October 2009

[Ally]

Good News: Expect lower heating Costs

There`s good news for people worried about winter heating bills.

People using natural gas (NG-FT4.910.030.57%) this winter stand to save $105 (U.S.), compared with last year, and propane users will get even bigger savings, the U.S. government said. Households that use heating oil (HO-FT1.78-0.03-1.75%) or electric heat also are expected to spend less during the heating season.

The Energy Information Administration said in its annual winter outlook Tuesday that lower fuel costs across the board and an expected milder winter will cut average heating costs for the upcoming season by 8 per cent compared to last year – to about $960.

Households are expected to pay an average of $783, nearly 12 per cent less than last winter, for natural gas, and $1,821 for heating oil, about 2 per cent lower. People using electric heat will pay $933, a decline of 2 per cent and those using propane $1,667, or 14 per cent less than last winter, the agency said.

The report cautioned that the projections reflect average costs and that expenditures for individual households will vary depending on local weather conditions, the size and energy efficiency of homes and the efficiency of heating equipment.

Read the full article here.

 

[Ally]

U.S. Commercial Real Estate the next to feel Chill

The new mantra is about to migrate from "too big to fail" to "too many to fail" as another banking tsunami, involving commercial real estate, heads toward the global economy.

"Commercial real estate is the next shoe to drop," according to James Helsel, Treasurer of the U.S. National Association of Realtors in recent testimony before Congress.

This is another delayed result of the meltdown as nonresidential property values have collapsed more than have residential properties and their loans need to be rolled over.

Commercial properties are usually mortgaged for five or more years, in tandem with the leases they have signed. But renewing or increasing mortgages will be difficult to impossible given the economic and banking climates.

Moody`s Investors Service says the value of U.S. commercial real estate has fallen from the 2007 peak by an average of 35%, more than the residential property average. At the same time, these landlords` tenants are in trouble and so are their lenders.

Read the full article here.

 

[Ally]

Average Canadian Home Prices up slightly, says Royal LePage Survey

TORONTO - The housing market may be recovering, but is experiencing an undersupply of homes for sale in southern Ontario and elsewhere in Canada.

That`s according to the latest house price survey by Royal LePage. It says with the recession retreating, home prices are stabilizing and unit sales are increasingly driven by improved affordability.

Royal LePage says the average price of a two storey home in Canada is up just 0.1 per cent from a year ago at $409,335.

Average bungalow values grew 0.06 per cent year-over-year to $341,146, while the price of an average condo increased 0.09 per cent to $243,748.

Royal LePage says a shortage in housing supply is leading to bidding wars in several cities, including Toronto, Montreal, St. John`s, N.L.; St. John, N.B. Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria.

Read the full article here.

 

[Ally]

Canada adds 31,000 jobs in September

OTTAWA — The Canadian economy gained a surprising 30,600 jobs in September, driven mostly by full-time jobs, Statistics Canada said Friday, as the economy continued to show signs of recovering from the country`s first recession since the early 1990s.

"September`s full-time increase of 92,000 — the largest since May 2006 — was partially offset by part-time losses of 61,000," the federal agency said. "Construction, manufacturing and educational services saw employment increases in September, while there were declines in transportation and warehousing."

The federal agency said the unemployment rate fell to 8.4 per cent from 8.7 per cent in August — the first monthly decline since the beginning of the labour market downturn in the fall of 2008.

Most economists had expected 5,000 additional jobs during the month, with the unemployment rate rising to 8.8 per cent. This follows a surprise gain of 27,100 jobs in August. That gain was driven mostly by part-time positions, but was the first month in four that there hadn`t been a net loss of positions.

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[Ally]

Canadian Banks top Moody`s Global ranking

If there was ever any lingering doubt about the place of Canada`s banks in the global financial system, Moody`s Investors Service would like to put that to rest.

For the second year running Canadian banks have scored the top spot in Moody`s annual ranking of banks around the world, ahead of Singapore and Hong Kong.

The report, which looks at banking systems in 95 countries, takes into consideration the same elements as a debt rating with the exception of government support. In other words, it looks at the industry as if taxpayer bailouts were not a possibility.

"Canada performed well relative to our global peers," said Peter Routledge, a senior vice president at the ratings giant, who added that part of the reason can be traced to "our consolidated and profitable system."

Unlike their U.S. and European peers, Canadian banks mostly steered clear of subprime mortgages and the kind of toxic credit investments that led to the demise of Lehman Brothers and so many other global giants. As a result, while their global rivals were negotiating government bailouts Canadian banks were scouting for foreign acquisitions.

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[Ally]

Fed Frets about Commercial Real Estate

Banks in the U.S. "are slow" to take losses on their commercial real-estate loans being battered by slumping property values and rental payments, according to a Federal Reserve presentation to banking regulators last month.

The remarks suggest that banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst. "Banks will be slow to recognize the severity of the loss -- just as they were in residential," according to the Fed presentation, which was reviewed by The Wall Street Journal.

A Fed official confirmed the authenticity of the document, prepared by an Atlanta Fed real-estate expert who is part of the central bank`s Rapid Response program to spread information about emerging problem areas to federal and state banking examiners throughout the U.S.

While the Sept. 29 presentation by K.C. Conway doesn`t represent the central bank`s formal opinion, worries about the banking industry`s commercial real-estate exposure have been building inside the Fed for months. "More pain likely lies ahead for this sector and for those banks with heavy commercial real estate exposures," New York Fed President Bill Dudley said in a speech Monday.

Read the full article here.

 

[Ally]

Food Production `must rise 70%`

The Food and Agricultural Organisation says if more land is not used for food production now, 370 million people could be facing famine by 2050.

The world population is expected to increase from the current 6.7 billion to 9.1 billion by mid-century.

Climate change, involving floods and droughts, will affect food production.

The FAO said net investments of $83bn (£52.5bn) a year - an increase of 50% - had to be made in agriculture in developing countries if there was to be enough food by 2050.

Climate challenges

"The combined effect of population growth, strong income growth and urbanisation... is expected to result in almost the doubling of demand for food, feed and fibre," FAO Director-General Jacques Diouf told delegates at a forum entitled How to Feed the World 2050.

The FAO said that even if governments increased agricultural investments, there could still be 370 million people suffering from famine in 2050.

Difficulties ahead included a scarcity of natural resources such as land, water and biodiversity.

Food production would also have to deal with "the effects of climate change, notably higher temperatures, greater rainfall variability and more frequent extreme weather events such as floods and droughts," Mr Diouf warned.

Climate change would reduce water availability and lead to an increase in plant and animal pests and diseases, he said.

Read the full article here.

 

[Ally]

U.S. Recession over, Unemployment to peak at 10 Per Cent: Survey

WASHINGTON -- The worst U.S. recession since the Great Depression has ended, but weak household spending as the labor market struggles to create jobs will slow the pace of the economy`s recovery, according to a survey released on Monday.

The survey of 44 professional forecasters released by the National Association of Business Economists (NABE) found that 80 percent of the respondents believed the economy was growing again after four straight quarters of declines.

"The great recession is over," said NABE President-Elect Lynn Reaser.

"The vast majority of business economists believe that the recession has ended, but that the economic recovery is likely to be more moderate than those typically experienced following steep declines."

Recessions in the United States are dated by the National Bureau of Economic Research. The private-sector group, which does not define a recession as two consecutive quarters of decline in real gross domestic product, often takes months to make determinations.

Read the full article here.

 

[Ally]

Bank of Canada clings to low rates on strong Dollar

OTTAWA — The Bank of Canada said Tuesday that the "heightened volatility" and "persistent strength" in the Canadian dollar are subduing inflationary pressures and slowing growth.

It added that "the current strength in the dollar is expected, over time, to more than fully offset the favourable developments" in the economy since the central bank last published its economic outlook in July.

As a result, it reiterated its conditional commitment to keep its key policy rate at a record low 0.25 per cent until the end of June of 2010.

The comments were in the Bank of Canada`s latest interest rate announcement, and were likely meant to temper market expectations that the central bank was looking to move earlier than expected on rate hikes. More details about its forecast will become available when the central bank releases its monetary policy update on Thursday.

Analysts immediately described the statement as "dovish," indicating the central bank is in no rush to move on rates.

Read the full article here.

 

[Ally]

Best Cities for Business: Saskatchewan heats up

It`s official: Saskatchewan is the new Alberta.

According to the second annual FP/CFIB ranking of Canada`s top business-friendly cities, Saskatchewan and Quebec have the largest number of cities at the top of the list, while the post-boom cities of British Columbia and Alberta, along with those in Ontario, dropped significantly in the rankings from lower commodity prices and faltering economies.

This year`s top-ranked entrepreneurial city in Canada is Saskatoon. For Gordon Ashdown, the owner of Can-West Agencies Ltd., a wholesale distribution company in Saskatoon, the reversal of fortunes is welcomed with open arms.

"We now have an environment that`s really good to work in and it`s improving all the time," he says.

"Just the business-friendly government has made a huge difference in Saskatchewan."

Read the full article here.

 

[Ally]

U.S. Housing starts disappoint

WASHINGTON -- New construction of U.S. homes rose by less than expected in September, held back by a plunge in ground-breaking activity for multi-family homes even as single family dwellings rebounded, according to a government report on Tuesday.

The Commerce Department said housing starts rose 0.5% to a seasonally adjusted annual rate of 590,000 units, below market expectations for 610,000. August`s housing starts were revised down to 587,000 units from the previously reported 598,000 units.

The data weighed on U.S. stocks, offsetting strong quarterly results from such companies at Apple Inc. and Caterpillar.

Read the full article here.

 

[Ally]

Tfsa abuses irk Ottawa

The tax-free savings account has not even celebrated its first birthday, but the Department of Finance is already cracking down on TFSA abuses.

The TFSA, which debuted on Jan. 1, this year, allows each Canadian resident who is 18 years of age or older to contribute up to $5,000 annually. While contributions to a TFSA are not tax-deductible, any investment income or gains earned inside a TFSA are 100% tax-free. TFSA withdrawals are also tax-free.

The Department of Finance has announced it was proposing amendments to the Income Tax Act to penalize those exploiting TFSAs to avoid paying tax. While the changes are punitive, they are not likely to affect the vast majority of Canadians, who use their TFSAs to save for a rainy day, their kids` education or retirement. The new rules are aimed at sophisticated investors who are using TFSAs as trading accounts, to exploit what may have been perceived to be fairly modest penalties in exchange for gargantuan tax-free profits.

The proposed amendments target four main areas of concern:

- Any income attributable to deliberate overcontributions beyond your TFSA contribution limit ($5,000 in 2009) will be taxed at 100%;

- Any income from prohibited investments held inside a TFSA, such as private company shares of which you own 10% or more, will also be subject to a 100% tax;

Read the full article here.

 

[Ally]

Biomass holds huge Business potential, Conference told

Canada can generate enough fuel from forest industry waste to run close to 200 of the world`s largest biomass energy, wood pellet and second-generation ethanol plants, a conference heard Tuesday.

But it must be treated as a serious industry that can create an efficient supply chain, Canadian Bioenergy Association president Doug Bradley said.

"The biomass industry needs to demonstrate the scale of the business opportunities," Bradley told the bioenergy association`s annual conference in Edmonton.

Canada`s forests contain the equivalent of about 69 years of our fossil fuel consumption at current levels. And when you add livestock waste and agricultural residues such as wheat straw, there`s huge potential for valuable bioenergy fuel, he said.

It`s estimated Canada will have a 30 million Bone Dry Tonne (BDT) surplus of potential forestry-based biofuel by 2011, four million tonnes of it in Alberta. And a lot of it is cost-effective, Bradley said.

The current focus is on logging waste, known as slash, as the

Read the full article here.

 

[Ally]

Country shedding Jobs gloom: poll

Businesses and consumers alike are more confident about the job market, according to a new survey released Friday by Leger Marketing and PricewaterhouseCoopers.

Optimism about future employment ranked 116 in September, continuing an upward trend after hitting bottom at 25 in January, said the firms` September business-and consumerconfidence surveys.

An index score above 100 represents an optimistic sentiment, and scores below 100 indicate pessimism.

By comparison, consumers are less optimistic about future job prospects --with an index of 97-- but they`re growing more confident since a low of 34 in January.

The index has not crossed the 100 mark since May 2008.

Overall, the business-confidence index is up for the second straight month with an overall index of 106.

Read the full article here.

 

[Ally]

Canada needs new Business Brand

Canada is on course to emerge from the global downturn as a much weaker country if it does not step up to improve its overseas image and find a new niche in the changing global landscape, business leaders said at the Economic Edge Conference in Toronto on Wednesday.

"The news for Canada is not good. Canada is always on the chopping bloc," said Trish Wheaton, the chief marketing officer of the global marketing agency Wunderman and chairperson of its Canadian arm.

She said investors were increasingly turning towards the emerging markets and that Canada`s image of friendly, unaggressive people, beavers and pristine wilderness, while a positive image, was not the right brand to attract business. Ms. Wheaton said this tourism image needed to be brought under a strong umbrella brand that also included an image of Canada as intelligent and business savvy in a way that differentiated it from other countries.

"I think we have such huge potential and it really is nothing less and nothing more than getting our message out about what that potential is," Ms. Wheaton said. She said unlike brands such as Coca-Cola, Microsoft and Toyota where consumers could identify the product with its country of origin, surveys consistently showed that foreigners did not identify Canada`s strongest brands like BlackBerry, TD Bank and Cirque du Soleil, with Canada.

Indira Samarasekera, the president of the University of Alberta, said it was already evident that Canada was losing ground to other countries, particularly in education. She said valuing education as the country`s preeminent resource was a key to helping improve competitiveness.

Read the full article here.

 

[Ally]

Harper says Deficitis necessary for now

Stephen Harper, the Prime Minister, says the world is in a rare period where budget deficits are not bad, but necessary to pull the world out of recession. Nevertheless, he says he is concerned about winding back spending and the risks from outside Canada that could push the country into another recession.

"I actually do think we are in a rare period, one that as an economist I didn`t think we would see again in my lifetime, where deficits are not only necessary but actually advised," he told an audience at the inaugural Economic Edge conference in Toronto Wednesday. "It actually makes sense for the government to come into the market and borrow funds, and borrow funds at, frankly, interest rate costs that are virtually zero, and put those funds to productive work. I actually think it makes sense as a short-term phenomenon."

Mr. Harper said there was a lot of money sitting on the sidelines because consumers lacked the confidence to spend, businesses lacked the confidence to invest and dysfunction in the financial sector has meant peoples` savings have not been translated into productive investment. It was therefore up to government to fill the gap.

Even so, he said he had some concerns about spending because "deficits are so addictive." He said while everyone agreed that spending would have to be wound back, individual sectors were always reluctant for spending to be cut in their area.

Mr. Harper said the government would wind back its stimulus by Spring next year and that Canada`s deficit was "very manageable."

Read the full article here.

 

[Ally]

Bank of Canada raises growth forecast for end of Year

OTTAWA -- The Bank of Canada expects consumer spending to expand considerably, aided by improved financial conditions, and business investment to finally post growth in early 2010 after five consecutive quarters of declines, according to its updated economic outlook released Thursday.

In its quarterly monetary policy report, the central bank upgraded its growth projections for the second half of 2009, anticipating expansion of 2% for the third quarter and 3.3% in the current three-month period. That`s compared with its previous expectation of 1.3% and 3%, respectively.

The Bank of Canada said its forecast "hinges" on the resumption of growth in the global economy and the firming of commodity prices. Yet, it acknowledged the global recovery could be "even more protracted," as there is "modest" evidence that private-sector demand is poised to return and the unwinding of global trade imbalances could create "disorderly adjustments."

Plus, the Canadian dollar – which it assumes will trade at an average rate of US96¢ over its forecast period – will be a "drag" on the trade-oriented sector of the economy, with net exports expected to fall 1% next year. The bank attributed the loonie`s recent climb to over US97¢ to have been "increasingly driven by a broader appreciation of the U.S. dollar."

Domestic demand in Canada is set to boost the domestic recovery, with growth of 3% next year and 3.3% in 2011. According to the bank`s outlook, consumer spending is set to contribute half of the 3.4% gain in final domestic demand in 2010. In 2011, that contribution increases to roughly 75% as government spending is wound down.

Read the full article here.

 

[Ally]

No signs yet of `Significant` growth: Flaherty

OTTAWA -- Canadian Finance Minister Jim Flaherty said Wednesday he shared the Bank of Canada`s concern about the sharp rise in the Canadian dollar, noting that entrenched economic growth had yet to take hold.

"I agree with the comments by the governor," Mr. Flaherty told reporters, a day after the central bank said the currency`s strength had more than fully offset positive developments in the last three months. "He is concerned about volatility in the (Canadian) dollar."

The Canadian dollar fell sharply on Tuesday after the bank`s announcement, but has since recovered some of that ground.

Mr. Flaherty did acknowledge some of the Canadian dollar`s strength was justified by higher commodity prices.

"Commodity prices, in particular oil, have gone up substantially in the past six to eight months. We`re seeing also some upward pressure on gas prices, also more recently, and commodities have something to do with the view of the dollar. We`re also seeing overall weakness in the U.S. dollar which is a concern," he said.

Read the full article here.

 

[Ally]

Potash Corp. profit drives 80% on low demand

Potash Corp. of Saskatchewan Inc. announced Thursday an 80% drop in third-quarter profit, blamed on farmers and fertilizer buyers worldwide continuing to delay their purchases due to economic uncertainty.

The company (POT/TSX) said profit for the quarter ended Sept. 30 plummeted to US$248.8-million (82 cents a share) from US$1.24-billion (US$3.93) at the same time last year.

Gross margins for the quarter came in at US$346.2-million, down 80% from US$1.74-billion in the third quarter of 2008.

"Even though the science of food production and fundamentals of global development dictate that more fertilizer, especially potash, is needed around the world, the impact of the global financial crisis remained a difficult hurdle in the third quarter," Bill Doyle, chief executive of PotashCorp, said in a release. "The uncertainty among fertilizer buyers has lasted far longer than we anticipated."

North American potash shipment volumes were down more than 50% in the third quarter and year-to-date totals are down almost 70% compared with 2008.

Read the full article here.

 

[Ally]

China`s Economy grows at fastest pace in Year

China`s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession.

Gross domestic product rose 8.9% in the third quarter from a year earlier, the statistics bureau said in Beijing Thursday. The median of 34 estimates in a Bloomberg News survey was for a 9% gain. Separate reports showed industrial production and retail sales accelerated in September.

The dollar headed higher and Asian stocks dropped on concern that the acceleration in China`s growth will spur policy makers to consider withdrawing record fiscal and monetary stimulus in coming quarters. Qin Xiao, chairman of China Merchants Bank Co., this week said it`s "urgent" for the central bank to tighten policy to avert asset-price bubbles.

"It`s all a question now of making sure they don`t overdo the stimulus," said Stephen Green, head of China research at Standard Chartered PLC. "The probability of stronger guidance to banks on lending growth is rising."

The MSCI Asia Pacific stock index slid 0.5% to 120.56 as of 12:30 p.m. in Hong Kong. China`s benchmark Shanghai Composite Index was little changed after losing as much as 0.8% earlier today. The dollar benefited from its status as a haven, advancing 0.2% to 91.17 yen and US$1.4986 per euro. The yuan was little changed, trading at 6.8270.

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