Today's top stories from Report on Business :
Unemployment plagues major economies
The world's major economies may be emerging from recession, but unemployment remains a stubborn problem. American employers slashed 85,000 positions in December and the unemployment rate held steady at 10 per cent, the government reported today, a setback much worse than markets expected. Still, there was one optimistic sign: Revisions to earlier readings showed that 4,000 jobs were created in November, the first growth in almost two years.
"With the New Year upon us, we see the circle of life that is likely to define the U.S. economy and markets through 2010," Toronto-Dominion Bank senior economic Richard Kelly said in a research note. "The U.S. labour market was much weaker than expected in December ... But equities were mixed to positive on the news. Why? Because weaker jobs mean less chance the Fed will raise rates soon. The Fed, in turn, is on hold until inflation pressures build. This won't happen for some time given that all the people looking for work will keep spending power and wage pressures weak." Read the story
Canada's jobs market flat
Canada's labour market also stalled in December, but today's Statistics Canada report still pointed to continued stability and, more importantly, possibly better times ahead. Overall, the economy shed 2,600 jobs last month, disappointing given that economists had expected an increase of up to 20,000, but this followed a gain of 79,100 jobs in November and does little to change the general picture of stabilization over the past nine months. The unemployment rate remained at 8.5 per cent, and some economists believe it will fall going forward. "While a tad disappointing, today's jobs report hardly represents a serious challenge to the recovery picture," said BMO Nesbitt Burns economist Douglas Porter. "After all, it only offsets a tiny fraction of November's hefty gain. Still, it reinforces the view that the recovery will be uneven and sluggish."
It's important to note, however, that while the public sector lost jobs, employment in the private sector remained unchanged. Private employers resumed hiring in November, which was key to the recovery, and there was little in today's reading to change that. Also notable is that the number of hours worked rose 1.5 per cent in December from November. That, said Scotia Capital economists Karen Cordes and Derek Holt, was the biggest in two months "as firms started to reboot, signalling that we could see a gain in employment in January. Employers are working their existing work forces more aggressively and that's a classic sign of adding bodies in future." Read the story
Unemployment rises in Europe
Unemployment is also on the rise in the euro zone, but the divergence among the 16 countries that use the common currency is spectacular. The overall jobless rate hit 10 per cent in November the highest since the currency union was formed in 1999, the EU's statistics agency said today. But given that there are 16 nations involved, the rates range from 3.9 per cent in the Netherlands to more than 19 per cent in Spain. This puts the European Central Bank in a tight spot, given that it is adopting monetary policy that must cover both the haves and the have-nots, worrying about inflation in the strong economies and growth in the weaker areas. Read the story
CanWest newspapers in court protection
CanWest Global Communications Corp. put its newspaper division under creditor protection Friday and began looking for buyers for Canada's biggest newspaper chain. A group of lenders led by Canada's five largest banks has agreed to take ownership of the newspaper operations under a "pre-packaged" financial restructuring under the Companies' Creditors Arrangement Act. But CanWest said a search continues for other buyers who can make a superior offer. The Asper family, which controls CanWest Global, will have no ownership of the newspaper operations under the restructuring proposal. The group, saddled with $1.3-billion in debt, includes many of Canada's leading daily newspapers, such as the Ottawa Citizen, Calgary Herald, Montreal Gazette and Vancouver Sun. The National Post newspaper is not included in the court filing but is part of the purchase offer. Read the story
Argentina's central bank fight escalates
The Argentine president's fight with her central bank chief escalated today, and took new twists, as a judge blocked her plan to use foreign exchange reserves to help pay the country's rising debt. Reports from Buenos Aires, however, said the new central bank chief, Miguel Pesce, was still moving ahead with trying to move reserves from the bank to the treasury. President Cristina Fernandez, who wants to use more than $6-billion (U.S.) of the total $48-billion in reserves, fired her central bank president yesterday, though he said he was refusing to leave. "It's much better to use the reserves than to take out loans with an interest rate of 15 or 14 per cent," Ms. Fernandez said. Read the story
EU pushes Greece for tougher measures
The EU wants Greece to cut deeper. An inspection team that spent three days going over the books in Athens is pushing the country to take even stronger measures than it has proposed to fix its fiscal mess. "EU officials are asking for spending cuts as much as possible," Greece's finance minister, George Papaconstantinou, told Greek TV. "We are in the eye of the storm. A country that borrows €50- to €60-billion a year has to think of the markets." Read the story
Already proposing that its electorate swallow tough measures, the government today also announced it's boosting tobacco and alcohol taxes, a move expected to bring in about €1-billion to help fight the debt crisis. Taxes on cigarettes - Greeks are said to be heavy smokers - will rise next week to 70 per cent from 57.5 per cent. Tax on a litre of most alcoholic beverages will rise immediately. The measure will help increase budget revenues and deter consumption, to the benefit of public health," the government said.
German exports rise again
Europe's biggest economy continues to recover. Germany reported today that exports in November rose for the third month in a row while industrial production rebounded, though not in a big way. Germany's exports are key to the global recovery given that the country, until recently, was the world's top exporter, an honour now held by China. "The economic revival in emerging countries is being reflected in German foreign trade," an export official told The Associated Press. "However, the strong decline in imports shows that large parts of the economy are still running in neutral."
India a 'slow-moving elephant'
India's Prime Minister is promising to fix the problems facing businesses in the emerging powerhouse, from infrastructure troubles to red tape. Yesterday, Lakshmi Mittal, who heads Arcelor Mittal, the world's largest steel maker, slammed the government for its bottlenecks. Today, Prime Minister Manmohan Singh vowed to make things better. "I recognize the frustration well-wishers feel when they lament why things don't work faster or why well-formulated plans and policies don't get implemented as well as they should be," he told a conference in New Delhi. "It is probably true that we are a slow-moving elephant but it is equally true that with each step forward we leave behind a deep imprint."
H1N1 fears boost Jean Coutu
Fears over the H1N1 flu bug helped boost the fortunes of Jean Coutu Group Inc. in the latest quarter. Quebec's biggest drugstore chain this morning reported a profit of $44.6-million or 19 cents a share, a turnaround from a loss of $399.2-million or $1.66 a share a year earlier, when the company took a heft writedown related to Rite-Aid in the United States. Revenue jumped in the latest quarter to $678.1-million from $620.3-million. Jean Coutu cited market growth and a bigger network of franchised stores but also noted that "the consumers' cautiousness in view of the N1N1 flu contributed to the increase of the over-the-counter drug sales."