November 2007 Market Research

[BMironov]

Financial Post:Ontario must invest in new business (Nov 19, 2007)
http://www.canada.com/nationalpost/financi...77-b1919c44d999

QUOTE Ontario is one of the world`s most prosperous regions. As shown by our research in the 6th annual report to the Ontario public by the Task Force on Competitiveness, Productivity and Economic Progress, only a handful of similarly sized regions outside North America can claim higher gross domestic product per capita than Ontario. It is fair to say the province is one of the most competitive regions in the world.Yet, Ontarians could do better. We continue to lag our prosperity potential, as defined by the gap in GDP per capita with our North American peers. Among the most populous U.S. states and Canadian provinces, Ontario stands 15 out of 16. Only two decades ago, we were in the middle of the pack of the world`s leading jurisdictions.

As the government develops its legislative agenda and budget, the task force recommends a few priorities. In taxation, we urge a fundamental rethink of how government taxes. It is fair to say Ontario has one of the worst regimes for new business investment. Three factors drive this standing and ought to be priorities in the coming budget.
...
Ontario is not the only jurisdiction with these taxes on business investment, nor are they the highest in each. But they are combined in such a way that Ontario ends up having the highest taxation on new business investment among developed economies.

Press Release:
http://www.competeprosper.ca/index.php/med..._annual_report/

Report:
http://www.competeprosper.ca/download.php?...P_AR6_final.pdf

 

[BMironov]

Statistics Canada (Nov 19, 2007):http://www.statcan.ca/Daily/English/071119/d071119.pdf

Wholesale trade (Sep 2007)
http://www.statcan.ca/Daily/English/071119/d071119a.htm

QUOTE Widespread gains contributed to an estimated 1.1% rise in sales in September to $43.7 billion, partially offsetting August`s 1.9% decline.

Led by stronger sales of "other products", five of the seven wholesale sectors reported increases in September. Sales in the "other products" sector rose 4.2%, boosted by higher sales of agricultural chemicals. The personal and household goods sector also had a solid month (+2.0%), as did the food, beverages and tobacco sector (+1.4%). Other sectors posted smaller gains, while sales in the key automotive products sector, which have been quite volatile in recent months, were unchanged.

The building materials sector registered the only decline (-0.2%) in September following another large drop in lumber sales.

HIGHLIGHTS:

• Higher sales of agricultural chemicals give a boost to the "other products" sector
• Widespread gains in the personal and household goods sector
• Building materials sector held back for the second straight month by weak lumber sales Saskatchewan boosted by healthy demand for agricultural products Third quarter sales rebound from second quarter decline
  
  
  Inventories changed little following significant increase in August

 

[BMironov]

Statistics Canada:Apartment Building Construction Price Index (Q3 2007) (Nov 19, 2007)
http://www.statcan.ca/Daily/English/071119/d071119c.htm

QUOTE The composite price index for apartment building construction was 156.2 (1997=100) in the third quarter, up 1.4% from the second quarter, and up 8.5% from the third quarter of 2006. The quarterly increase was mostly the result of higher labour and materials costs, and a strong market for building construction.
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Calgary experienced the highest gain (+18.1%) from the third quarter of 2006, followed by Edmonton (+17.9%), Vancouver (+13.8%), Toronto (+5.0%), Ottawa–Gatineau, Ontario part (+4.6%), Halifax (+3.6%) and Montréal (+3.2%).

 

[BMironov]

Statistics Canada:North American Transportation Statistics (2006) (Nov 19, 2007)
http://www.statcan.ca/Daily/English/071119/d071119g.htm

QUOTE An updated version of the North American Transportation Statistics (NATS) database, a unique online source for comprehensive information on transportation activity, is being released today. The database is the result of a tripartite initiative representing the transportation and statistical agencies of Canada, the United States and Mexico.

All three countries have attempted to update the tables to include 2006 data.

The database covers 12 specific areas of interest, including transportation and the economy, passenger and freight transportation, transportation and energy consumption, as well as transportation safety.

The NATS database provides consistent and comparable data across modes of transportation and countries to help evaluate transportation benefits and impacts. It helps in understanding changes in dynamic transportation markets in this era of global economic growth.

The NATS database is available online in English, French and Spanish at the following URL: http://nats.sct.gob.mx.

 

[BMironov]

National Post:Canadian inflation rises 2.4% in October (Nov 20, 2007)
http://www.canada.com/nationalpost/news/st...862&k=16576

QUOTE A weaker-than-expected rise in the inflation rate for October could give the Bank of Canada room to cut interest rates.

Statistics Canada said Tuesday that the consumer price index rose by 2.4% in the 12 months leading up to October, 2007. The increase was slightly lower than the 2.5% rise recorded in September.
...
Core inflation rose 1.8% in the 12 months leading up to October, down from a 2.0% rise in September. The slowdown puts Canada`s core inflation rate well within the Bank of Canada`s comfort zone of 2.0% for the first time in 16 months.

Michael Gregory, senior economist with BMO Capital Markets, said in a note to clients that the inflation news gives the Bank of Canada some flexibility. He expects November`s CPI report to reveal yet another drop in prices due to a "social epidemic" of cross-border shopping that will force Canadian retailers to cut prices.

David Dodge, who retires early next year as the governor of the Bank of Canada, has recently hinted that the central bank may cut interest rates. Mr. Gregory said the October CPI report would help the Bank make such a move in either December or January.

 

[BMironov]

Statistics Canada:Consumer Price Index (Nov 20, 2007)
http://www.statcan.ca/Daily/English/071120/d071120a.htm

QUOTE Consumer prices rose by 2.4% in October compared with the same month in 2006, a slightly slower rate of growth than the 2.5% posted in September.

The Bank of Canada`s core index, used to monitor the inflation control target, increased by 1.8% between October 2006 and October 2007, a slowdown compared with the rate of 2.0% in September. This was the weakest growth of this index since June 2006. This slowdown was mainly the result of lower prices for the purchase and leasing of passenger vehicles.

Gasoline drives growth in year-over-year consumer prices for a second straight month
In October 2007, the price at the pump rose 13.5% compared with the same month in 2006, a change due largely to a drop in last year`s gasoline prices.

Upward pressure from the cost of owned accommodation (+4.8%) continued in October, due mainly to the growth in mortgage interest cost, homeowners` replacement cost and property taxes.

Mortgage interest cost rose 6.7% in October compared with 6.4% in September. October`s growth was the highest since June 1991. This upturn is more a reflection of increases in amounts borrowed because of higher new housing prices than of increases associated with the renewal of mortgage loans at higher rates.

Property taxes were up 3.8% in October compared with October 2006. Property tax hikes were higher in Newfoundland and Labrador (+8.8%) and in Alberta (+6.0%). In both provinces, tax rates fell but a re-assessment of properties led to an increase in the amounts paid. The only province in which residents paid less in property tax was Manitoba (-1.5%). Properties were not assessed in this province in 2007 and the amounts paid out in property tax credits for education rose.

 

[BMironov]

Statistics Canada:Large urban transit (Nov 20, 2007)
http://www.statcan.ca/Daily/English/071120/d071120e.htm

QUOTE Combined ridership on 10 large urban transit systems in Canada was 4.8% higher in September 2007 than it was for the same month in 2006.

Approximately 126.6 million passenger trips were taken on these transit systems in September. These systems account for about 80% of total urban transit in Canada.

The trips generated $213.3 million in revenue in September 2007 (excluding subsidies), a 7.2% increase over September 2006.

 

[BMironov]

TD Economics:CORE INFLATION DIPS BELOW BoC`s TARGET RATE IN OCTOBER (Nov 20, 2007)
http://www.td.com/economics/comment/pg112007.pdf

QUOTE HIGHLIGHTS

• Core CPI inflation drops to 1.8% in OctoberOdds of an overnight rate cut in December by the BoC increase significantly

Headline inflation eased slightly in October to settle at 2.4% while core inflation dipped to 1.8%. This is the first time since June 2006 that the core inflation reading has come in below the Bank of Canada`s (BoC) target rate of 2.0%. The first half of 2006 was also the last time that core inflation held below target, averaging only 1.7% during that period. October`s core inflation was significantly below the consensus call of 2.0% but bang-on our call.
...
The month-over-month annualized 6-month trend in core CPI is only 1.3% and is unlikely to trend significantly upwards in coming months. Year-end readings in core inflation for November and December could certainly come in higher than October`s, due in part to base effects, but we expect it to average 2% in Q4, lower than the BoC`s latest forecast of 2.3%.

As such, this raises the prospect of rate cuts, perhaps as early as December.

 

[BMironov]

CIBC World Markets:Canadian Inflation Shows Strong C$ Benefits (Nov 20, 2007)
http://research.cibcwm.com/economic_public/download/cpic.pdf

QUOTE Canadian dollar appreciation is playing an unmistakable role in dampening inflation. Note the huge gap that has opened up between Canadian headline inflation, at 2.4%, and America`s 3.5% price gain over the same period, even with the still-significant gains in Canadian house prices.

Economic Forecast — The October results were softer than expected and this will open the door for the Bank to turn dovish. While we do not expect a rate cut in December, the bank will use the opportunity to make its recently more dovish comments "official", by turning its bias of risks from neutral (balanced risks of inflation being too high or too low) to a greater downside risk, signaling room to cut rates if needed to cool another strong run for the C$. But the fall of the C$ back to earth in November makes the need to pull the trigger on that rate cut threat less likely in the near term.

 

[BMironov]

Calgary Herald:North West announces upgrader contract (Nov 20, 2007)

Lurgi will undertake gasifier project

QUOTE North West Upgrading announced Monday the award of a major construction contract -- worth $500 million to $600 million -- to German engineering firm Lurgi for its heavy oil upgrader project in Sturgeon County, in northern Alberta.

The engineering, procurement and construction contract will focus on the fabrication and installation of a gasifier silo. It will entail the design, procurement and construction of a new, 120 million-cubic-feet-per-day, gasification-based hydrogen plant that will use Lurgi`s proprietary, multi-purpose gasification and gas-sweetening processes.
...
Mechanical completion and commissioning of the facilities is due in the first half of 2011.

High-purity hydrogen produced from the gasifier unit will be used within the upgrader processes to make ultra-low sulphur diesel. High-purity carbon dioxide (CO2) will be captured from the process and sold for enhanced oil recovery.
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Calgary-based independent upgrader builder North West plans to build a 231,000-barrel-per-day upgrader in three stages, at an cost of $4.2 billion.

 

[BMironov]

Edmonton Journal:Provincial surplus hits $4B mark (Nov 21, 2007)
http://www.canada.com/edmontonjournal/news...39e&k=40460

Extra spending keeps mid-year total well below last year`s $8.9B

QUOTE A $4-billion surplus will let the Stelmach government pump another $1.3 billion into the Heritage Savings Trust Fund this year.

But that doesn`t make up for the $1.4-billion in earnings being skimmed from the rainy-day fund for Alberta`s present-day needs.
...
For the sixth straight year, Alberta`s mid-year financial update showed an "unanticipated" surplus higher than originally predicted.

Because of higher revenues from income taxes, corporate taxes and oil royalties, this year`s surplus was nearly double the prediction in April`s budget, Finance Minister Lyle Oberg announced Tuesday. While it may still grow further, so far the surplus is far below last year`s record $8.9-billion surplus, as the Stelmach government dramatically boosted spending this year to meet booming Alberta`s needs.
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The province announced another $1.3 billion will go into unannounced construction and maintenance projects, but Oberg said much of that will be eaten up by inflation, such as for Edmonton`s new remand centre, which the province recently revealed has doubled its initial cost estimate.
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Alberta`s finances also had to weather a wild ride on financial markets, he reported Tuesday. The value of the loonie, now worth more than the U.S. dollar, will wipe an estimated $1.6 billion from Alberta`s budget, especially since the province`s energy firms sell oil in greenbacks. But that loss is more than absorbed by a $3.1-billion boost courtesy of the skyrocketing price of oil, which rose above $98 US per barrel Tuesday.

 

[BMironov]

Globe and Mail:Ontario car plant to cut production (Nov 21, 2007)http://www.reportonbusiness.com/servlet/st...y/Business/home

QUOTE Cami Automotive Inc. is planning to scale back vehicle production next year, a move that will wipe out an estimated 500 jobs as the downturn in the U.S. auto market batters Canadian vehicle assembly plants again.The production cutback is scheduled for next spring at the joint venture owned by General Motors Corp. and Suzuki Motor Corp., industry sources said, and means the auto maker is effectively eliminating one shift of production.



The Cami move follows announcements by GM that it is cutting a shift at its truck plant in Oshawa, Ont., in January and by Chrysler LLC, which is ending a third shift of production at a car plant in Brampton, Ont., early next year. The combined total of job cuts at the three operations is in excess of 2,800 out of a total of 46,500 vehicle assembly jobs in Canada as of the end of June.

Cami spokeswoman Susan Nicholson said there will be some retooling next spring for a new, unidentified GM vehicle, but would not confirm that a shift will be eliminated or discuss specifics of production plans. Sources said that vehicle is a crossover for the GMC brand that will be called the Terrain.
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A layoff of about 125 people has already been announced for the end of December, she said. Cami, which is located in Ingersoll, Ont., employs about 2,300 people.

The sources said output of the Chevrolet Equinox, Pontiac Torrent and Suzuki XL7 vehicles will be sliced to 585 a day during the second quarter from 918 now. A scheduled shutdown coming in the first quarter of next year will reduce production of Chevrolet Equinox, Pontiac Torrent and Suzuki XL7 crossovers to 858 a day.

The cut will trim overall production to about 150,000 next year, compared with about 175,000 anticipated in 2007 and 196,328 last year.

The moves to cut output in Canada come as auto makers and economists warn that the U.S. market - the destination for more than 80 per cent of the vehicles made in this country - is heading for a slump amid the housing crisis and high gasoline prices.

 

[BMironov]

Globe and Mail:Here`s why the U.S. is facing up to its thirst for oil (Nov 21, 2007)
http://www.reportonbusiness.com/servlet/st...lumnsBlogs/home

QUOTE In a massive new multivolume report on energy strategy in the United States, a high-powered federal task force puts "peak oil" into perspective. On the one hand, it says, the country has already consumed, in 150 years, 446 billion barrels of its own fossil-fuel endowment. On the other hand, it says, the country has 8.59 trillion barrels left - or more "oil equivalent" than the rest of the world combined. More than 95 per cent of America`s oil reserves, in other words, are still in the ground.Canada enters this particular calculation in passing. "North American oil shale and [oil] sands alone far exceed all the remaining proven and undiscovered oil resources of the entire world," the task force reports. "They represent 3.5 trillion barrels of oil resources. America`s commercial-quality oil shale resources alone exceed two trillion barrels. This shale can be processed to generate ultraclean, high-quality diesel and jet fuels, along with high-value chemicals - with existing technologies under normal economic conditions."
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In its report, the task force concluded the U.S. Department of Defence can use coal and shale for all its fuel needs - all 312 million barrels of oil a day - by 2011. (The U.S. Air Force is the biggest military user of oil by far, requiring 219 million barrels of jet fuel a day; it is already testing synthetic fuels to replace conventional fuels.) The task force found the U.S. can produce between 7.65 million barrels and 9.35 million barrels a day from unconventional resources by 2035. This oil would be produced as follows: (1) from oil shale, 2.5 million barrels a day; (2) from oil sands, 0.5 million b/d; (3) from coal, 2.6 million b/d; (4) from heavy oil, 0.75 million b/d; and (5) from depleted and abandoned wells, a minimum of 1.3 million b/d and as much as three million b/d.

The task force describes this goal as aggressive but realistic. If accomplished, it would mean that the U.S. would meet all of its anticipated increase in oil demand by 2035 from domestic production - with several million barrels a day left over to reduce oil imports significantly.

But the task force calculates that technological advances will make the payoff much greater. It anticipates efficiency gains alone will equal an additional five million barrels a day. From the combination of new oil and increased efficiency, the task force estimated that the country would save as much as $130-billion a year in import costs, would increase public sector revenues by $30-billion a year, would employ an additional 200,000 people and would cost the Treasury only $3-billion a year to accomplish.

The U.S. consumes 20 million barrels of oil a day, 25 per cent of global consumption. The task force expects this number to reach 26 million barrels by 2035, a number that would still equal 25 per cent of global consumption.

 

[BMironov]

Globe and Mail:TransCanada wants to build new Alberta pipeline (Nov 21, 2007)
http://www.theglobeandmail.com/servlet/sto...ory/energy/home

QUOTE TransCanada Corp.`s subsidiary Nova Gas Transmission has applied for a permit to construct a 300-kilometre natural gas pipeline in Alberta at an estimated cost of $983-million.The application to the Alberta Energy and Utilities Board includes a plan to install 26 megawatts of additional compression and associated facilities on the northern section of the Alberta pipeline system.

TransCanada said Wednesday the North Central Corridor pipeline project is an expansion of the Alberta system, providing capacity “needed to address increasing gas supply in northwestern Alberta, declining gas supply in northeast Alberta, growing intra-Alberta markets resulting largely from increased oil sands development and reduced delivery capability to interconnecting pipelines at the Alberta-Saskatchewan border.”


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The pipeline will connect the northwest portion of the Alberta system at the existing Meikle River compressor station to the northeast portion of the system at the existing Woodenhouse compressor station.

In addition, 26 megawatts of compression will be added at the Meikle River station.

Subject to regulatory approval, construction is anticipated to begin in late 2008 and the first segment of the pipeline is expected to be completed in April, 2009.The second segment is expected to be service in April, 2010.

 

[BMironov]

Financial Post:Canadian crude oil reserves climb 33% as oilsands projects being developed (Nov 21, 2007)
http://www.canada.com/nationalpost/financi...36-0d475ab420ba

QUOTE Canada`s crude oil reserves grew 33% in 2006 due to companies booking resources as they developed new oilsands projects and expansions, the industry`s main lobby group said yesterday. Meanwhile, the country`s natural gas reserves were relatively flat for the seventh straight year, the Canadian Association of Petroleum Producers said. Established minable oilsands reserves increased by 45% to 8.9 billion barrels last year as Canadian Natural Resources Ltd booked the resources at its $7.8-billion Horizon project in northeastern Alberta, CAPP said. New projects and expansions boosted "in situ" or steam-driven production project reserves 90% to 4.7 billion barrels. The established reserves represent just a fraction of Alberta`s overall oilsands resources, which have been estimated as high as 174 billion barrels, second in size only to Saudi Arabia`s conventional reserves.

 

[BMironov]

TD Economics:UPDATED BANK OF CANADA FORECAST (Nov 20, 2007)
http://www.td.com/economics/special/dd1107_boc.pdf

QUOTE HIGHLIGHTS

• We now call for the Bank of Canada to cut the overnight rate by 25bp on December 4th, and again on January 22nd.
• The Canadian dollar is exerting a greater drag than the Bank of Canada had expected, and Canadian inflation continues to trend persistently lower. The Bank of Canada itself has increasingly cited downside risks to its forecast, setting the stage for rate cuts.

Not Just Likely, But Justifiable
We have argued that we believe the Bank of Canada is likely to cut the overnight rate beginning in December. But so far, we have shied away from a judgement call on this likely policy action. We should emphasize that we believe rate cuts not just to be the likely move but also to be the correct move. There are two key reasons for this.
The first reason is that the Bank of Canada is mandated to pursue an inflation target of 2.0%. To the extent that core inflation is clearly trending below that level with little probability of bouncing sharply back, rate cuts are justified. This trumps all other considerations.
Second, the Bank of Canada has some room to manoeuvre given the inherent inexactness of monetary policy and the unusual uncertainty associated with the economic outlook. In this context, it might make sense to err at the margin on the side of slightly lower rates given the unusual burden being felt by Canada’s manufacturing sector. The Bank of Canada is surely sympathetic to the sectors hard hit by the appreciation of the Canadian dollar.

Implications for the Canadian Dollar
There appears to be a view in the market that a change in the overnight rate would have a dramatic influence on the Canadian dollar. While this is certainly possible given the recent wild swings in the currency market on the thinnest veneer of information, a large swing would not be consistent with the historical record. Generally, rate changes have only a minor impact on the currency, and the rate cuts that we predict would be unlikely to swing the Canadian dollar by more than a few cents at most. And given the huge volatility in commodity prices recently, it is just as likely that a sizeable commodity move – one way or the other – would dwarf the impact on the currency stemming from monetary policy.

 

[BMironov]

Statistics Canada:Study: Growth in real income in Canada and the United States (1980 - 2006) (Nov 22, 2007)
http://www.statcan.ca/Daily/English/071122/d071122.pdf (Daily as PDF)
http://www.statcan.ca/Daily/English/071122/d071122b.htm (just this section as HTML)

QUOTE In terms of income per capita, the Canadian economy grew significantly faster than the US economy between 2000 and 2006. Real income per capita in the United States grew by 9.1% during this period, while in Canada real income per capita grew 15.5%, nearly two-thirds faster than the US rate.

The study showed that a long downward trend in Canada`s fortunes prior to 1999 was reversed in very short order. In three short years, real income relative to the United States returned toward levels not seen since the mid-1980s. And much of this "reversal of fortunes" has been due to Canada`s resource economy.

In the two decades prior to 2000, the US economy tended to grow faster than the Canadian economy, regardless of whether labour productivity, real gross domestic product (GDP) per capita or real income per capita was examined. In fact, if real income is used as the yardstick for measuring performance, the Canadian economy fares worse than if either labour productivity or real GDP per capita is used.

The study found that between 1980 and 1989 and between 1990 and 1999, labour productivity, real GDP per capita and real income per capita all increased faster in the United States than in Canada. After 2000, labour productivity continued to grow faster in the United States than in Canada, while growth in real GDP per capita was similar between the two countries.

For real income per capita, however, the situation was reversed following the turn of the millennium. Between 2000 and 2006, real income per capita in the United States grew by only 9.1%. In Canada, the increase was 15.5%.

The study suggests that the Canadian economy`s growth has shown the advantages of diversification coming from its resource base. A diversified economy has some of the same advantages as a diversified stock portfolio. Some sectors may decline slowly for long periods of time, only to experience a sudden and dramatic change in fortunes. Canada has had just such an experience.

Terms of trade improvements boost real income in Canada
An important ratio for determining how changes in commodity prices, imported consumer goods prices and the Canadian dollar will affect Canada is the "terms of trade." This is the price of exports relative to the price of imports.

When the ratio rises, it signals that the value of Canada`s exports is increasing. Exports will now purchase more imports than they would have previously. A rise in the terms of trade indicates that the volume of goods and services Canadians can purchase with their earnings is rising.

The study found that Canada`s terms of trade, spurred on by higher commodity prices, falling prices of imported goods and a higher dollar, were a driving force behind real income growth in Canada. The terms of trade rose noticeably, increasing the purchasing power of Canadian real incomes between 2002 and 2006.

At the same time, real income growth in the United States was held back by the rising commodity prices. As a result, Canadian real income growth significantly outpaced American real income growth after 2002.

Net income from abroad a factor in real income growth



The study also found that after 2000, international investment income contributed to real income growth each year, unlike during the 1980s and 1990s when it tended to detract from real income growth.

Between 1980 and 2001, the net amount of income sent abroad each year increased. In 1980, Canadians earned $8.5 billion less on their foreign investments than foreigners derived from their investments in Canada.

Over the next 20 years, the amount of income earned by foreigners from their investments in Canada increased at a faster rate than the income Canadians earned from their foreign investments.

By 1999, Canadian investments abroad were earning $33.2 billion less than foreign investments in Canada.

Beginning in 2000, and accelerating from 2005 to 2006, the income earned by Canadian investments abroad rose sharply. The earnings from foreign investments in Canada failed to keep pace, and the amount of money sent abroad each year became smaller. By 2006, it had shrunk to $10.8 billion, close to the same balance observed in 1980.

Full 33-page document is available at:
http://www.statcan.ca/english/research/11F...7MIE2007048.pdf

 

[BMironov]

Statistics Canada:Quarterly financial statistics for enterprises (Nov 22, 2007)
http://www.statcan.ca/Daily/English/071122/d071122a.htm

QUOTE Higher profits in the oil and bank industries spearheaded a 5.8% upswing in third quarter operating profits to a record high $67.0 billion. The third quarter growth was the strongest in seven quarters, but most of the increase was concentrated in a handful of industries.

Motor vehicles post biggest profit increase in manufacturing sector

Overall profits in the manufacturing sector increased 8.3% to $11.7 billion in the third quarter, but remained well below the most recent high, which reached $12.7 billion in the second quarter of 2004. Profits had declined in four of the previous six quarters. For this sector, third quarter operating revenues were down for a second consecutive quarter. The Monthly Survey of Manufacturing recently reported that manufacturers` sales have shown a weakening trend over the past six months, with the appreciating Canadian dollar playing a major role.
...
Petroleum and coal manufacturers` operating profits rose 3.0% to $3.4 billion, reflecting steady demand and robust oil prices. On the other hand, chemical and plastics producers lost ground as their profits fell 10.3% to $1.4 billion.

Other highlights:

• High crude prices boost oil and gas industry profits
• Other non-financial industries Banks lead the financial sector Profitability ratios

Totals (Q3 2006 to Q3 2007)
All industries:
Operating revenue: +4.2%
Operating profit: +9.1%
After-tax profit: +11.3%

Non-financial:
Operating revenue: +4.0%
Operating profit: +6.9%
After-tax profit: +9.8%

Financial:
Operating revenue: +6.4%
Operating profit: +14.7%
After-tax profit: +15.6%


Globe and Mail:
Growth in third-quarter profit strongest in almost two years (Nov 22, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

 

[BMironov]

Globe and Mail:China to drive commodity prices, bank says (Nov 22, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE China`s hunger for oil and minerals will continue to drive up commodity prices for years to come and be a key factor in global demand for Canadian resources, suggests a Bank of Canada report published Thursday.
...
“For oil and metals, China`s size and growth are likely to remain among the key factors driving the growth of global demand for some time.”

For instance, the paper notes that international bodies consistently underestimated China`s demand for oil, which increased by 28 per cent from 2002 to 2004, and have contributed to the steep rise in crude oil prices to near $100 U.S. a barrel level today.

As well, in 2002 China accounted for about 13 per cent of world trade in metal ores. Three years later, that slice of the pie had grown to 25 per cent, with estimates it may have exceeded 30 per cent in 2006.

As a result, between 2001 and 2006, prices for metals such as aluminum, copper, nickel and steel have almost tripled.

Bank of Canada report:
http://www.bankofcanada.ca/en/review/autumn07/francis.pdf

 

[BMironov]

TD Economics:CANADA AND THE U.S.: THE ODD DECOUPLE (Nov 22, 2007)
http://www.td.com/economics/special/el1107_decouple.pdf

QUOTE HIGHLIGHTS:

• The Canadian and U.S. economies can and do occasionally decouple.
• Potential wedges include resource sector and manufacturing sector orientation, fiscal stances, the regulatory environment, and diminishing trade ties.
• But powerful adhesives counteract many of these drivers in the form of a floating exchange rate and independent monetary policy. Our present outlook suggests an aggregate economic performance more similar than different, even if the underlying drivers are likely to vary. A sharp downturn in the U.S. – were it to occur – might create a more profound decoupling scenario.

Canada remains both a close neighbour and an intimate trading partner to the U.S. Conventional wisdom suggests that as the U.S. economy goes, so goes Canada. There is a great deal of truth in this belief, due both to the trade ties and a broadly similar economic structure. But at the same time, there can most certainly be the odd decoupling of the two nations. Indeed, the link may be declining, and special factors can occasionally drive a wedge between the two.

Canada’s capacity to at least partially decouple from the U.S. is related to several factors, all of which we discuss in this report. We look at the historical link between the two economies and find that it is relatively strong, but not ironclad. We observe several structural differences between the two nations that create the potential for occasional decoupling. We note numerous factors that have contributed to greater economic health in Canada lately, including fiscal stimulus and a favourable environment for the resources industry. And we observe that Canada’s trade ties to the U.S. have been weakening. Finally, we contemplate two mechanisms that help to minimize the divergences between the two economies: independent monetary policy and a floating exchange rate. This last subject – a floating exchange rate – does indeed normally smooth the operations of the two economies. But in the present instance, it is arguably doing more than that, exerting an outright drag on Canada due to currency strength that exceeds the fundamentals.