GHY Tradelines

(Mike Moffatt – Canadian Business)

When the media discusses the problems plaguing Canadian business, we typically talk about the fluctuating loonie, soft demand from the United States and Europe, bureaucratic red tape and a mismatch between open jobs and worker skills. An issue that receives less attention, but is no less important, are taxes that are being charged retroactively by the government on businesses. Retroactive taxation in Canada goes beyond the occasional isolated incident and has economic consequences.

There have been at least three significant examples in 2013 where Canadian businesses allege that they have been assessed taxes retroactively. Read more here.
 

(David Ljunggren – Reuters)

Canada’s trade deficit leapt in April as imports hit a record high and exports edged down, a further sign that exporters’ woes are helping to crimp growth, Statistics Canada data indicated on Tuesday.

The April deficit hit C$567 million ($550 million), slightly more than the C$550 million shortfall analysts had expected. Statscan also revised March’s initial C$24 million surplus to a deficit of $3 million.

The revision means Canada has posted 16 consecutive monthly trade deficits as exporters struggle to cope with a strong Canadian dollar and uncertainty in major markets such as the United States and the European Union. Read more here.
 

(CTV News)

In his last interest rate announcement as governor of the Bank of Canada, Mark Carney issued a steady-as-she-goes update, once again leaving the key lending rate at 1 per cent.  [...]

In its statement released Wednesday morning, the Bank of Canada said global economic growth is in line with expectations set out in the April Monetary Policy Report.

It pointed out that U.S. economic expansion is progressing, though at a “modest pace,” with a strengthening private sector. Japan has been a bright spot in the global economy, the report said, noting that it is “beginning to respond to significant policy stimulus.”

“Europe, in contrast, remains in recession. Growth in China has continued to ease from very strong rates, weighing somewhat on global commodity prices,” according to the central bank. Read more here.
 

(Business Wire)

TransCore Link Logistics reported weaker Canadian Freight Index volumes for April 2013. The month-over-month load volumes had a seven percent decrease and the year-over-year volumes fell behind April 2012 levels by 14 percent.

The equipment postings for April increased by six percent compared to figures from the previous month, and the year-over-year equipment postings saw a significant increase of 11 percent. As a result of these index changes, the equipment-to-load ratio declined considerably for April to 2.35 from 2.08 of the previous month.

Overall load volumes for cross-border postings and intra-Canada postings averaged at 70 and 25 percent respectively. Cross-border loads destined for provinces within Canada were down 21 percent year-over-year compared to April 2012. In contrast, cross-border year-over year loads from Canada to the United States were up substantially by 16 percent.

Intra-Canada year-over-year load volumes for April were down two percent while equipment increased substantially by 24 percent. Read more here.
 

(CBC News)

Bank of Canada governor Mark Carney is leaving Canada with some parting advice – seize the country’s natural advantages.

The central banker said Tuesday in his last scheduled public appearance before departing for the Bank of England next month that Canada can coast and wait out the decade-long damage-repair process in the rest of the G7 economies, or build on its strengths for the emerging new global economy.

Carney said the Canadian government is correct in seeking out new trade deals, particularly in emerging economies, because they represent one half of the world’s imports growth and also are essential to securing a position in global supply chains.

Export growth needed
The speech to the Montreal Board of Trade, notes of which were released in Ottawa, read somewhat like a valedictory address in which the banker was full of praise for the country’s achievements and endowments, while also urging it on to future successes.

Carney broke no new ground in the speech as he has long stressed the need to transition Canada’s exports-based industries from reliance on slow-growing economies like the U.S. and Europe to fast-growing markets in China and Asia in general. But the advice took on added currency given it was likely the last time he will pronounce generally on the Canadian condition for at least the next five years, the term of his posting in London. Read more here.
 

(Peter Hall – Huffington Post)

International trade will be a key growth driver for the Canadian economy this year and next. However, the distribution of export growth in Canada’s provinces is anything but even. Some are leading the charge, while others are steady at the national pace. Others are lagging behind, some quite seriously. What are the key factors influencing the different growth patterns?

On top of the heap are British Columbia and Nova Scotia. Surging forestry exports are a big reason that B.C. will see 12% growth this year and a further 11% in 2014. Wood shipments to the reviving US market will add to the robust increase in exports to China. BC will also get a solid boost from mineral exports, thanks to new mining production. Nova Scotia will see the same growth rates, except the years are flipped around. It’s largely an energy story for Nova Scotia, with Venture and Deep Panuke causing output to double this year and double again in 2014. The return of NewPage supercalendered paper production will boost forestry exports by 15% in 2013. Read more here.
 

(CBC News)

Stephen Poloz, the head of Export Development Canada, has been named as the surprise pick to be the next governor of the Bank of Canada. Poloz, who has experience in both the public and private sector, replaces Mark Carney, who is leaving his post to lead the Bank of England.

At a Thursday afternoon press conference in Ottawa, Minister of Finance Jim Flaherty said the search for the new governor was extremely thorough and sought out candidates from around the world. “It has taken us some time to get to this point,” Flaherty said, adding that the appointment process was scrupulously followed. Flaherty said he is confident Poloz will perform with “distinction” as he guides the Bank of Canada for the next seven years. Read more here.
 

(Statistics Canada)

Canada’s merchandise exports increased 5.1% in March and imports rose 1.7%. As a result, Canada’s trade balance went from a deficit of $1.2 billion in February to a surplus of $24 million in March.

Exports grew to $40.5 billion in March, and have been on an upward trend since July 2012. Gains were recorded in all sections during the month and export volumes were up 5.1%.

Imports rose for a third consecutive month to reach $40.4 billion, their second highest value on record. The main contributors to the monthly increase were energy products and metal and non-metallic mineral products. Overall, prices grew 1.4% and volumes were up 0.3%.

Exports to the United States rose 4.0% to $29.5 billion in March, on higher exports of motor vehicles and parts and energy products. Imports from the United States were up 2.0% to $25.6 billion, a third consecutive monthly advance. Consequently, Canada’s trade surplus with the United States increased from $3.2 billion in February to $3.8 billion in March.

Exports to countries other than the United States rose 7.9% to $11.0 billion in March. All principal trading areas registered gains, with Japan (+25.2%) recording the largest percentage increase. Imports from countries other than United States grew 1.2% to $14.8 billion. As a result, Canada’s trade deficit with countries other than the United States decreased from $4.4 billion in February to $3.8 billion in March. Read more here.
 

(Richard Blackwell – Globe & Mail)

In an era focused on international free trade, it seems incongruous that Canada has so many internal barriers that impede movement of goods, services and people between provinces. That’s a situation that has to change if the country is going to stay competitive in a global marketplace, says Perrin Beatty, a former Conservative cabinet minister who is now president of The Canadian Chamber of Commerce.

Businesses are operating today in an intensely competitive global economy. It is important for them to have a market at home in which they can build their scale. We are a comparatively small economy to begin with, and if we Balkanize our economy and turn it into 13 regional ones, then it is much more difficult for Canadian companies to get the scale that they need to be able to be globally competitive.

Also, from the perspective of Canadian consumers and customers of businesses, it limits choice and drives up costs. Read more here.
 

(CBC News)

There is zero chance of Canadians getting a bigger break on borrowing costs from Wednesday’s Bank of Canada interest rate announcement, but that doesn’t mean governor Mark Carney doesn’t have a opportunity to adjust policy to impact the economy, if solely on the margins.

Carney’s penultimate policy announcement before stepping down in June will on the surface be more of the same.

For the umpteenth time – even officials have difficulty keeping count – the central bank is expected to keep its trendsetting rate at one per cent where it’s been since September 2010. That has kept borrowing costs at historically low levels in Canada and contributed to one of the hottest housing markets in the industrialized world in the years following the recession. Read more here.

Related: Bank of Canada Holds Rate Steady, but Chops Growth Forecast (Financial Post)

(Bloomberg)

The Canadian dollar had its biggest drop in more than a year against its U.S. peer as gold led commodities down with its biggest loss in 33 years after China’s growth slowed more than forecast in the first quarter.

The currency weakened against the majority of its 16 most-traded peers on speculation slowing growth at home and abroad will lead the Bank of Canada to trim its economic growth forecast at a policy meeting April 17. Data released last week showed retail sales in the U.S., Canada’s largest trading partner, unexpectedly contracted in March. Commodities, including crude oil, Canada’s biggest export, fell. Read more here.
 

(Vancouver Sun)

The Canadian economy needs to be more international and grow its exports to markets other than the United States, Scotiabank chief executive Rick Waugh says.

“We are several decades into globalization and still roughly three quarters of our exports go to the United States,” Waugh told the bank’s annual meeting Tuesday. “It’s no wonder Canada’s export performance is second to last in the G20…Relying on one customer is never good strategy.”

Waugh, who heads Canada’s most international bank, said he sees the most potential in emerging markets. “This year we expect GDP growth in our key international markets to be more than twice what it is in Canada and the U.S.,” he said. Read more here.
 

(Reuters)

Lower exports and slightly higher imports pushed Canada’s trade deficit in February up to C$1.02 billion ($1.01 billion) from a revised shortfall of C$746 million in January, Statistics Canada said on Friday.

Market operators had expected a modest surplus of C$200 million after the initial C$237 million deficit reported in January. Read more here.
 

(The Canadian Press)

Statistics Canada says 54,500 jobs disappeared from the economy in March and the unemployment rate climbed two-tenths of a point to 7.2 per cent.

The surprisingly weak employment report took back all of the gains of February and then some, leaving job creation in Canada in negative territory for the first three months of the year.

Economists had expected a modest 6,500 pick-up during the month, anticipating that February’s large gain could not be sustained. But few saw the cut in the labour market would run so deep. Read more here.
 

(Montreal Gazette)

The Conference Board says Canada has been spinning its wheels in the critical area of business innovation despite a decade of trying.

The Ottawa-based think-tank says its latest comparison of 16 advanced economies puts Canada in 13th place on innovation, a key element of a modern, competitive economy.

The report, being released Thursday morning, says Canada ranks second last in two important aspects of the overall innovation record, the amount businesses spend on research and development and in venture capital expenditures. Ironically, the research shows Canada does well in the quality of its scientific research and the creation of new businesses. Read more here.
 

(CTV News)

The Canadian dollar closed higher Tuesday amid a general improvement in risk appetite on financial markets and strong U.S. economic data.

The commodity-sensitive loonie was off early highs amid accelerating price declines for gold, copper and oil but still up 0.17 of a cent at 98.53 cents US after earlier rising to a six-week high of 98.77 cents US.

Traders looked to the February report on U.S. factory orders, which showed a jump of 3% following decline in January that was revised to one per cent from 2%. Read more here.
 

(Michael Babad – Globe & Mail)

Canada’s economy is still struggling for more solid ground, though it’s getting there bit by agonizing bit.

New reports paint a picture of somewhat stronger growth, but an economy still dogged by a weaker housing market, softer trade and a wary consumer juggling high levels of debt.

Indeed, warns Scotiabank’s deputy chief economist, Canada faces “a number of challenges” going forward.

The Organization for Economic Co-operation and Development said in a new forecast today that it expects Canada’s economy to pick up some steam in the first half of the year, rebounding somewhat from the weak finish of 2012 but still falling shy of the 2% growth mark. Economic growth in Canada will outpace the laggards of Europe, but trail the United States, Japan and Germany among the G7 countries, the OECD said in its interim forecast. Read more here.
 

(Hollie Shaw – Financial Post)

Target Canada president Tony Fisher addressed Tuesday the sticker shock gripping some consumers who expected the retailer’s prices would be on par with its U.S. stores when it opened outlets across the country this month.

The hot-button issue of Canada-vs.-U.S. retail pricing was the subject of a Senate committee report this year and resurfaced in last week’s federal budget when the government announced it would drop tariffs on hockey gear and baby clothing.

Fisher told a Canadian Club of Toronto luncheon that Target, which has opened 20 stores in Ontario since the beginning of the month, knew it would have to open stores that would be competitive with other retailers operating in the Canadian market, whether they be U.S.- or Canadian-owned. Read more here.
 

(CBC News)

Last year’s budget brought $5.2 billion in cuts to federal government spending, trimming the civil service and projecting future cuts to Old Age Security. With the 2012 budget outlining cuts for the following three years, the 2013 budget isn’t expected to hold many additional trims. Finance Minister Jim Flaherty has hinted at some of what will be in the budget. Read more here.
 

(Bill Curry – Globe & Mail)

Skills, infrastructure and manufacturing will be major themes in Thursday’s federal budget, according to a letter Finance Minister Jim Flaherty has written to the Conservative caucus.

The one-and-a-half page letter indicates the budget will be branded as “Economic Action Plan 2013” and will have three main themes centred on job creation. The letter is light on details, but confirms the overall focus of the budget.

The first theme is titled “Connecting Canadians with Available Jobs.”

“There are too many jobs that go unfilled in Canada because employers can’t find workers with the right skills. Training in Canada is not sufficiently aligned to the skills employers need,” the letter states. “We can do better… we will take steps to address this important issue.” Read more here.