Latest news with #PromitMukherjee
Yahoo
31-07-2025
- Business
- Yahoo
Canada's GDP shrinks in May, could avoid contraction in second quarter
By Promit Mukherjee OTTAWA (Reuters) -Canada's Gross Domestic Product shrank 0.1% in May on a monthly basis as expected but is likely to regain the lost ground in June as some sectors rebound, data showed on Thursday. An advanced estimate showed GDP is likely to have expanded by 0.1% in June, and on an annualized basis it could also post growth of 0.1% for the second quarter, Statistics Canada said. That is in contrast to the more widely held expectation for a second-quarter contraction, and could change when the final June numbers are released next month. In May, the biggest hit to growth came from the retail trade sector which contracted 1.2%, StatsCan said, adding that activity across seven subsectors out of 12 shrank. Retail trade is part of the larger services-producing industries that contribute up to 75% of total GDP. Overall, output from the services-producing group was flat in May as the drop in retail trade was offset by real estate and transportation. Amongst goods-producing industries, which account for 25% of GDP, the mining, quarrying, and oil and gas extraction sector was the main laggard with activity shrinking 1% in the month. Manufacturing expanded 0.7% on a monthly basis, after a 1.8% decline in April, largely as a result of higher inventory accumulation, the statistics agency said. Canada's first quarter GDP expanded 2.2% on an annualized basis as exporters advanced their sales to the United States to beat a barrage of incoming tariffs. But as tariffs took effect from March, exports and industrial output took a hit. The Bank of Canada, after announcing that it would keep rates on hold at 2.75% on Wednesday, said that it expected the economy to contract by 1.5% in the second quarter due to a 25% drop in exports. StatsCan's forecast of even slim Q2 growth could take away the incentive for a rate cut in September, though data on inflation and job growth before the BoC's next meeting will be crucial. Economists expressed doubt on a prospective growth in the second quarter as the data is calculated based on expenditure and income of people, unlike monthly GDP which is based on industry output. "We will need to wait and see next month's quarterly GDP release to know whether the economy is really outperforming the Bank's expectations," Andrew Grantham, senior economist at CIBC Capital Markets wrote in a note. Royce Mendes, head of macro strategy for Desjardins Group noted that there was lingering uncertainty about trade policy and domestic headwinds, which will continue to weigh on activity, forcing the central bank to restart cutting rates by September. Money markets are betting around an 89% chance of the BoC holding rates on September 17, up three percentage points from before the GDP data was released. The Canadian dollar dropped 0.11% to 1.3842 to the U.S. dollar, or 72.24 U.S. cents. The U.S. and Canada are currently locked in negotiations to hash out a trade deal by Friday in a bid to reduce tariffs, but negotiators have admitted that it may not happen by the deadline.
Reuters
25-07-2025
- Business
- Reuters
Canada budget deficit over first two months of 2025/26 jumps to C$6.50 bln
OTTAWA, July 25 (Reuters) - Canada recorded a sharply higher C$6.50 billion ($4.71 billion) budget deficit for the first two months of the 2025/26 fiscal year as government expenditures grew but revenues stalled, the finance ministry said on Friday. By comparison, the deficit in the same period a year earlier had been just C$3.82 billion, it said in a statement. Program expenses rose 4% on increases across all major categories of spending. Public debt charges increased by 3.8% largely because of higher rates of government bonds. Year-to-date revenues marginally increased by C$26 million, largely reflecting lower corporate income tax and lower revenues from GST. This was partly offset by higher income from customs import duties and personal income tax revenue. Canada's government has been earning higher import duty revenues because of counter-tariffs on the U.S. in response to President Donald Trump's tariffs. The data showed that customs import duties for the first two months of the fiscal year jumped 180% from the same period a year ago. On a monthly basis, Canada posted a deficit of C$228 million in May, compared to a C$1.17 billion surplus in May 2024. ($1 = 1.3701 Canadian dollars) (Reporting by Promit Mukherjee, editing by David Ljunggren) ((Reuters Ottawa bureau; opens new tab)) Keywords: CANADA BUDGET/
Yahoo
24-07-2025
- Business
- Yahoo
Canada's retail sales shrink as tariffs bite, June expected to improve
By Promit Mukherjee OTTAWA (Reuters) -Canada's retail sales shrank by 1.1% in May as consumers curtailed car purchases and spent less at supermarkets, convenience stores and on alcohol, data showed on Thursday. Retail sales - closely watched by economists as they give an indication of GDP trends - had held up fairly strongly in the last two months, as concerns around the timing and magnitude of tariffs threatened by U.S. President Donald Trump brought forward purchases. But sales weakened as the impact of tariffs started hitting consumers and the general outlook around the economy paled. By contrast, an early or "flash" estimate showed retail sales likely grew 1.6% in June, though this figure is prone to correction, statistics agency StatsCan said. Analysts polled by Reuters had expected a drop during May, similar to what was reported, and barring autos and auto parts, which contribute almost 30% to overall sales, they had predicted a drop of 0.3%. Sales excluding autos in May were down 0.2%, StatsCan added. The biggest drop was posted in the motor vehicles and parts dealers category, where sales contracted by 3.6%, after two consecutive months of increases. The drop was led by 4.6% lower sales at new car dealers, which fell for the first time since February, it said, adding that in volume terms, retail sales decreased 1.4% in May. LOWER BEER SALES Another declining sector was food and beverages. This category, which contributes up to 18% of total retail sales, saw purchases shrinking by 1.2%, led by lower transactions at convenience stores and a decline in sales of beer, wine and liquor. Economists noted the expected rise in sales in June which could indicate that GDP might improve in the second half of the year, but said trade tensions are likely to keep consumer spending under check. "Unless a trade deal is reached to significantly reduce U.S.-Canada tariffs ... we expect households will continue to tighten their purse strings as job losses and higher prices from tariffs squeeze disposable income," said Michael Davenport, senior economist at Oxford Economics. The Bank of Canada will announce its rate decision next week and is likely to keep borrowing costs on hold, but most economists expect the central bank will need to start easing rates again to support the economy. The largest increase in retail sales in May came in building materials, and garden equipment and supplies, which posted an increase of 1.9% following a decline of 0.3% in April. A survey of retailers by StatsCan on the impact of U.S. tariffs and Canada's countermeasures showed that 32% of retail businesses were impacted by the trade tensions in May, compared with 36% in April. The most common impacts in May were price increases, changes in demand for products, and increased expenses for raw materials, shipping or labor, it said, citing the survey. Sign in to access your portfolio
Yahoo
21-07-2025
- Business
- Yahoo
Bank of Canada survey: firms less worried by worst-case tariff scenarios
By Promit Mukherjee and David Ljunggren OTTAWA, July 21 (Reuters) - Canadian businesses see less chance of a worst-case tariffs scenario but remain cautious and are keeping hiring and investment under check, the Bank of Canada said in a regular quarterly survey on Monday. Firms' short-term inflation expectations have returned to levels observed at the end of last year and the number of businesses planning for recession has declined slightly, the bank's Business Outlook Survey said. Earlier this year firms had fretted that U.S. tariffs would hit the economy hard, triggering inflation, weak economic growth and joblessness. But their impact has largely been contained to the steel, aluminum and automobile sectors. Inflation, job numbers and the economy have not deteriorated markedly. "Tariffs and related uncertainty ... continue to have major impacts on businesses' outlooks. However, the worst-case scenarios that firms envisioned last quarter are now seen as less likely to occur," the survey said. Around one-third of the firms expect higher tariff-related costs, down from roughly two-thirds in the last quarter, the bank said. A separate monthly survey of business leaders suggests the outlook amongst companies, especially exporters, improved as few have been directly affected by the tariffs so far. But there is still widespread uncertainty on how the U.S. measures and their impacts will play out in the economy. The business outlook indicator - a metric of what business prospects look like under current economic conditions - fell to its lowest level in a year to a negative 2.42. The quarterly survey said around 35% of the firms reported their indicators of order books, advance bookings and sales inquiries had deteriorated compared with 12 months ago as against 29% who said indicators had improved. Investment intentions remain muted, the survey said, adding the balance of opinion is well below its long-term average. Analysts and economists say the business outlook survey gives the central bank more teeth to take a call on rates. The Bank of Canada has kept its key rate steady at 2.75% since April. Only around 12% of the current money market bets show a likely cut on July 30 when the bank will announce its monetary policy decision. A separate survey by the central bank into consumer expectations showed 64.5% of Canadians expect a recession within the next 12 months, down from 66.5% in the first quarter. "The trade conflict is leading consumers to become increasingly cautious about their spending plans and to change their spending behavior," the report said. Many respondents wanted to spend money on Canadian goods and local vacations. ((Reuters Ottawa bureau)) Keywords: CANADA CENBANK/
Reuters
21-07-2025
- Business
- Reuters
Bank of Canada survey: firms less worried by worst-case tariff scenarios
By Promit Mukherjee and David Ljunggren OTTAWA, July 21 (Reuters) - Canadian businesses see less chance of a worst-case tariffs scenario but remain cautious and are keeping hiring and investment under check, the Bank of Canada said in a regular quarterly survey on Monday. Firms' short-term inflation expectations have returned to levels observed at the end of last year and the number of businesses planning for recession has declined slightly, the bank's Business Outlook Survey said. Earlier this year firms had fretted that U.S. tariffs would hit the economy hard, triggering inflation, weak economic growth and joblessness. But their impact has largely been contained to the steel, aluminum and automobile sectors. Inflation, job numbers and the economy have not deteriorated markedly. "Tariffs and related uncertainty ... continue to have major impacts on businesses' outlooks. However, the worst-case scenarios that firms envisioned last quarter are now seen as less likely to occur," the survey said. Around one-third of the firms expect higher tariff-related costs, down from roughly two-thirds in the last quarter, the bank said. A separate monthly survey of business leaders suggests the outlook amongst companies, especially exporters, improved as few have been directly affected by the tariffs so far. But there is still widespread uncertainty on how the U.S. measures and their impacts will play out in the economy. The business outlook indicator - a metric of what business prospects look like under current economic conditions - fell to its lowest level in a year to a negative 2.42. The quarterly survey said around 35% of the firms reported their indicators of order books, advance bookings and sales inquiries had deteriorated compared with 12 months ago as against 29% who said indicators had improved. Investment intentions remain muted, the survey said, adding the balance of opinion is well below its long-term average. Analysts and economists say the business outlook survey gives the central bank more teeth to take a call on rates. The Bank of Canada has kept its key rate steady at 2.75% since April. Only around 12% of the current money market bets show a likely cut on July 30 when the bank will announce its monetary policy decision. A separate survey by the central bank into consumer expectations showed 64.5% of Canadians expect a recession within the next 12 months, down from 66.5% in the first quarter. "The trade conflict is leading consumers to become increasingly cautious about their spending plans and to change their spending behavior," the report said. Many respondents wanted to spend money on Canadian goods and local vacations. ((Reuters Ottawa bureau)) Keywords: CANADA CENBANK/
