Behind the headlines - Stories Report on Business is following today:
What the jobs numbers show
This morning's jobs numbers were bleak, and not quite what markets expected, but they also may hint at a labour market that is transforming as Canada struggles its way back to health. Over all, 43,000 jobs were lost in October and the unemployment rate ticked up to 8.6 per cent, according to Statistics Canada. This reversed two months of moderate job gains. But some of the details of the report are worth noting. This has largely been a man's recession, and one of full-time job losses with rising part-time work since the labour market peaked a year ago. But for two months now, full-time jobs have increased and part-time work has declined. September saw 92,000 new full-time positions and October a slight increase. September also saw 61,000 part-time jobs disappear and October 60,000, which accounted for the bulk of last month's hit. Since October, 2008, job losses were concentrated among men and youth. This October, however, women and youth accounted for all of the decline. Note also that average hourly wages rose 3.3 per cent year-over-year in October, faster than September's increases. Still, it has been an ugly recession. Since the labour peak, 400,000 jobs have been lost in all, although the bulk of that came in the first five months. Read the story
www.theglobeandmail.com/report-on-business/jobless-rate-jumps-to-86-per-cent/article1353485/
U.S. labour market still weak
U.S. numbers this morning also illustrate the jobs crisis among Americans. The U.S. jobless rate has now topped 10 per cent for the first time since 1983, and economists expect it will move higher yet. There are now almost 16 million Americans without work as the economy shed 190,000 jobs in October. The unemployment rate jumped to 10.2 per cent from 9.8 per cent as October marked the 22nd month of job losses in a row, the longest on records that date back seven decades. Remember that job gains lag economic growth, and the U.S. economy has been growing. Still, said one U.S. economist, "you need explosive growth to take the unemployment rate down. Read the story
www.theglobeandmail.com/report-on-business/us-jobless-rate-tops-10-per-cent/article1353595/
G20 officials meet in Scotland
G20 finance ministers and central bankers begin meeting today in St. Andrews, Scotland, and are expected to agree that it's too soon to start pulling back on the emergency measures that have kept their economies on life support. They're also expected to look at proposals for a system of sharing economic projections as a canary-in-the-mine-shaft tool. While governments and central banks are not yet talking about major exit strategies, and but for Australia and Norway are planning to keep interest rates at historic lows for now, they are beginning to plot a path. There has been talk, and fears, of an asset bubble in the making, which could set the stage for another crash. Yesterday, the European Central Bank said one-year loans to commercial banks will be withdrawn, possibly as early as December. And the Bank of Canada is also cutting back on some of its emergency lending programs.
Related: Central banks set path for pullback
www.theglobeandmail.com/report-on-business/central-banks-set-path-for-pullback/article1352940/
Blowing bubbles
Alistair Darling, Britain's Chancellor of the Exchequer, is one of those people on the lookout for bubbles, one of the favourite themes of New York University professor Nouriel Roubini. "We have got to make sure we don't get ourselves into a situation where some pressure starts to rise and then it becomes bigger and bigger, and when the whole thing comes to an end it has catastrophic consequences," Britain's finance minister told Bloomberg Television, calling for the G20 officials to find a way to address this issue.
GM's European chief leaves auto maker
Just days after General Motors Co. decided to keep its European Opel unit, rather than sell 55 per cent to Magna International Inc. and its Russian partner Sberbank, the chief of GM's European business is leaving the auto maker, news reports say. Carl-Peter Forster, a former BMW executive, had been expected to run Opel under Magna, the Reuters news agency says, and his departure is the first for a high-profile manager since the deal collapsed.
Telus cuts its guidance
The weak economy and heightened competition are hitting Telus Corp.. The Vancouver-based telecommunications company said today its third-quarter profit dipped to $280-million, or 88 cents a share, from $286-million or 89 cents. Notable is that Telus lowered its outlook for both profit and revenue this year. It now expects revenue to range between $9.6-billion and $9.7-billion, and profit to come in between $3.10 and $3.30 a share. That's down from $3.35 to $3.55. Read the story
www.theglobeandmail.com/globe-investor/telus-profit-revenue-slip/article1353578/
Gold tops $1,100
Gold briefly eclipsed the $1,100 (U.S.) an ounce mark today. One report said the move came after the World Gold Council said that Sri Lanka's central bank is, like India, buying bullion to diversify its reserves. India, the world's biggest gold consumer, has purchased 200 tonnes of gold from the International Monetary fund. Another report said gold futures moved higher on speculation that the U.S. dollar will sink further, heightened gold's appeal.
Air Canada profit up on currency
You've got to look behind Air Canada's third-quarter net profit to determine how Canada's biggest airline is faring. Air Canada this morning posted a profit of $277-million, or $2.44 a share, in the third quarter, a turnaround from last year's loss of $132-million or $1.32. But the airline gained $295-million on foreign exchange. Its operating income fell to $68-million from $112-million, passenger revenues fell 13 per cent, traffic dipped 2.1 per cent and revenue per available seat mile fell 10.2 per cent. Air Canada is not unique as the world's airline suffer from the recession. And chief executive officer Calin Rovinescu noted that the third quarter was of "pivotal significance" to its strategy: "We finalized a series of transactions that stabilized the company and strengthened our position to manage through the challenges brought on by ongoing weak economic conditions.” The airline said it does see a bottom of the recession, but doesn't expect a full recovery for 12 to 18 months. Air Canada's British counterpart is also suffering, chalking up a worse-than-expected loss in the first six months and projecting its yearly revenues will fall £1-billion short of a year ago. It also announced it plans to cut 3,000 jobs. British Airways PLC said traffic volumes are stabilizing. Read the story
www.theglobeandmail.com/globe-investor/air-canada-in-the-black/article1353480/
Suncor to sell assets after merger
Fresh from its takeover of Petro-Canada, Suncor Energy Inc. plans to sell between $2-billion and $4-billion in assets next year, moving to trim debt and narrow its focus. The energy plans to sell 30 per cent of its natural gas assets and sell of some of its North Sea minority interests. Suncor also today reported profit jumped to $929-million, or 74 cents a share, from $815-million or 87 cents a year earlier. But like other energy majors, it is feeling the effects of weaker energy prices, with operating profit falling to $288-million from $810-million. Still, said Suncor chief executive officer Rick George, "the integration work we've completed in just a little over three months is already yielding some significant efficiencies that will enable Suncor to come out of this cycle stronger than ever as a globally competitive energy producer." Read the story
www.theglobeandmail.com/globe-investor/suncor-reports-third-quarter-profit-of-929-million/article1353419/
RBS cuts losses
Royal Bank of Scotland, once Britain's global champion and now a ward of the state, cut its third-quarter losses as its bad debts narrowed, boosting its shares. Still, the bank warned that bad loans will remain high for several quarters. Said RBS chief executive officer Stephen Hester: "I have repeatedly said this is a marathon, not a sprint, and so it is proving."
Down Under keeps looking up
Australia, the world's new economic darling, is faring even better than initially believed. The Reserve Bank of Australia, its central bank, boosted its growth forecast for the year to 1.75 per cent, from just 0.5 per cent earlier, and called for an even better showing next year. Australia is reaping the benefits of a resources boom, and the central bank credited the rebound in China for its growth. "Investment in the resources sector is at historically high levels and is expected to increase further, particularly as the [liquefied natural gas sector expands," the RBA said.
Citigroup merger engineer says he's sorry
The man who helped build Citigroup Inc. into the global giant that it is now says he's sorry. Citi, formed in the late 1990s through the merger of Citicorp and Travelers Group, lost billions of dollars last year on more than $100-billion in writedowns. And, given the money it received from the U.S. government, is now partly owned by the Treasury Department. John S. Reed also told Bloomberg News that the repeal of the U.S. Glass Steagall Act in 1999, which until then had separated traditional banking from investment banking, was wrong, though he supported it at the time. In his Bloomberg interview, Mr. Reed, chief of Citicorp until the merger, said of Citigroup: "These are people I love and care about. You could imagine emotionally it's not easy to see what's happened."
From today's report on Business
Manulife's Guloien plots his own course
www.theglobeandmail.com/globe-investor/investment-ideas/manulifes-guloien-plots-his-own-course/article1353035/
Canada's pension funds eye Australian assets
www.theglobeandmail.com/report-on-business/canadas-pension-funds-eye-australian-assets/article1353034/
Wall Street insider trading probe widens
www.theglobeandmail.com/report-on-business/wall-street-insider-trading-probe-widens/article1353039/