Tag: economy

Japan’s Economy Sinks Into Contraction as Spending, Investment Decline

by  on  in Business Investment News

TOKYO (AP) — Japan’s economy contracted at a 2.1% annual pace in July-September as consumption and investment weakened, the government said Wednesday.

Weak wage growth in the world’s third-largest economy also sapped its vitality, the Cabinet Office said. In quarterly terms, the economy contracted by 0.5%.

The numbers were unexpectedly weak. Private consumption shrank an annualized 0.2%. Corporate investment decreased 2.5%. With investment and demand weakening in other major economies, “we expect GDP growth to slow from 1.7% this year to 0.5% in 2024,” said Marcel Thieliant of Capital Economics.

The economy grew at a revised annual pace of 4.5% in April-June and 3.7% in the January-March, the latest figures showed. The earlier estimate for the April-June quarter was of a 6% annual expansion.

The last quarter’s performance was far worse than what had been expected, according to the financial services company ING, which had forecast an annual contraction of 0.5%.

Political Cartoons

“Most of the miss in the consensus forecast came from weaker-than-expected domestic demand items, such as consumer spending, business investment and inventory accumulation,” Robert Carnell, ING’s head of research for the Asia-Pacific area, said in a report.

Prime Minister Fumio Kishida recently announced a stimulus package of more than 17 trillion yen ($113 billion) that includes tax breaks and benefits for low-income households that have struggled as prices for many necessities have surged due to global inflation and the weak yen.

Economic activity in previous quarters was helped by recoveries in inbound tourism and exports. Social restrictions related to the COVID-19 pandemic have been lifted, allowing for more travel and fewer disruptions to trade and supply chains.

Exports managed to eke out 0.5% growth in the latest quarter, in contrast to a 3.2% rise in the second quarter. Auto exports recovered after stalling partly due to shortages

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Japan’s economy sinks into contraction as spending, investment decline

by  on  in Business Investment News

TOKYO — Japan’s economy contracted at a 2.1% annual pace in July-September as consumption and investment weakened, the government said Wednesday.

Weak wage growth in the world’s third-largest economy also sapped its vitality, the Cabinet Office said. In quarterly terms, the economy contracted by 0.5%.

The numbers were unexpectedly weak. Private consumption shrank an annualized 0.2%. Corporate investment decreased 2.5%. With investment and demand weakening in other major economies, “we expect GDP growth to slow from 1.7% this year to 0.5% in 2024,” said Marcel Thieliant of Capital Economics.

The economy grew at a revised annual pace of 4.5% in April-June and 3.7% in the January-March, the latest figures showed. The earlier estimate for the April-June quarter was of a 6% annual expansion.

The last quarter’s performance was far worse than what had been expected, according to the financial services company ING, which had forecast an annual contraction of 0.5%.

“Most of the miss in the consensus forecast came from weaker-than-expected domestic demand items, such as consumer spending, business investment and inventory accumulation,” Robert Carnell, ING’s head of research for the Asia-Pacific area, said in a report.

Prime Minister Fumio Kishida recently announced a stimulus package of more than 17 trillion yen ($113 billion) that includes tax breaks and benefits for low-income households that have struggled as prices for many necessities have surged due to global inflation and the weak yen.

Economic activity in previous quarters was helped by recoveries in inbound tourism and exports. Social restrictions related to the COVID-19 pandemic have been lifted, allowing for more travel and fewer disruptions to trade and supply chains.

Exports managed to eke out 0.5% growth in the latest quarter, in contrast to a 3.2% rise in the second quarter. Auto exports recovered after stalling partly due to shortages of computer chips

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The ‘sugar rush’ effect: Why the U.S. economy is growing faster than Canada’s

by  on  in American Business News

In a lot of ways, the U.S. and Canadian economies are similar. They’re both seeing progress in the fight to rein in inflation. They both have robust employment levels.

But the American economy is growing by 4.9 per cent, while ours has been flat.

Economists warn the numbers aren’t even capturing the full extent of the differences.

“Things are actually worse than the data would suggest,” said Royce Mendes, managing director at Desjardins Capital Markets.

He says explosive population growth has inflated economic growth in Canada. Without that, the economy would be decidedly worse than it is right now.

So why are the Canadian and U.S. economies performing so differently?

Two key factors are driving that. One is Canadian, one is American. One is well known, the other caught almost everyone by surprise.

The first is simple: Higher interest rates are having a disproportionately harsher impact in Canada than in the United States.

WATCH | About That: When will rates come down? 

Why aren’t interest rates going down in Canada? | About That

Featured VideoCBC’s Andrew Chang looks at the Bank of Canada’s latest move to hold its key interest rate. Why haven’t rates dropped? And how does it impact your mortgage, loans and cost of living?

Canadians have higher debt loads. Those debt loads renew more quickly in Canada. That means higher borrowing costs bite harder, faster here.

Most Americans have a 30-year mortgage, so rising rates don’t have as big an impact as they do in Canada, where the average mortgage comes with a five-year term.

Americans spending more, saving less

Millions of Canadian households are bracing for their renewal in the next couple of years, so they’re spending less and saving more. In the United States, households are spending more and saving less.

“The U.S. is

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China’s Economy Is Going Bust. That Should Terrify US Businesses.

by  on  in American Business News

We’ve reached the end of an era for the Chinese economy.

For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country’s capacity to manufacture, appetite to consume, and ability to project power across the world economy. The Chinese Communist Party relentlessly pursued economic development over all else, even when that single-mindedness pushed the party to make debilitating policy mistakes — creating a massive bubble in the property market, saddling provinces with loads of debt, and failing to transition away from an overreliance on investment. There was no time to stop for corrections while China’s mind was on money alone. 

This era of expansion was not only a boon for Beijing, it also helped fuel global demand. Countries relied on China’s hunger for speedy modernization and industrial might to supercharge their own development. Even American companies saw China as the next great global market — and made bets accordingly.

They lost those bets.

China’s leader, Xi Jinping, has shifted the CCP’s raison d’être to national security over the economy. Getting rich isn’t China’s big project anymore; the project is power. As a result, both the government’s priorities and its behavior have changed. In the past, whenever it seemed that a recession was on the horizon, the CCP came to the rescue. There’s no hefty stimulus coming this time. Nor will the explosive growth that experts once expected from China return. Beijing’s relationship with the outside world is no longer guided by the principles of economic rationality, but rather by its yearning for political power.

“This isn’t about the economy anymore, it’s all about advanced technology and weaponry,” Lee Miller, the founder of the Chinese economic surveyor China Beige Book, told me.

In response, American businesses need to consider

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Jobs, housing, consumer and economy news that matters

by  on  in Business Breaking News

Consumers are still spending, showing remarkable resilience. Retail sales rose 0.7% in September, coming off a strong 0.8% increase in August.

  • The strong jobs market and income growth that is on pace with inflation fuels spending.
  • Consumers using credit cards is also up.

Details: Big drivers of the gains in September were car sales, online purchases, and sales at miscellaneous retailers. Purchases at restaurants, bars, and gas stations were robust, too.

Big picture: A strong economy will keep consumers confident and spending. To strengthen the economy businesses need pro-growth policies that address the worker shortage and advance a bold trade agenda.

Labor Force Can’t Grow Fast Enough to Fill Job Openings

October 11, 2023

The job market continued to sizzle in September with 336,000 new jobs created – the vast majority created by the private sector. Also, job gains for July and August were revised up a combined 119,000. Workers made more as well with wages rising 0.2%, up 4.2% annually.

Why it matters: While the labor force continued growing, expanding by 90,000 in September, it’s not growing fast enough to fill millions of open jobs.

Be smart: Finding more workers is critical for businesses to grow and compete. More legal immigration is part of the solution, along with helping Americans get in-demand skills and removing barriers keeping people from entering the workforce.

By the numbers: The top five industries that added jobs in September were:

  • Leisure and Hospitality: 96,000
  • Government: 73,000
  • Education and Health: 70,000
  • Wholesale and Retail Trade: 31,000
  • Professional and Business Services: 21,000

Learn more:

Job Openings Rise, Tight Labor Market Continues

October 6, 2023

With the release of September jobs numbers this week, let’s look back at the last few months. After falling in June

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Canada’s economy shrinks, mortgage balances grow and Freeland imposes measures on Wealth One Bank: Business and investing news for Sept. 3

by  on  in Business Investment News

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The Canadian economy fell at an annualized rate of 0.2 per cent in the second quarter, bolstering the case for the Bank of Canada to hold interest rates steady next week.Chris Wattie/Reuters

Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.

Canada’s economy unexpectedly contracts in second quarter

Canada’s economy unexpectedly contracted in the second quarter of 2023. The economy fell at an annualized rate of 0.2 per cent, led by a drop in housing investment and a pullback in consumer spending, according to Statistics Canada. Mark Rendell reports the GDP numbers came in well below both Bank of Canada and Bay Street estimates, indicating that higher interest rates may be weighing on economic activity more than previously appreciated and bolstering the case for the Bank of Canada to hold interest rates steady next week.

Freeland imposes measures on founding shareholders of Wealth One Bank

Finance Minister Chrystia Freeland has imposed extraordinary national security conditions against the founding investors of Wealth One Bank of Canada over their alleged ties to Beijing, according to an exclusive report from Robert Fife and Steve Chase. The three businessmen – Toronto insurance executive Shenglin Xian, grocery tycoon Yuangsheng Ou Yang, and wealthy Vancouver property developer Morris Chen – were instructed to divest their shares in the Toronto-based bank. Wealth One has also been ordered to sever all ties with the three shareholders. Both the bank and shareholders have been under investigation by the Canadian Security Intelligence Service since 2021 amid concerns of Chinese government coercion and money laundering.

Another drop in job vacancies, another sign the labour market is cooling

Canada is

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US news chain Gannett sues Google, alleges online ad monopoly | Business and Economy News

by  on  in Business Google News

Google’s control over tools for buying and selling online ads forces publishers to sell more cheap ad space, Gannett says.

Gannett, the largest newspaper chain in the United States and publisher of USA Today, has sued Google, accusing it of trying to corner the market for online advertising by monopolising ad technology.

In a complaint filed in Manhattan federal court on Tuesday, Gannett, which owns more than 200 daily newspapers, said Google’s control over tools for buying and selling online ads forces publishers to sell more cheap ad space to the Alphabet Inc unit.

Gannett said this leaves Google with “exorbitant monopoly profits”, and “dramatically less revenue” for publishers and its ad technology rivals.

“Digital advertising is the lifeblood of the online economy,” Gannett Chief Executive Mike Reed said in an opinion published in USA Today. “Without free and fair competition for digital ad space, publishers cannot invest in their newsrooms.”

“The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions,” Reed wrote.

Gannett said it wants “very substantial”, actual, punitive and triple damages.

“These claims are simply wrong,” Dan Taylor, vice president of Google Ads, said in a written statement. “Publishers have many options to choose from when it comes to using advertising technology to monetize – in fact, Gannett uses dozens of competing ad services, including Google Ad Manager. And when publishers choose to use Google tools, they keep the vast majority of revenue. We’ll show the court how our advertising products benefit publishers and help them fund their content online.”

The lawsuit adds to legal pressure on Mountain View, California-based Alphabet, already in the crosshairs of regulators on two continents.

On Wednesday, the European Union brought

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US commerce secretary says companies see China as ‘uninvestable’ | Business and Economy News

by  on  in American Business News

The US Secretary of Commerce says United States companies have complained that China has become “uninvestable”, pointing to fines, raids and other measures that have made it risky to do business there.

Gina Raimondo’s comments came on Tuesday as her delegation of American officials headed from Beijing to Shanghai in the latest visit by a top US government representative to China in recent months.

“Increasingly I hear from American business that China is uninvestable because it’s become too risky,” she said.

For his part, Chinese Premier Li Qiang warned during a meeting with US officials on Tuesday against “politicised” US trade curbs on China, which Washington has insisted are necessary for its national security. Beijing has said the measures are meant to dampen its economic rise.

The statements by Li and Raimondo underscored the continued challenges the US and China face in navigating their complex relationship, even as they have recently sought to lower tensions and manage competition.

Ties between Beijing and Washington have soured over a range of issues, from trade and the status of Taiwan to China’s expansive claims in the South China Sea and an ongoing US push against growing Chinese influence in the Indo-Pacific.

Raimondo is the fourth senior official from US President Joe Biden’s administration to visit China this year, following Secretary of State Antony Blinken, Special Envoy for Climate Change John Kerry and Treasury Secretary Janet Yellen.

‘Mutual trust’

On Tuesday, Raimondo said US firms are facing new challenges, including “exorbitant fines without any explanation, revisions to the counterespionage law, which are unclear and sending shock waves through the US community, [and] raids on businesses”.

That has presented “a whole new level of challenge and we need that to be addressed”, she said.

She added there had been “no rationale given” for Chinese actions

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Canada’s economy contracted during 2nd quarter, StatsCan says

by  on  in Business Investment News

The Canadian economy appeared to stall in the second quarter as investment in housing continued to fall, led by a drop in new construction.

Statistics Canada said Friday the economy contracted at an annualized rate of 0.2 per cent in the second quarter.

The agency also revised its reading for growth in the first quarter to an annual pace of 2.6 per cent, down from 3.1 per cent.

The decline in the second quarter came as housing investment fell 2.1 per cent to post its fifth consecutive quarterly decrease. New construction dropped 8.2 per cent in the quarter, while renovation spending also fell 4.3 per cent.

The drop in spending came as Canadians face higher borrowing costs fuelled by interest rate hikes by the Bank of Canada, which is trying to bring inflation back to its target of two per cent.

The weakness in the second quarter was also attributed to lower inventory accumulations, as well as slower growth in exports and household spending.

Exports of goods and services crept up 0.1 per cent in the second quarter compared with a 2.5 per cent increase in the first quarter.

Growth in real household spending slowed to 0.1 per cent in the second quarter compared with 1.2 per cent in the first quarter.

Good news that consumer spending has slowed: economist

Pedro Antunes, chief economist at the Conference Board of Canada, said it came as a surprise that the economy had stalled.

The Bank of Canada had expected a 1.5 per cent annualized GDP growth, while analysts had forecast a 1.2 per cent gain.

“We had been thinking the economy might be a little stronger than what it finally came in at. I think that’s actually good news,” he said, adding that it appears the central bank’s tightened monetary policy is

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Mexico Replaced China As America’s Top Trade Partner, Proves World Economy Is Changing

by  on  in American Business News
  • Trade between the US and Mexico reached $263 billion during the first four months of this year.
  • That pushed Mexico past China and Canada as its top trade partner since the start of the pandemic.
  • China was America’s top partner for much of the 2010s and again at the start of the pandemic.

Meet America’s new, old best friend in the world economy.

According to a new post from Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas, Mexico has once again cemented its place as America’s top trading partner, with $263 billion worth of goods passing between the two countries in the first four months of this year. Trade with Mexico accounted for 15.4% of goods exported and imported by the US, just ahead of America’s trade totals with Canada and China, which were 15.2% and 12% respectively.

Even as the world moves on from the height of the pandemic, Mexico’s ability to take the top spot away from China — which had spent the last two decades integrating itself further into the US economy — is a clear sign of how the economic chaos of 2020 is set to continue to define the world economy for years to come.

Torres said the seeds for this shift were sown before the pandemic — with former President Donald Trump’s tariffs on some Chinese goods and the signing of the US-Canada-Mexico trade deal, a slight update of the nearly three-decades-old NAFTA deal. But Torres said the changes also suggested an accelerated shift toward “nearshoring,” a practice in which countries bring supply chains for crucial goods to countries that are close physically and

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