Canada's unemployment rate sinks to new low as hiring gains continue - The Globe and Mail

Canada’s unemployment rate fell to a new four-decade low in May, as the economy followed up April’s record hiring spree with a month of modest job gains and rising wages.

Statistics Canada’s monthly Labour Force Survey showed that the country added 27,700 net new jobs in May, with all of the gains coming in full-time employment. The relatively small increase, coupled with a decline in the number of people actively participating in the labour force, sent the unemployment rate down to 5.4 per cent from 5.7 per cent. That’s the lowest since Statscan began gathering comparable data in 1976, beating the previous low of 5.6 per cent set last November and December.

Economists had braced for the possibility of a small pullback in employment last month, after the April survey showed a record 107,000-job surge. Instead, the labour market posted its eighth rise in the past nine months – an almost unheard-of growth run in an economic indicator that is typically prone to ups and downs from month to month.

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“What goes up, keeps on going up. The energizer bunny of global employment reports kept on ticking last month,” said Bank of Nova Scotia economist Derek Holt in a research note.

However, economists cautioned that the details beneath the surface of the report were mixed at best, with some encouraging signs offset by several weak spots.

On the upside, May’s gains all came in full-time jobs, with the part-time segment unchanged. And average hourly wage growth – which has been slow to pick up despite the persistently strong hiring demand and historically low unemployment – rose to 2.8 per cent year over year, from 2.5 per cent in April.

“Sustained job growth and low unemployment finally appear to be delivering the wage growth Canadians have been waiting for,” said Julia Pollak, labour economist at ZipRecruiter, an online job-search service.

But economists noted that self-employment was responsible for all of May’s job growth, while payroll employment in both the private and public sector fell slightly. They also noted that the drop in unemployment was largely due to a surprise decline of nearly 50,000 in the size of the labour force – something that’s not typically associated with labour-market strength.

“Looking past the new record low in the unemployment rate, this report was a bit on the soft side,” said Brian DePratto, senior economist at Toronto-Dominion Bank, in a research note.

Nevertheless, the labour market continues to be a pillar of strength for the Canadian economy, adding more than 400,000 jobs in the past nine months, including 250,000 since the beginning of this year. The continued growth of the employment numbers in May, especially on top of April’s massive increase, lends further support to the recent string of upbeat economic data indicating that the economy has picked up substantially in the second quarter of the year, after two straight quarters of near-zero growth. Economists now believe the second-quarter growth pace could be more than 2 per cent annualized – well above the Bank of Canada’s most recent forecast of 1.3 per cent.

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“It looks as if the economy will show a resurgence in growth in the second quarter and third quarter, although one that is benefiting from a low starting point,” Canadian Imperial Bank of Commerce economist Royce Mendes said in a research report.

May’s gains were led by increases in health care and social services (up 20,400 jobs) and professional, scientific and technical services (up 17,200). On the downside, the business and building-support services segment lost 19,400 jobs, while accommodations and restaurant employment fell 12,400.

Among other key sectors, manufacturing rose by 9,400 jobs, while construction fell 8,600.

Five of 10 provinces posted job gains, led by Ontario, up 20,900, and British Columbia, up 16,800. On the downside, Quebec shed 11,600 jobs, while Newfoundland and Labrador fell 2,700, and Alberta dipped 2,200.

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June 08, 2019 at 01:22AM

Metro Vancouver gas prices fall more than 40 cents from record-breaking May highs - Global News

A month after Metro Vancouver repeatedly shattered all-time high gas prices, motorists are seeing a significant drop in the price at the pump.Gas was selling for as low as $1.369 in Langley, $1.379 in Burnaby and $1.389 at one gas bar in Vancouver on Friday morning.For comparison, gas was selling for $0.979 in Calgary on Friday and $1.088 in Toronto, according to Gasbuddy.com.Gasbuddy’s senior petroleum analyst Dan McTeague said he believes this is the bottom of the dip in prices, but that they should hold into next week.READ MORE: Regulator given 3 months to probe causes of B.C.’s sky-high gas prices“We’re pretty smooth sailing here, at least for the next week or so, until markets wake up from their panic over fears on trade between the U.S. and China, the U.S. and Mexico and so on,” McTeague told Global News.WATCH: New details on investigation into gas prices


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June 07, 2019 at 10:21PM

Who's to blame for the FCA-Renault deal collapse? - Automotive News

The hunt for a scapegoat for the collapse of the merger talks between Fiat Chrysler Automobiles and Renault is in full cry.

There’s furious leaking on all sides: The Italians blame the French, the French blame Fiat and the reluctance of Renault’s partner Nissan Motor Co. to bless the deal. A lot of people on both sides blame Bruno Le Maire, Emmanuel Macron’s finance minister, whose eleventh-hour request for more time to bring Nissan on board was the final straw for FCA.

While it’s too simplistic to lay all of the culpability at the feet of Le Maire and Macron (did Fiat really think it could stitch together a huge, politically sensitive cross-border car deal in just 15 days?), it has become worryingly common for overconfident Parisian technocrats to slip up on problems of their own making. There are lessons here for Macron when it comes to handling France’s web of government holdings, including its 15 percent ownership of Renault.

For a start, French politicians would do better to align their rhetoric with reality. Promising to fight for every industrial job in France, as Le Maire has done, is a great message for voters, but in the confines of a boardroom, or a shareholder meeting, it’s hard to back up such talk with only a 10 or 15 percent equity stake.

Macron himself acknowledged back in 2016 the limits of the state in stopping management from taking decisions: “It's not because [the government] has 20 percent of the voting rights that it can stop closures.” He’s less upfront these days.

Beyond the French blunders over the Renault-Nissan alliance and now Fiat – both examples of Paris overplaying its hand when seeking to exercise control – there’s also deeper confusion over what purpose state investment actually serves. There are too many competing strategies at work across too many state-backed firms (France has 1,800 of them!), from building national champions, to protecting jobs, to blocking foreign takeovers.

Low returns

This does nothing for the performance of these companies: The return on equity of most French state holdings averaged 2.8 percent between 2010 and 2015, versus 10 percent for the SBF 120 index of the country’s most actively traded stocks, according to France’s national audit body.

Nor has state intervention done much to avoid the blight of de-industrialization. The share of manufacturing in the French economy fell from 19 percent in 1975 to 10 percent in 2015. There needs to be a rethink on exactly why and when taxpayer funds should be used. Restricting it to companies facing crisis or bankruptcy, or those with technology worth subsidizing, would be one idea.

There also needs to be some faith in management’s ability to just do its job.

It’s true that in this case Renault’s new boss Jean-Dominique Senard may have been too hasty in pushing the Fiat deal. But the state is never far behind in these situations. Look at Carlos Ghosn’s plans for a Renault-Nissan merger, a project reportedly encouraged by Paris, which in part led to his downfall. Too often, an antagonism sets in between the state and management, usually over compensation, strategy or political meddling. 

Government ownership

You’d have to question the very idea of having a state investor. Banker David Azema, who for a time had the job of overseeing the French portfolio of holdings, said in 2017 that it was impossible for the government to be an effective shareholder. The business cycle is completely different to the electoral cycle and the media scrum, he said at the time.

On top of the pressure of politics, and the confusion of goals, French state shareholders are generally too risk averse and prone to procrastination. The Italians will no doubt agree. 

Macron really needs to get back to his eminently sensible 2017 campaign promise: Sell down more French stakes and reinvest in low-carbon technology.

Renault would be a good start, given the size of the holding. Voters might be happy to see Paris reduce its influence there if it meant more cash to spend on job-creating electric car investments. Perhaps it could go hand in hand with a new deal with Nissan, based on a more equitable shareholder split. Until something changes, expect the international finger-pointing to continue.

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June 07, 2019 at 05:27PM

Oil Jumps 2% on Surprise Possible Delay to Mexican Tariffs - Investing.com

© Reuters.

By Barani Krishnan

Investing.com - The sheer domination of trade wars on the global markets narrative was proven again Thursday when oil prices reversed course from the battering they had taken in recent days to settle up 2% on a report that U.S. tariffs on Mexico might be delayed.

The U.S. may be considering delaying President Donald Trump’s threatened tariffs on Mexico as talks continue over stemming the flow of undocumented migrants and illegal drugs from Central America, Bloomberg reported. The report fired a late stock market rally and led to a jump of about $1 per barrel in key crude oil benchmarks.

settled up 91 cents, or 1.7%, at $52.51 per barrel, after spending most of the day in negative territory. In post-settlement trade, WTI was up more than 2%.

WTI sunk to $50.62 on Wednesday, its lowest level since Jan. 14, after the U.S. Energy Information Administration reported a of nearly 7 million barrels, versus expectations for a draw of 850,000.

, the U.K.-traded global benchmark for oil, rose $1.04, or also 1.7%, to settle $61.67 a barrel. Like WTI, it continued to rise after settlement, trading more than 2% higher.

Brent hit a five-month low of $59.45 on Wednesday, breaking below the key $60 per barrel support, after the crude stockpile build reported by the IEA.

Just in April, WTI reached 2019 highs of $66.60 and Brent $75.60 from the combination of OPEC production cuts and U.S. sanctions on Iranian and Venezuelan crude exports. Since then, the escalating U.S.-China trade row and surprise tariffs proposed by the Trump administration on Mexico has dominated the narrative in oil, sparking global recession worries.

Trump had not greenlighted the plan to halt tariffs on Mexico, Bloomberg said. But Mexican officials were pushing for more time to negotiate over concerns the two sides won’t be able to reach agreement quickly on the president's demands.

The report added that chances are the first 5% tariffs due on Mexican imports from Monday were likely to go through. But if Mexico follows through on promises to crack down on migration, the duties could be short-lived, the report quoted a U.S. official as saying.

Talks between U.S. and Mexican officials, which began Wednesday and resumed earlier Thursday, were poised to continue at 5:30 PM ET (21:30 GMT) at the State Department, CNBC reported, citing a key Mexican government negotiator.

Oil markets have had a volatile two months, with initial year-to-date gains of more than 40% dwindling to about 15% as global economic concerns intensified amid a worsening outlook for crude demand.

Aside from last week's unexpected crude stockpile build, the EIA also reported that increased by 3.21 million barrels last week, compared to expectations for a gain of 0.63 million barrels. rose by 4.57 million barrels, compared to forecasts for a build of 0.50 million.

Over and above that, U.S. crude production hit new record highs of 12.4 million barrels per day. Total petroleum stockpiles grew by about 22 million barrels last week, the biggest jump going back to 1990, marking a three-decade high.

That all these builds were occurring with just about two weeks to the official start of summer -- a period when driving and demand for fuels are at their peak in the U.S. -- has roiled the market.

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June 07, 2019 at 03:08AM

Documents show federal push for infrastructure bank to back Via project - CTV News

OTTAWA -- Federal officials are pushing the Canadian Infrastructure Bank to back Via Rail's high-frequency rail project, according to documents tabled in the House of Commons.

The response to a written question from New Democrat Robert Aubin details the eight times between October and December 2018 that officials from the Finance Department met with the financing agency to make the business case for Via Rail.

The rail company wants to build a multibillion-dollar new network of dedicated passenger-rail lines in Ontario and Quebec, so its trains would no longer have to yield to freight trains on borrowed tracks.

The document says that a final phone call on Dec. 11, 2018 focused on the timeline for the infrastructure financing agency to finish its review of a project widely seen as one the bank could back, but which Transport Canada has yet to come to a conclusion on.

The Finance Department noted in its written response to Aubin that a range of public-private models are still being assessed "with varying degrees of private sector investment."

Options include having a private partner help with designing and building new tracks -- which could be done in phases or all at once -- or expand a deal to include financing, operating and maintenance agreements.

The Liberals created the infrastructure agency in 2017, hoping to use $35 billion in federal funding to pry three to four times that much from the private sector to pay for new infrastructure projects that are in the public interest.

In practice, that means projects need to meet federal policy objectives, along with those of the jurisdiction housing a particular project. Projects must also be attractive to the private sector, meaning they need to bring in money to pay off investors.

"Our role is to conduct analysis of options in order to provide commercially confidential advice," agency CEO Pierre Lavallee said in a statement about the meetings regarding Via Rail.

Of the meetings in the documents, Lavallee said they were "standard practice," and often involve bouncing ideas off outside auditors.

Lavallee didn't answer a question about whether any political staffers or ministers had contacted the agency about the project.

So far, the agency has gotten involved in two projects, first through a $1.28-billion loan to an electric rail project in Montreal, and last month with up to $2 billion in debt to expand GO Transit's rail network around Toronto.

The agency said in a release last month that its money would "improve the cost of financing and attract private capital" to projects like those.

Transport Canada has been looking over the Via proposal for more than a year, and the Liberals have yet to announce a decision on funding.

The department's planning report for this fiscal year includes a note to review "revenue and ridership forecasts" as well as the business case -- all of which the infrastructure bank looked at late last year -- to "provide evidence" on options for government consideration.

Transport Minister Marc Garneau told the Commons earlier this week that the government will make an announcement when it's made a decision.

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June 07, 2019 at 03:31PM

Dow up around 270 points as disappointing jobs report fuels hopes of a Fed rate cut - MarketWatch

• The U.S. economy created 75,000 new jobs in May, well below 185,000 predicted by economists
• Weakening economic data support argument for a cut in interest rates as soon as this summer
• Major benchmarks on pace for best week since November

U.S. stocks rallied Friday, following a weaker-than-expected jobs report, which supports the case for the Federal Reserve to ease interest rates in the near future, amid fears that the U.S. economy is decelerating as trade tensions between the U.S. and counterparts Mexico and China persist.

How did the benchmarks perform?

The Dow Jones Industrial Average DJIA, +1.20%   rose 271 points, or 1.1% , at 25,997, while those for the S&P 500 index SPX, +1.29%   gained 33 points, or 1.2%, at 2,876, and the Nasdaq Composite index COMP, +1.82%   advanced 119 points to 7,734, a gain of 1.6%.

On Thursday, the Dow rose 181.10 points, or 0.7%, at 25,720.66, representing its longest string of gains since March 18, according to Dow Jones Market Data. The S&P meanwhile, rose 17.34 points, or 0.6% to 2,843.49, while the Nasdaq added 40.08 points, or 0.5%, to reach 7,615.55.

For the week, the Dow is set to gain 4.8%, the S&P 500 looks likely to return 4.6%, while the Nasdaq was set for a weekly climb of 3.8%. If these levels hold it would mark the best performance since the week ended Nov. 30, according to FactSet data.

What’s driving the market?

The U.S. economy added 75,000 new jobs in May, while the unemployment rate held steady at 3.6%, the Labor Department said Friday, below the 185,000 estimated by economists, per a MarketWatch poll. Estimated job gains for both March and April were revised down by a total 75,000, and the three-month moving average of monthly job gains has fallen from 245,000 in January to 151,000 today.

The jobs report follows the smallest increase in private-sector employment in nine years, according to payment processor ADP on Wednesday, which showed that the private sector added 27,000 nonfarm jobs in May, representing the weakest growth since March 2010.

While stock index-futures initially sold off on the news, markets could be entering a period in which bad economic news is good for stock markets, analysts said, as it would increase the chances that the Federal Reserve would move to lower interest rates in the coming months.

Wall Street is increasingly anticipating a reduction of borrowing costs by the Federal Reserve to combat sluggish inflation and the aftershocks of intensifying trade wars between the U.S. and counterparts, including Mexico and China. The market is placing a 25% chance of a rate cut at the Fed’s coming policy-setting meeting June 18-19, according to CME Group data.

On the trade front, several newsreports suggested the U.S. and Mexico made progress Thursday on a deal that would have Mexico agree to steps to slow the flow of migrants from Central America to the United States, in return for the U.S. declining to impose tariffs on Mexican imports.

Mexico has also emphasized the need for more U.S. economic aid to potentially subsidize Mexican interdiction efforts, and to support economic development in migrants’ home countries. It remains to be seen, however, whether a deal can be reached in time to avoid the imposition of a 5% tariff on all Mexican imports, set to go into effect Monday. Talks are set to resume Friday.

There is less reason for optimism that the U.S.-China trade dispute will be resolved any time soon, with no new scheduled talks between the two powers. Early Friday, the Governor of the People’s Bank of China told Bloomberg that the central bank has “tremendous” room to use monetary policy to stimulate the Chinese economy, should the Sino-American trade spat worsen.

What other data are ahead?

Wholesale inventories rose 0.8%, the Commerce Department said Friday, above the 0.3% consensus expectation, according to Econoday.

A report on consumer credit growth will be released at 3 p.m.

What are the analysts saying?

“This is the type of [jobs report] the doves will really take to, as it supports the argument for cutting rates beyond politics or trade issues, which were never part of the Fed’s mandate to begin with,” Mike Loewengart, vice president of investment strategy at E-Trade wrote in an email.

“That said, our historically low unemployment rate hasn’t moved, and even though the number came in low we’re still creating jobs, which supports the case that the economy is still expanding,” he added. “So the Fed will have to walk a really thin line.”

“Stock indices were headed for weekly gains, as expectations that the US Federal Reserve and other central banks around the world would soon cut interest rates to counter the damaging impact of rising trade tensions lifted sentiment,” wrote Raffi Boyadjian, senior investment analyst at XM. “Traders were also hopeful that US and Mexican officials will be able to resolve the issue of illegal migration across the two countries’ border.”

Which stocks are in focus?

Barnes & Noble Inc. BKS, +12.16%   shares could be in focus Friday, after the bookseller confirmed it will be acquired hedge fund Elliot Management Corp., for $6.50 per share, in a deal valued at $683 million, including the assumption of debt. The stock rose 10.8% Friday.

Shares of Zoom Video Communications Inc. ZM, +20.89%   were up 21.7% Friday morning, after the firm announced better-than-expected earnings Thursday evening.

How are other markets trading?

The yield on the 10-year Treasury note TMUBMUSD10Y, -2.08%   retreated nearly .03 percentage point to 2.088%.

Asian stocks closed higher Friday, with Japan’s Nikkei 225 rising 0.5% and South Korea’s Kopsi advancing 0.2%. Markets in China were closed for a holiday. In Europe, stocks were on the rise, with the Stoxx Europe 600 SXXP, +0.93%   adding 0.8%.

Crude oil CLN19, +2.21%   was on the rise for the second-straight session, while the price of gold GCN19, +0.37%  edged higher. The U.S. dollar DXY, -0.53% meanwhile, fell 0.4% relative to its peers.

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https://www.marketwatch.com/story/stock-market-poised-to-rise-ahead-of-friday-jobs-report-2019-06-07

2019-06-07 15:17:00Z
CAIiEK0RbkAvaQ2oODRRYWrVgxwqGAgEKg8IACoHCAowjujJATDXzBUwmJS0AQ

The Job Market Isn’t as Strong as It Seemed. The Fed Needs to Pay Attention. - The New York Times

Image

A Mercedes-Benz factory in Vance, Ala.CreditAndrew Caballero-Reynolds/Agence France-Presse — Getty Images

As of 8:29 a.m. Friday, things were shaping up for the Federal Reserve to face a real conundrum at its policy meeting in less than two weeks.

Some financial market indicators, mainly in the bond market, were suggesting that the economy was weakening and that the Fed would need to cut interest rates in the coming months to prevent a recession. But there was little evidence of a major slowdown — only a few soft data points here and there.

In particular, the United States labor market has been booming, not at all suggesting an American economy in need of rescue with interest rate policy.

The good news out of the Labor Department’s May employment report released at 8:30 a.m. Friday is that the Fed no longer faces a conundrum. The bad news is that it showed a job market that was not as robust as it had seemed.

It’s not just that the economy added only 75,000 jobs last month, far less than the 180,000 forecast. That might be chalked up to the statistical randomness that can cause the numbers to bounce around in ways that don’t reflect the underlying reality of the economy.

More worrisome is that the report also revised previous months’ numbers down by 75,000, meaning that the blockbuster spring job creation rates were considerably more modest.

It is now clear that there really is softer job creation in 2019 than there was in 2018 — an average of 164,000 jobs a month so far this year, compared with 223,000 last year.

That could reflect the simple math of an economy arriving at full employment. Once nearly everyone who wants a job has one, after all, employers simply can’t create new jobs at the same pace because there is no one out there to fill them.

But some curious pieces of evidence point to underlying weakness. The proportion of prime working-age adults, those 25 to 54, who are working, which rose sharply in 2018, has now leveled off or even edged down. It was 79.9 percent in February, and 79.7 percent in May.

Perhaps most significant, wage growth is also steady or slightly declining, rather than accelerating. Average hourly earnings for private-sector workers rose 0.2 percent in May, and are up 3.1 percent over the last year. Wages rose 3.4 percent in the year ended in February.

If this really were a situation of softening job growth because employers were up against the constraints of full employment, you would expect them to have to pay more to find scarce workers. Instead, the wage growth picture is steady as she goes.

Finally, all of that came before a major escalation of the trade wars that began in early May. The surveys on which the new data are based cover the middle of the month, so there is no reason to think employers would have changed their behavior in response to the latest headlines in time to affect these numbers. The trade war to date has already been damaging for sectors including automobile production and agriculture. And a cycle of higher tariffs on Chinese imports and retaliation against American exports could spread further in months ahead — not to mention a new round of tariffs threatened to go into effect on Mexico next week.

All these numbers don’t add up to a crisis, and there is no reason to assume that a recession is inevitable. But it does amount to the clearest evidence yet that the economic slowdown isn’t a figment of the bond market’s imagination, but something that is happening all around us, even if a few really good jobs reports in a row hid that fact.

The Fed and its chairman, Jerome Powell, will meet June 18-19. They are loath to appear to be responding only to what happens in the financial markets — their job is to try to watch out for the real economy, not treasury bond prices.

They are not in the easiest position. Their main interest rate target is quite low by historical standards, especially in the context of a decade-long expansion. Still, the current federal funds rate of 2.25 to 2.5 percent leaves room to cut rates over the coming quarters to a degree that would cushion the economy.

And the soft May employment numbers offer an opportunity for the Fed to ground a policy pivot on conditions that affect ordinary Americans, not because bond investors expect that they will cut rates.

Both the market and the economic data are now suggesting that the Fed overtightened interest rates in 2018, and that the economy is at risk if it does not correct things. Mr. Powell and his colleagues are on the clock to decide what to do about it.

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https://www.nytimes.com/2019/06/07/upshot/the-job-market-isnt-as-strong-as-it-seemed-the-fed-needs-to-pay-attention.html

2019-06-07 14:06:32Z
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