October 2007 Market Research

[BMironov]

Toronto Star:Alberta expected to drive 4% non-union wage hikes (Oct 30, 2007)
http://www.thestar.com/Business/article/271847

QUOTE The Conference Board of Canada says non-union wage increases will average nearly four per cent in 2008, with the highest raises going to people in labour-starved Western Canada.

It says Alberta`s worker shortage is creating a "ripple effect" that puts upward pressure on wages right across the country.
...
The four western provinces are expected to see average wage gains above the national average – with Alberta seeing the highest at 5.2 per cent.

Forecasts for Ontario, Quebec and the Atlantic provinces see wage increases as well, but below the national average.

The conference board also predicts that Alberta`s labour market will continue to get tighter as fewer people move there due to higher living costs and improving economic opportunities in neighbouring provinces.

News release:
http://www.conferenceboard.ca/press/2007/c...nning-outlk.asp

QUOTE Wage increases for non-unionized Canadian employees are expected to average 3.9 per cent in 2008, with the highest increases going to workers in labour-starved western Canadian provinces
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All four western provinces are expected to see average wage gains above the national average. Pay increases for non-unionized workers are expected to average 5.2 per cent in Alberta, 4.6 per cent in Saskatchewan and Manitoba, and 4.2 per cent in British Columbia. In contrast, organizations in Quebec, Ontario and the Atlantic provinces are forecasting increases below the national average.

The oil and gas industry is projecting increases of 5.7 per cent in 2008, highest among all industries. Alberta’s surging economy will continue to drive competition for workers. Moreover, the province’s labour market is expected to become even tighter, since the number of people relocating to Alberta is subsiding due to high costs of living and improved economic opportunities in neighboring provinces.

Above-average increases are also expected in construction, natural resources (excluding oil and gas), and transportation and utilities sectors. The lowest average increases, at 3.1 per cent, are projected in communications/telecommunications, and services sectors.

 

[BMironov]

CIBC World Markets:A nickel back (Oct 30, 2007)
http://research.cibcwm.com/economic_public...jr_fx_oct07.pdf

33-page presentation for materials discussed in "A nickel back" report (Oct 15, 2007)
http://research.cibcwm.com/economic_public...load/foct07.pdf

 

[BMironov]

National Post:Tax Cuts Total $60B (Oct 31, 2007)
http://www.canada.com/nationalpost/news/st...d03&k=96785

QUOTE The Conservative government delivered a minibudget yesterday that lowered the Goods and Services Tax for a second time and reduced corporate taxes by one-third over the next five years as part of a $60-billion multi-year package of tax cuts.The plan was contained in Finance Minister Jim Flaherty`s fall update, which was a budget in all but name given the myriad tax relief measures introduced. The minority government`s political opponents issued fierce denunciations of the plan, but Liberal leader Stephane Dion said his party would not oppose the measures, ensuring they receive Parliamentary approval as early as today.
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Roughly $11-billion of the savings is targeted for individuals through a boost in the amount Canadians can earn before paying tax, and a reduction in the rate applied to the lowest taxable incomes. The GST cut, to 5% from 6%, takes effect on Jan. 1 and is expected to cost $34-billion over the next five years.

Perhaps the biggest surprise was Mr. Flaherty`s commitment to cut the corporate income tax rate deeper than planned, from its current 22.1% to 15% in 2012, at a cost of $14-billion. The rate was set to drop to 18.5% by 2012.
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At a media conference, Mr. Flaherty said he was able to deliver the reductions because the economy has grown faster than expected.
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The Minister said the proposed cuts to the corporate tax rate, which will be deeper and faster than projected in the most recent budget, will place Canada among the lowest in the Group of Seven countries.
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Ottawa said it was "willing to work" with the five non-harmonized provinces -- Ontario, British Columbia, Saskatchewan, P.E.I. and Manitoba -- to facilitate the transition to a harmonized sales tax regime.

Sources have told the National Post the government is willing to set aside $5-billion in a fund to ease that transition.

 

[BMironov]

Toronto Star:Condos, bank anchor plans for renewed Regent Park (Oct 31, 2007)
http://www.thestar.com/News/article/272114

QUOTE The first tangible signs of Regent Park`s new housing mix were revealed yesterday – two condo buildings that will be anchored by a Sobeys, Tim Hortons and a Royal Bank branch.

The $70 million, nine- and 19-storey structures at Dundas St. E. and Parliament are to be connected by a glass podium, with retail on the ground floor. The suites will go on sale starting at about $190,000 next fall, with first move-ins slated for spring 2009. They`re part of Phase 1 of the remaking of Regent Park, in which the concentration of social housing will be broken up and replaced with a mix of housing types.
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Two more condo buildings and townhouses are to follow.

Other phases in the redevelopment – there are six in total – will be built over the next 12 to 15 years. The number of assisted housing units won`t drop, Toronto Housing officials say, but some will be dispersed around the downtown core.

 

[BMironov]

Financial Post:Cross-overs crucial to carmakers` futures: report (Oct 31, 2007)
http://www.canada.com/nationalpost/financi...23-dd333463608b

QUOTE But new research suggests the Malibu and other family sedans are already losing the battle for consumer eyeballs. Mid-sized car sales are on the decline continent-wide, Scotiabank Group says in a report released yesterday. And Detroit`s future lies instead with so-called crossover utility vehicles. "CUVs are set to rule North America," Scotiabank senior economist Carlos Gomes said in the report. "Given double-digit declines in sales of traditional light trucks [like pickups and minivans], crossovers will be key in stabilizing the Big Three`s market share."

It`s already happening. Detroit`s three automakers saw their combined share in the U.S. fall below 50% in July, a watershed moment because they were outsold in their home market for the first time.

But hot-selling crossover models such as Ford Motor Co.`s Edge and GM`s GMC Acadia and Buick Enclave helped lift their stake back above 51% in both August and September, Scotiabank said.

CUVs, basically small sport utility vehicles built on car frames, have soared in popularity since they hit the market, combining better fuel economy than many SUVs with many of the same practical features as minivans. Amid a 3% slump in total vehicle sales in the United States this year, crossover sales have climbed 16% to 2.1 million units, eclipsing sales of both small cars and pickup trucks. Next year, they will pass mid-sized cars as the biggest segment in North America, Scotiabank said.
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Executives with Canadian parts supplier Magna International Inc. said last month they estimated crossovers would represent 22% of Magna`s North American production sales by 2008, up from 13% in 2003. Half of the 34 new vehicle models produced in North America over the next five years are expected to be crossovers, Scotiabank said. In Canada, the federal government`s rebate for the most fuel-efficient vehicles has helped propel crossover sales growth even faster than in the United States. Chrysler LLC`s Jeep Compass and Patriot models for example, eligible for rebates of $1,000 each, accounted for 7% of the Canadian crossover market this year, Scotiabank said. Meanwhile, sales of Chrysler`s new minivans are not escaping U.S. market softness, according to reports, forcing the company to cancel most Saturday overtime shifts at its Windsor, Ont., plant.

In general, however, Canada`s vehicle assembly is on the right side of the crossover trend. Plants here produce about 27% of crossovers made in North America, about 10 percentage points higher than the country`s share of continental production, Scotiabank said. Toyota`s new RAV4 crossover, scheduled to start production in Woodstock, Ont., next year, will push that share even higher.

ScotiaBank`s report:
http://www.scotiacapital.com/English/bns_econ/bns_auto.pdf

QUOTE Crossover utility vehicles are also buoying Canadian vehicle output, with assemblies surging by nearly 30% through September — largely due to the production of the Ford Edge and the Lincoln MKX at Oakville, Ontario. Canada currently produces about 27% of all CUVs assembled in North America — roughly ten percentage points higher than our share of the region’s total production. CUV output in Canada will get an additional boost in 2008, when Toyota starts assembling the new RAV4 crossover at its new 150,000-unit facility in Woodstock.

 

[BMironov]

Statistics Canada:Gross domestic product by industry (Oct 31, 2007)
http://www.statcan.ca/Daily/English/071031/d071031a.htm

QUOTE In August, economic activity increased 0.2%, its average pace since the beginning of 2007.

Globe and Mail:
Economy grew 0.2 per cent in August (Oct 31, 2007)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE The Canadian economy grew 0.2 per cent in August as retail trade jumped sharply after two months of decline, Statistics Canada reported Wednesday.

Rising oil and mineral extraction also powered the growth, and both the goods and services sectors advanced.

Year-over-year expansion in gross domestic product was 2.4 per cent, the agency reported, with growth of 0.8 per cent in goods-producing industries and 3.2 per cent in services.

"The Canadian economy is cruising along at a moderate growth rate, managing to stay on track despite the heavily conflicting forces buffeting it from both sides," BMO Capital Markets deputy chief economist Douglas Porter said in a research note. "While growth has lost a bit of momentum since its show of strength in the first half of the year, it`s still grinding forward at a respectable pace. In some ways, this underlying 2.5 per cent clip is an ideal growth rate from the Bank of Canada`s perspective, and they are likely to remain content to stay on the sidelines as long as growth stays around that rate."

 

[BMironov]

Globe and Mail:Canadian Natural boosts Horizon cost estimate (Oct 31, 2007)
http://www.theglobeandmail.com/servlet/sto...ory/energy/home

QUOTE Canadian Natural Resources Ltd. has hiked the estimated cost of its Horizon oil sands project by eight to 14 per cent above the original $6.8-billion estimate — up to $1-billion more — but the firm says it should see its first oil production at the Alberta site in the third quarter of 2008.

The Calgary-based firm had said earlier this year the completion cost forecast had been increased by five to 12 per cent over the original estimate, to a range of $7.1-billion to $7.6-billion. The new range is $7.34-billion to $7.75-billion.

“Canadian Natural achieved nine per cent progress on the Horizon project during the third quarter of 2007 and is still positioned to meet an overall 90-per cent-plus completion by year-end,” Real Doucet, a senior vice-president, said Wednesday in a release.

“With overall engineering and procurement substantially complete and construction at 76 per cent complete, we remain on track for first oil in the third quarter of 2008.”

He said progress in the third quarter slipped “as a result of distractions resulting from Alberta-wide labour negotiations that occurred throughout the summer. These challenges appear to be behind the Horizon project and our contractors current work force of 8,700 people are focused on completing as much work as possible before winter.”

 

[BMironov]

TD Economics:(Oct 31, 2007)
http://www.td.com/economics/special/pg_fed07_upd.pdf

QUOTE HIGHLIGHTS

• Focus shifts back to tax relief measures
• After adjusting for new measures, surplus projection below private sector forecasts
• Expected but regrettable cut to the GST
  Slight personal income tax relief
  Significant but back-end loaded move on corporate income taxes
  Further major tax relief in next Budget unlikely but not inconceivable

 

[BMironov]

RBC Economics:FEDERAL GOVERNMENT’S FISCAL UPDATE (Oct 30, 2007)
http://www.rbc.com/economics/market/pdf/update07.pdf

QUOTE The 2007 Economic and Fiscal Update continues last year’s practice of leaning more in the direction of a full fledged budget. The economic case for such a move is derived from one of Ottawa’s largest embarrassment of riches ever recorded by way of dramatically overshooting budgetary revenue forecasts that were made just seven months ago.

All told, this is very much a budget focused upon reducing taxes and debt. A total of $60 billion in new tax relief has been offered to households and businesses over six fiscal years. However, the fact that three quarters ($45 billion) of this is focused upon personal relief will disappoint those who point to Canada as being in line with the OECD average on personal taxes, but much less competitive on business taxation once provincial tax rates are included (especially Ontario). Nothing was offered by way of further spending stimulus in sharp contrast to the recent trend.


Just great 1-page report!

 

[BMironov]

CIBC World Markets:Federal Economic Statement (Oct 30, 2007)
http://research.cibcwm.com/economic_public...state_oct07.pdf

QUOTE The Finance Minister opted to deliver the tax cuts promised in the Throne Speech in his midyear fiscal update. Stronger nominal GDP growth has once again raised the trajectory for revenues above the prior budget’s plan, allowing a larger-than-expected $10 bn debt paydown in the current fiscal year. The government also announced nearly $60 bn in tax cuts for the current and subsequent five fiscal years, cutting the GST and personal and corporate income taxes. The debt/GDP ratio will continue to drop, falling below the 25% target three years ahead of plan.

 

[BMironov]

CIBC World Markets:US Q3 GDP: What Slowdown? (Oct 31, 2007)
http://research.cibcwm.com/economic_public...nload/usgdp.pdf

QUOTE

• For all the doom and gloom over America’s economic fate, other than in housing, signs of a looming disaster are hard to find in the numbers on the ground, with third-quarter growth topping expectations at a 3.9% annualized pace. Sure, that’s water under the bridge, but it shows that whatever damage we see from August’s credit crunch and the ongoing housing dive, it’s going to be hitting an economy that was previously in fairly good shape.
• Whether able to borrow against their houses or not, American consumers seem eager to spend what they earn. Real consumer spending numbers have see-sawed, in part due to the on-again, off-again pinch from gasoline price spikes, but Q3 registered a decent 3% real consumption gain. That was backed by a 4.4% rise in real disposable income backed by healthy labour compensation gains. As a result, the spending did not require greater borrowing, leaving the savings rate marginally higher.
  As expected, trade was a big winner, adding 0.9%-points to annualized GDP growth in the quarter. Indeed, net exporters have been a major plus in three of the past four quarters, a sign that a weaker US dollar, and strong overseas growth, are creating opportunities for US companies abroad. This isn’t just a story of declining import demand, as exporters advanced sharply in the quarter.

 

[BMironov]

Guardian Unlimited:Mud, sweat and tears (Oct 31, 2007)
http://www.guardian.co.uk/environment/2007...gy.oilandpetrol


The vast tar sands of Alberta in Canada hold oil reserves six times the size of Saudi Arabia`s. But this `black gold` is proving a mixed blessing for the frontier town of Fort McMurray, fuelling both prosperity and misery. As the social and environmental toll mounts, Aida Edemariam reports on the dark side of a boom town

QUOTE You`ve only got to stroll down Hardin Street to the main drag, then hang a left and walk a couple more short blocks, to see what Fort McMurray is about. It wouldn`t be the whole story, but you would catch the drift. You`d pass the Boomtown Casino, strip malls, and a club called Cowboys proudly advertising "naughty schoolgirl nights". Then the Royal Canadian Mounted Police station, the municipal offices, the Oil Sands Hotel, and Diggers bar, with its advertisement for exotic dancers. You would be passed by Humvees and countless pick-up trucks, each more souped up than the next, many covered in dried mud, many carrying further 4x4s - in winter, snowmobiles; in summer, all-terrain vehicles on which to go chasing through the bush, which is visible from the main street. And if the wind is from the north-west, you can smell oil on the air: heavy, slightly sour, unmistakable. Round here, they call it the smell of money.
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The companies intend to invest $100bn in the area in the next 15 years; if oil prices stay as they are, or rise, and once the capital costs are paid off, they`re playing for possible profits of tens of billions a year - much of which will come from America, gleeful at this sudden access to so much "safe" oil right next door.

It is very interesting reading. I did not quote second part of an article intentionally.

Enjoy,
Boris