stay low for some time, housing could maintain decent momentum into 2016 – though it will be tough for hot markets in Toronto and Vancouver to repeat their 2015 performance.”

Chart of the day

Bank of America Merrill Lynch now believes Canada’s economy contracted at an annual pace of 0.4 per cent in the final three months of last year.

A poor showing, to say the least, and one that suggests trouble is spreading beyond the oil patch.

“Falling energy prices are damaging Canada’s economic engine,” said the bank’s North America economist, Emanuella Enenajor.

“But the weakness in Canada’s economy is more than just an energy story,” she added in a report.

“The share of GDP subcategories (roughly 195 in total) that are in an outright decline has risen to 33 per cent (categories are weighted to adjust for relative importance). This includes energy, but also subcategories within wholesaling, construction and manufacturing, among others. The share of sectors in decline is still well below the peak of the recession, but the gradual upward creep suggests the economic pain is spreading.”

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