Tom Sweeney

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Posts Tagged ‘Bank of Canada’

Corporate profits likely headed downward this year: Conference Board

Posted by sweens on June 9, 2010

Canadian companies saw their profitability outlook weaken in May after a strong post-recession recovery, and will likely see a modest drop in the second half of year, according to Conference Board of Canada.

A leading indicator that tracks profits across Canada’s various industries fell 0.4 percentage points from April, the second month in a row it has registered such a drop, the Ottawa-based think-tank said Wednesday.

“The decline suggests that after experiencing a strong post-recession recovery, corporate profitability will weaken modestly in the second half of the year, as interest rates rise,” the Conference Board said in a statement.

“The outlook for most industries remains positive, but their rates of profit growth are expected to slow.”

The survey covered 49 industries, 39 of which saw an increase in May, improved from 37 in the previous month.

The profit weakness, however, is “not expected to derail the broader economic recovery,” it said.

Profit recovery among Canadian companies is expected to be “uneven” with volatility in commodity prices, currency exchange and interest rates hikes, which began earlier this month when the Bank of Canada raised its key lending rate from rock bottom to 0.5 per cent.

The Conference Board noted that indexes it tracks for Canada’s most influential sectors, such as trucking and wholesale trade, are still showing strong growth.

http://www.obj.ca/Canada—World/2010-06-09/article-1238034/Corporate-profits-likely-headed-downward-this-year%3A-Conference-Board/1

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Canadian economy grows 6.1% in first quarter

Posted by sweens on May 31, 2010

The Canadian economy was roaring in the first quarter, jumping ahead of even the rosy estimates of economists to post an oversized 6.1 per cent annualized advance during the first three months of 2010.

It was the largest quarterly expansion in more than a decade.

The number doubled what the U.S. economy managed to produce and bettered the consensus forecast for a 5.8 per cent increase.

As significant was that output in March, the last month of the quarter, advanced 0.6 per cent from February, giving the economy a strong hand-off to the second quarter.

With the Bank of Canada scheduled to make a decision on interest rates on Tuesday morning, the gross domestic product data is expected to add to the pressure on governor Mark Carney to move rates higher for the first time in about three years.

“It would take some fancy footwork for the Bank of Canada to pass on hiking rates tomorrow after the Canadian economy just doubled the U.S. quarter-one growth pace,” Scotiabank economists Derek Holt and Karen Cordes Woods wrote in a note.

“This is the strongest growth pace witnessed since 1999 and it is the latest evidence of how the Canadian economy and Canadian markets are outperforming much of the rest of the industrialized world.”

They noted that the level of the economic activity in Canada is now roughly back to where it stood prior to the recession taking hold in the fourth quarter of 2008.

One a quarter-over-quarter basis, GDP advanced 1.5 per cent following a 1.2 per cent increase in the fourth quarter.

Statistics Canada credited consumer spending, housing and manufacturing for the stellar results, but all industries were solidly in the plus column.

While markets expected a strong result, the oversized growth pushed the Canadian dollar up more than three-quarters of a cent to 95.89 cents US in light early trading. U.S. markets were closed for Memorial Day on Monday.

Economists caution that the torrid pace of growth cannot continue, and with European woes weighing down global prospects, the moderation in Canadian output may have already begun.

“We are of the view that much better-than-expected consumer spending and housing market performances so far this year came at the expense of future growth,” said TD Bank’s Diana Petramala.

“The recent spending spree has left consumers even more fatigued and highly indebted than ever. As interest rates begin to rise (as early as this week) and households have to devote a greater share of their income to servicing their debt, this may well constrain future consumer spending growth.”

http://www.obj.ca/Canada—World/2010-05-31/article-1196324/Canadian-economy-grows-6.1%25-in-first-quarter/1

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