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Optimism fades among small businesses Small business owners in Canada are a gloomier lot, a poor signal for the overall economy. The Canadian Federation of Independent Business, which represents small and mid-size outfits across the country, said today its Business Barometer Index dipped to 65.7 in July from 66.4 a month earlier, marking the third drop in four months. The measure fell among eight of the 13 industry groups and in seven of the 10 provinces, suggesting "the economy is settling into a phase of slower growth."
Health care, information, financial services and wholesaling formed the most optimistic group, while agriculture, hospitality and construction were among the most pessimistic.
Short-term perspectives continued to improve compared to several months ago as those owners who believe conditions are good far outnumber the naysayers, the CFIB said. "More troubling is the drop in customer orders and increase in inventories, which suggests a slowing of demand. In addition, capital spending plans also dropped in July among all categories, which means business owners are likely betting on higher interest rates and slower growth into the future."
Global stock markets dip Stocks are sinking across the globe this morning, hounded again by fears of a rapidly slowing recovery in the United States and slower growth overseas. In Asia, Japan's Nikkei 225 index fell about 2 per cent, though the Shanghai composite and the Hang Seng in Hong Kong rose slightly. London's FTSE 100, Germany's DAX and the CAC-40 in Paris were also all down, though by less than 1 per cent.
"Risky assets are generally weaker ... but moves are not large by recent standards," said Adam Cole, global chief of foreign exchange strategy at RBC Dominion Securities.
U.S. markets were mixed after a report on hiring in the U.S. as Dow Jones industrial average futures rose slightly and S&P 500 futures were flat. The Canadian dollar was again well above 97 cents U.S.
A report today from Automatic Data Processing Inc. and Macroeconomic Advisers showed the U.S. still struggling to recover lost jobs, as private hiring rose in July by just 42,000.
"Despite yesterday's slip, the S&P 500 has quietly staged a near-10-per-cent rally from the closing low set on July 2, reclaiming both the 50- and 200-day moving averages in the process," said BMO Nesbitt Burns economist Robert Kavcic. "This is made all the more encouraging by the fact that copper prices and Chinese stocks have confirmed the move, and the relative sector strength has shifted back in favour of cyclicals over defensives in recent weeks. Meantime, the better risk appetite has the [Canadian dollar]sitting just below the 98-cent mark ($1.02/US$), a level last seen in mid June - firm commodity prices are helping, including oil which is currently hovering around $82."
U.S. saving more, Canada less The dynamics of savings in the U.S. and Canada are changing. According to data released yesterday, the personal savings rate in the U.S. rose to 6.4 per cent in June, and came in at an average 6.2 per cent for the second quarter. But for one quarter when the recession was at its raging worst, that's the highest since the early 1990s, BMO Nesbitt Burns notes. Compare that to Canada, where the savings rate fell below 3 per cent in the first quarter.
"The gap between the U.S. and Canadian savings rate is the widest since the early 1970s, and looks poised to reach levels not seen since the 1960s," said BMO deputy chief economist Douglas Porter. "This is a huge change from most of the 40 years when Canadian savings rates were almost always higher than in the U.S."
In the U.S., many are saving more as unemployment remains high and prospects in the jobs market low.
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Agrium profit surges Like Potash Corp. of Saskatchewan last week, Agrium Inc. today posted sharply higher second-quarter profits as demand improves. Agrium earned $506-million (U.S.) or $3.20 a share, compared to $370-million or $2.35 a year earlier, as revenue climbed to almost $4.4-billion from just shy of $4.1-billion.
"Global grain prices have risen considerably over the past month, on concerns over drought conditions in Europe and Russia and significantly lower acreage in Western Canada," noted chief executive officer Mike Wilson. "Furthermore, U.S. corn ending inventories have been revised downward twice so far this year. Strong agricultural fundamentals should support the outlook for all crop inputs in the second half of 2010 ... We anticipate North American crop nutrient demand to be strong in the second half at both the grower and retail level, due to firming crop prices, weather induced constraints on nutrient application this spring, an anticipated increase in U.S. corn acreage next year and the current low inventory level of crop nutrients in the U.S. retail system."
Consortium eyes Liverpool A Syrian businessman and one-time soccer star says he has put together a group of investors from Canada and the Middle East to buy the Liverpool soccer club. Details are sketchy but the group headed by Yahya Kirdi said in a statement it has struck an agreement on all major points of a deal, including the purchase price, according to several reports today. A statement on behalf of Mr. Kirdi was released by GameDay Leadership Management Consultants Inc., a group based in Montreal, according to Bloomberg News. Liverpool has won the English soccer championships 18 times and the European championships five times.
AOL posts huge loss AOL Inc. posted a huge writedown and hefty loss today, though it says it's encouraged by recent strength in the advertising market. AOL lost $1.06-billion (U.S.) or $9.89 a share, compared to a profit of $90.7-million or 86 cents a year earlier. Revenue declined by 26 per cent to $584.1-million. Both subscription revenue and ad revenue fell, though AOL's churn rate fell to 2.6 per cent, the lowest in years.
Time Warner tops estimates Time Warner Inc. , the other half of what used to be the AOL-TIme Warner marriage, beat analysts' estimates today and raised its outlook for the year to project a jump in per-share earnings of at least 20 per cent. Time Warner earned $562-million or 49 cents a share, up more than 7 per cent from $524-million or 43 cents a year earlier. Revenue jumped almost 8 per cent.
"Our investments in high-quality content across the company continue to pay off," said chief executive officer Jeff Bewkes. "Turner's original programming strategy contributed to the quarter's strong advertising growth and helped to generate pricing gains at the high end of the recent 2010-2011 upfront. HBO achieved impressive audience growth for its returning shows, and it has more original series in development than at any time in its history."
Toyota rebounds to profit Toyota Motor Corp. today swung back to a quarterly profit and boosted its projections for the year, bouncing back strongly from both the global recession and its recall nightmare. Toyota posted a profit of ¥190.5-billion in its fiscal first quarter, coming back from a loss of ¥77.8-billion a year earlier. Revenue jumped 27 per cent to ¥4.9-trillion from ¥3.8-trillion. The Japanese auto giant also raised its forecast for annual profit.
From today's Report on Business
- Talisman picks up Colombian assets
- Kinross confident in Red Back strategy
- Brookfield Properties lands 'in the penalty box'
- Enbridge makes offer to Michigan homeowners
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