The Bank of Canada said on Tuesday that a recovery from the “intense” recession is in the early stages, and as a result it has revised upward its economic outlook for the next year and a half.
Further, in a sign that it believes credit conditions in capital markets have improved, the central bank announced it would make less liquidity available to market participants in special transactions.
In its latest scheduled rate announcement, the central bank, as widely expected, kept its key policy rate at a record low 0.25%, and reiterated its commitment to keep it there until end of June of 2010.
But it provided a slightly more upbeat take on the road ahead, roughly 48 hours before the release Thursday of its quarterly economic forecast – although cautioning that a recovery is “nascent.”
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For the past four years, BC Biomedical Laboratories has topped our list of the 50 Best Employers in Canada. But in 2006, we crown not one but two new champions. Among medium-sized companies (300 to 1,499 employees), the Winnipeg-based financial services firm Wellington West Capital took the top honour; Cintas Canada, meanwhile, ranked first among larger companies (1,500 employees or more). This is the first year we’ve separated companies by size, a format that should allow readers to better compare firms.
As always, those that make up our Top 50 this year are a diverse group, ranging from car rental companies like Enterprise to retailers like Wal-Mart, a multinational often portrayed as a foe of labour rather than a friend. In “What can we learn from Wal-Mart…” (next page), writer Steve Brearton explores why employees gave the nod to the store Sam Walton built, as well as to a couple of other firms that occupy less-than glamorous positions in the corporate pecking order—including our co-winner, Cintas. On the following pages, we chart the Top 50 and put a human face on all the numbers, with some key lessons delivered by employees themselves.
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The Bank of Canada will stick to its conditional pledge to keep its benchmark interest rate at its current near-zero level through the second quarter of next year, most Canadian primary securities dealers said on Friday.
Eight of Canada’s 12 primary dealers polled by Reuters predicted the slow pace of economic recovery will prevent the Bank of Canada from lifting its key interest rate above the current 0.25% level, an historic low, until after the first half of 2010.
“Given the state of the economy and the fact that we expect the recovery to be very mediocre and modest, there is really no need to tighten any earlier than that,” said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal.
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Canada’s inflation rate for June was negative 0.3%, marking the first time since November 1994 overall prices have declined on a 12-month basis.
Statistics Canada said the decline in prices was primarily due to a 19% drop in energy prices, particularly gasoline. Excluding energy, prices were up 2.1% from a year earlier.
It marked the biggest drop in prices since 1955.
The inflation rate was 0.1% in May.
June’s annualized drop in prices was in line with expectations of analysts polled by Bloomberg.
The price for regular gasoline averaged $1.016 a litre last month, down more than 24% from $1.351 a litre a year earlier, Statistics Canada said Friday.
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Canadian business sentiment has soared as bosses across the country prepare for a pick-up in economic activity, sales and employment amid better credit conditions, according to two Bank of Canada surveys released Monday.
The results of the central bank’s Summer Business Outlook Survey are a dramatic change in mood from the Winter and Spring reports, with 61% of businesses expecting sales to rise in the coming 12 months — the highest reading since records began in 1998.
The expected rise is a welcome change for recession-weary companies, but it is important to note any increases will be off the back of a record drop in sales and, therefore, the outlook does not indicate a return to full health. As Douglas Porter, an economist at BMO Capital Markets, puts it: “[Sales] had nowhere to go but up.”
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Surprisingly positive results from two Bank of Canada business surveys would suggest the country is poised for a quarter or two of 10% growth, says a report released Wednesday from Merrill Lynch Canada.
The surveys, unveiled this week, said businesses are the most optimistic about their future sales prospects in almost a decade, and obtaining new loans is becoming less difficult.
Sheryl King, the firm’s chief Canadian economist, said the central bank’s surveys imply that the country is headed for year-over-year growth in the 4.25% range, given there is generally a strong correlation between the survey results and real GDP growth.
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China’s purchase of a C$1.74 billion ($1.5 billion) stake in Teck Resources may be just the opening move from the world’s top resource consumer in a strategy to use its unique wealth advantage to become a key source of mining capital for Canadian firms.
Teck said last week it sold a 17.2 percent equity stake to state-owned China Investment Corp in a deal that allows the Canadian miner to pay down its massive debt while expanding China’s portfolio of commodity investments.
The deal underscores how deep China’s pockets are at a time when many sources of credit and financing have dried up in the global recession, even for the biggest miners.
‘Most people thought China would take advantage of this dip in commodity prices and, because they’re the only ones with money, take advantage of this financial situation we are in. They have come through big time, be it oil and gas, or any commodity you can think of,’ David Davidson, an analyst with Paradigm Capital in Toronto, said in an interview after the Teck deal was announced.
Teck is a major producer of copper, metallurgical coal, zinc and gold, all commodities sought by China.
‘I think what they are looking for is distressed opportunities … Companies who have a strong resource base that are suffering because of the lack of liquidity in the market,’ said Jack Azimi, managing director of Foundation Markets, a small investment firm in Toronto.
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Canadian business expect better conditions ahead for the economy, and hold positive expectations for sales growth as well as employment, the Bank of Canada says in its Summer Business Outlook Survey.
The turn in sentiment is a dramatic change to expectations taken in Spring, but businesses still foresee a level of difficulty ahead and expect activity to recover gradually.
The quarterly survey found 69% of businesses had reported lower sales in the past 12 months. However, 61% expected sales to rise over the year, compared with just 30% previously.
Pressures on production capacity remained low and few firms faced labour shortages.
“The percentage of firms reporting that labour shortages are restricting their ability to meet demand changed only slightly and remains at a low level,” the survey of 100 businesses found. “A majority of respondents indicated that labour shortages were less intense than 12 months ago, because the demand for labour has declined during the recession.”
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While the oil sands business remains challenging because of low oil prices, business conditions are improving thanks to lower costs, more productive labour and hungrier service providers, developers said at an investment conference Wednesday.
“The big change we have seen as an operator is that (staff) turnover is way down,” said Christopher Slubicki, CEO of OPTI Canada Inc., a partner in the Long Lake oil sands project, which is ramping up production at its recently completed first phase.
“We have our people. We are keeping our people. So, our productivity and our performance are improving with the workforce we have, which is much more constant compared to the turnover we had during the construction phase, when everybody was building,” Mr. Slubicki said on the sidelines of a conference on unconventional oil organized by TD Newcrest.
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Canada’s economy lost 7,400 jobs in June, far less than expected, even as the country continued to struggle through an economic downturn.
The unemployment rate rose to an 11-year high of 8.6%, up from 8.4% in May, Statistics Canada said Friday.
“Full-time employment continued its downward trend in June, offsetting gains in part-time,” the federal agency said. “Employment was little changed in June, leaving total net losses during the last three months at 13,000, much smaller than the 273,000 decline in the first three months of the year.”
Most economists had expected 35,000 job losses in June, with the unemployment rate rising to 8.7%.
On Thursday, however, Finance Minister Jim Flaherty warned that job losses are likely to continue for the months ahead.
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