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November 2011 Canadian Economic Fundamentals

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Labour market headed for serious downturn, economists warn





Canada is headed for a period in which job creation will not only be weak but the quality of jobs created will be poor, economists said Wednesday.




Wage earners will feel the pinch, as the bulk of jobs created will likely be low-paying, but more broadly the economy will suffer as the trend puts a damper on consumer spending, says Benjamin Tal, deputy chief economist at CIBC World Markets.




After a blowout month in September, in which the economy created 61,000 jobs and the unemployment rate fell to 7.1 per cent, economists are forecasting Statistics Canada will report Friday that only 15,000 jobs have been created in October.






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Bioenergy, biofuels an 'environmental fiasco' as producers target new forest ecosystems: Greenpeace





The federal and provincial governments must clamp down on large-scale burning of forest wood for energy and biofuels to prevent an "environmental fiasco," says a new report released on Wednesday by Greenpeace Canada.







The report, entitled "Fueling a Biomess," said that the practice used to consist of small-scale operations that used organic waste to produce energy. But it said that biomass could now be becoming even worse than some traditional fossil fuel options such as coal-fired electricity since producers are now targeting new forest ecosystems for energy.







"Without public hearings, exhaustive science or adequate environmental standards in place, provincial governments have allocated large volumes of biomass from publicly owned forests to be burnt, thereby radically changing the way forests are used in Canada," said the report, authored by Greenpeace forest campaigner and biologist Nicolas Mainville. "This is turning to ash sustainable job opportunities, threatening the greening of the forest sector and the value-added product trend that has been emerging in recent years."




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Spat escalates over real estate listing access




A skirmish between the country`s competition commissioner and Canada`s largest real estate board has been escalated by the Competition Tribunal, which has decided that a local fight over private websites will actually affect real estate agents across the country who use the Internet to help consumers find homes.





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Keystone Pipeline XL faces new uncertainties




A fresh crop of potential new obstacles have popped up in front of a proposed $7-billion pipeline that would carry oil sands crude from Alberta to Texas, but Canada`s ambassador to the United States is holding firm in his belief in the project.




`The process is proceeding as it should, and jobs, energy security are strong arguments for the project,` Gary Doer told reporters at the Chateau Laurier hotel in Ottawa on Nov. 2.




`I believe if it`s on merit, it`ll proceed,` he said.





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Job gains are slow, but outlook 'not terrible'





After two years of remarkable gains, Canada's job machine shows signs of shifting into neutral.




Wage gains have slowed over the past year or so, and so has the pace of employment. A measure of job quality shows that nearly all new full-time employment in recent months has been in lower-paid industries.




On the other hand, says Craig Alexander, chief economist at the TD Bank, "it's not a terrible employment outlook. The pace of job creation will be enough to absorb the new workers coming into the job market."




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Toronto the continent's new condo king, Winnipeg a future real estate hotspot: Study






BIG BUSINESS



From 2000 to 2010, the average value of a Canadian home doubled, rising to $339,030 from $163,951. The money involved is huge, with the value of residential building permits issued across Canada in the past decade pegged at $340-billion. But even that huge figure is eclipsed by the cash pushed into home renovations in the same time period ` estimated to be $450-billion. The TV shows know a good market when they see it.





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Taseko's New Prosperity mine in B.C. wins review




Taseko Mines will get a second kick at the can for its controversial gold and copper mine at Fish Lake, B.C. The Canadian Environmental Assessment Agency on Monday announced a review panel to look into the company's proposal for the massive New Prosperity Mine, located 125 kilometres southwest of Williams Lake, B.C.




"We're pleased that the environmental assessment is going forward. It's important that everybody makes their best efforts to bring this opportunity to reality," says Brian Battison, vice-president of communications at Taseko Mines.





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House prices to hold next year: CMHC




The housing market may be a boring place for the next year, according to CMHC, as the number of starts remains near current levels and resale prices hold steady.




In its fourth quarter market update, Canada Mortgage and Housing Corp. said mortgage rates would likely remain at historically low levels at least until the last half of 2012. The housing market`s fate is largely tied to rates, the agency said.





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7 tips for successful real estate investing




Many people think being a landlord and investing in real estate is a way to make easy money. It can be financially rewarding if you do your homework and reduce your risks. But easy, it isn`t and it can lead to financial ruin if not done properly.




Moneyville columnist Alison Griffiths wrote about her adventure as a landlord earlier this year. It`s a humorous look at what can go wrong and the lessons learned, but anybody thinking about an investment property might want to read: Why did I think being a landlord was easy money?





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Extensive mortgage research finds the lowest mortgage rates in Canada





Market Research Canada (MRC), has conducted a study of mortgage rates available to Canadian homeowners, for the entire one-year period of September 8, 2010 to September 27, 2011. In this study, the second of its kind performed by MRC, the entire Canadian mortgage lending market was reviewed in detail.




Results

The results clearly show that for each of the mortgage types and terms studied, homeowners selecting MortgageFlex as their lender were consistently able to take advantage of mortgage rates which were better than the published rates of any of the major lenders reviewed. Canadian homeowners choosing to borrow through MortgageFlex during the year, incurred lower interest costs than they would have with any of the other lenders reviewed. Based on our findings during this study, Market Research Canada continues to believe that rates offered by MortgageFlex are consistently lower than the best lowest discounted rates offered publicly by any major Canadian mortgage lender.




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Analysts expect only modest job gains in October






OTTAWA ` Economists are not expecting a big, confidence-boosting jobs creation number coming out of Ottawa this morning.




That's partly because Canada got such good news last month when Statistics Canada reported the surprising addition of 61,000 new jobs in September.




The big jump was partly due to seasonal education hiring coinciding with the return to school, but even so it was an impressive result given that July and August saw virtually no increases.




The economist consensus for October is more in line with trend growth of 15,000, which is considered modest.




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Economy's not as bad as you think




A high Canadian dollar has decimated a lot of businesses in Canada over the past few years, and continues to do so. Shoppers like a high loonie because they can buy more stuff in the United States and elsewhere. But manufacturers and commodity producers don't like it because it hurts their profits. Commodity players have some relief from higher resource prices. Manufacturers? They're suffering, assuming they're still alive.




Can the dollar stay as high as it is? Most economists say it should be around 80 cents US. But then again, they said the same thing when the dollar was 65 cents US. This estimate is based on purchasing power, so it's not just smoke. But currency markets march to the beat of another drummer.





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Hard hat nation




Look out over most Canadian cities and you see construction cranes dotting the skyline, dozens of them and maybe more if you live in Vancouver or Toronto, the epicentre of a building boom that has been gaining steam for the better part of a decade.




Primarily the activity is around condos but there`s also hospitals, roads, sports stadiums and office towers ` not to mention Alberta`s oil sands.




As the rest of the world grapples with the European financial crisis and sluggish growth in the United States, the cross-country construction boom has been Canada`s ace in the hole, providing the key economic building block that has been so lacking around the world: jobs.





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Harper sees support for Keystone XL pipeline




Canadian Prime Minister Stephen Harper said Friday he sees overwhelming U.S. support for TransCanada Corp's Keystone XL oil pipeline to Texas from Canada's oil sands, despite recent signs of reticence in Washington.




Harper, who was in France for the G20 summit, said he did not interpret U.S. President Barack Obama's remarks this week as pointing to a rejection of the $7 billion pipeline proposal, which is opposed by environmental groups.




``I read the President's comments. I thought on balance they were noncommittal and he indicated he had yet to make a decision and we respect that,'' Harper said.





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Loonie falls as Canadian jobs drop; eye on Greece





The Canadian dollar dropped more than a cent on Friday after employment numbers plunged in October, bucking expectations for a gain in jobs and boosting the chances of an eventual Bank of Canada interest rate cut.







Renewed doubts about Europe's bailout package and a looming key vote in Greece also kept risk assets on the defensive, overshadowing signs of improvement in a U.S. jobs report that also came out on Friday.







"The big driver has been that Canadian jobs report ... (but) in terms of event risk today, we're still waiting for that Greek confidence vote," said Stewart Hall, senior currency strategist at Royal Bank of Canada.







Canadian employers cut almost all the jobs gained in September as a sluggish economy led to October layoffs in the manufacturing and construction sectors, data showed.






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Euro crisis blamed for Canada's hefty job losses




The prospect of an eventual interest rate cut by the Bank of Canada looked more plausible after the economy lost 54,000 jobs in October, eroding most of the prior month's gains and pushing the unemployment rate up to 7.3 percent from 7.1 percent.




Other data also suggested markedly slower growth toward the end of the year, showing a third consecutive decline in building permits in September and a slower pace of purchasing activity in October.




"It looks like global economic fears and Europe's debt crisis are taking a toll on Canadian business confidence and hiring intentions," said Sal Guatieri, senior economist at BMO Capital Markets.




Breaking with a recent trend, Canada's job report was more downbeat than October's employment figures in the United States. Data on Friday showed U.S. employment rose less than expected in the month, but a drop in the jobless rate to a six-month low and upward revisions to previous months' gains pointed to some improvement.





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Flaherty retools as global economic picture darkens




OTTAWA`The federal government is scaling back a planned hike to employment insurance premiums and will extend a work-sharing program as global economic woes slow plans to balance the federal budget.




Finance Minister Jim Flaherty is expected to announce both measures in a major speech Tuesday to unveil the fall economic and fiscal update, the Star has learned.




The finance minister may also confirm that Ottawa will miss its target to balance the federal budget by 2014-15 due to slower-than-expected economic growth.





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Bank of Canada leaves unflation target unchanged




The inflation-control regime credited with keeping price gains in Canada relatively tame and reliable for the past two decades is being renewed for another five years.




Bank of Canada Governor Mark Carney and his policy-setting team will continue to adjust interest rates to achieve an annual inflation rate of between 1 and 3 per cent, with 2 per cent remaining the optimal target under the agreement, which will run until Dec. 31, 2016.




Finance Minister Jim Flaherty announced a rough sketch of the government`s latest accord with the Bank of Canada ` which was due by the end of the year ` in a joint agreement with the central bank as part of his fiscal update Tuesday afternoon in Calgary. The Bank of Canada will release a background document tomorrow morning at 10:30 a.m. in Ottawa to explain the details more fully.





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Condo building boom continues unabated




Dragged down by a drop in new construction of single detached homes even as new condo starts increased, Canadian housing starts for the month of October declined, Canada Mortgage and Housing Corp. said Tuesday.





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Canadian housing starts ease, but beat expectations




TORONTO, Nov 8 (Reuters) - Canadian housing starts slipped in October, but came in higher than expectations, as low interest rates and condominium building helped offset the impact of negative global economic news.




Canada Mortgage and Housing Corp (CMHC) said on Tuesday that starts slipped to seasonally adjusted annualized rate 207,600 units in October from an upwardly revised 208,800 units in September.




The median forecast in a Reuters poll was for 195,000 starts in October.





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