The Globe & Mail - Report On Business
U.S. private employers cut 22,000 jobs in January, less than the 61,000 jobs lost in December, a report by a private employment service said Wednesday.
The December decline was originally reported at 84,000.
The median of estimates among economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a fall of 30,000 private-sector jobs last month.
This morning, major news outlets are stressing the fact that China’s Shanghai Composite Index slumped as much as 5.1% overnight, extending the index drop from a 2009 high to more than 20%, the common definition of a bear market.
But this volatility should not come as a surprise to investors. The basic risk-return relationship also applies in the case of China. If you want higher returns, you will have to accept more risk. And the Chinese stock market did deliver returns. Since the beginning of the year, Chinese benchmarks lead nearly every other major index around the planet.
But this performance has a price. Since 2002, the Chinese indexes are also among the most volatile. The annualized volatility reaches 33.75 in the case of the Shanghai “B” index (open to foreigners) and 27.6% for the “A” index (locals only).
In fact, it should be kept in mind that the new bear market is the sixth one since 2002. This amounts to a bear market almost every year. In the current context of highly stimulative monetary and fiscal policy, I see the current correction in Chinese equities as a consolidation rather than a reversal of fortune.
Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca
FACTS: TM was up 0.7% on a monthly basis, the first rise in 9 months. Prices rose in May in four of the six metropolitan areas covered, namely Toronto (+2.0%), Montreal (+1.5%), Halifax (+1.3%) and Ottawa (+0.7%). Price declines were registered for an eleventh month in a row in Vancouver (-0.1%) and Calgary (-2.2%). On a y/y basis, the composite index declined 6.9%, with home price deflation persisting in four cities: Calgary (-12.2%), Vancouver (-11.8%), Toronto (-6.5%) and Ottawa (-0.6%). Price changes were still up in Montreal (2.3%) and Halifax (1.0 %).
OPINION: Today’s report is consistent with the improved conditions on the national home resale market, as the number of homes sold largely exceeded the pre-recession level in June, while the number of existing homes newly listed for sale continued to decline. The new listings-to-sale ratio is now in a zone usually associated with a balanced market. So, home prices could continue to improve on a monthly basis.
However, on a y/y basis, national home price deflation might remain unchanged, or even worsen slightly over the next few months, due to a base effect. In any event, the resulting negative wealth effect in Canada will definitely be far less severe than the one experienced in the U.S..
Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca
Financial Post
Published: Wednesday, July 22, 2009
OTTAWA — Canadian retail sales rose much more than expected in May after a surprise drop the previous month, Statistics Canada said Wednesday.
Sales increased 1.2% during the month to $34-billion, with gains in seven of eight sectors, led by a 2.4% increase in automotive products, the federal agency said.
“Retail sales have been generally rising since the beginning of 2009,” it said.
Most economists has expected sales to rise by just 0.5% in May after a 0.6% decline in April.
“This sturdy report marks a nice reversal from April’s sour note. It also drums home the point that Canadian consumers are not nearly as stressed as their U.S. counterparts, a point made amply clear by recent home sales data,” said Douglas Porter, deputy chief economist at BMO Capital Markets.
Canada’s economy shrank 5.4% in the first quarter of this year, its fastest pace of contraction since 1991. That followed a 3.7% decline in the fourth quarter of 2008.
On Tuesday, the Bank of Canada revised its outlook for the economy, saying it will contract 2.3% this year, which is less than the 3% drop it forecast in April. The economy is then expected to grow 3% in 2010, up from its previous 2.5% projection. In 2011, the bank forecast growth of 3.5%, which is down from its earlier call for an increase of 4.7%.
Last week, marketing and research group TNS Canadian Facts said Thursday its consumer confidence index edge up to 93.4 in July after slipping to 92 in June. However, its buy index, which monitors views on whether now is a good time to make major purchases, eased this month to 103.2 from 104.5.
“While spending here is no ball of fire, it is gradually climbing back from the lows at the start of the year, with consumers poised to moderately contribute to the recovery,” Mr. Porter said. “As the bank noted yesterday, domestic spending is on the road to recovery - the issue is exports, both because of the strong loonie and still-soft U.S. demand.”
Charmaine Buskas, senior economics strategist at TD Securities, said Wednesday’s report “does not necessarily suggest a turnaround in retail sales.”
“The backdrop for the Canadian economy remains soft, and consumers are sure to adjust their spending behaviour accordingly in the coming months,” she said.