Latest news with #economicuncertainty
Yahoo
14 hours ago
- Business
- Yahoo
Homebuyers need a psychological reset even as BoC rates plateau
With few — or no — further Bank of Canada (BoC) rate cuts expected this year, the country's housing market is facing a stark reality: a recovery hinges less on borrowing costs and more on a psychological reset. For activity to resume, experts say buyers and sellers must abandon hopes of a return to super-low rates and accept that current conditions are the new normal. 'As long as they expect things to be better for them if they wait, they're going to wait,' said Tsur Somerville, a professor of real estate finance at the University of British Columbia. Confidence is the main issue, not interest rates, says CIBC economist Benjamin Tal. He argues that the economic uncertainty is profound, driven by weak investment, slowing consumer demand and unresolved trade tensions. 'We are basically very close to a recession. I suggest we are in a recession in Ontario already,' Tal said. That lack of confidence is keeping the market in a deep freeze, even as economists widely expect the Bank of Canada to hold its policy rate steady on Wednesday. While CIBC is calling for two potential cuts later this year, Tal admits it's a 'tough call,' with stubborn core inflation and surprising employment data. By next year, he says, 'you have to start thinking about the Bank of Canada hiking rates, not cutting rates.' This reality is trickling down to buyers, but creating two very different reactions. For some, stability is enough. In May and June, activity picked up in 'hot pockets' of Toronto and Vancouver as some buyers took the central bank's steady tone as a sign of certainty. 'Buyers are using that as, 'That's the confidence I need,'' said Samantha Villiard, a regional vice-president at ReMax Canada. For many others though, the pressure has long been nearly unbearable. Ron Butler, a mortgage broker at Butler Mortgage, says that for middle-class families, the half-a-percent rise in fixed mortgage rates in recent weeks was another deflating moment. Clients tell him: "It's not just this increasing rate. It's everything,' he said. 'It's just an endless kind of crushing affordability context that, you know, you can tell from the sound of their voice that this is like a grievance against them." I believe that higher rates, namely relative to what they were a few years ago, are here to Tal, economist, CIBC Should fixed rates, which have moved into the "low to mid-fours," start heading back towards five per cent, Butler warns the effect would be devastating. 'It will literally crush everyone's dreams.' For those with mortgages renewing, Butler's advice is urgent. 'Go back to every email, every touch point you've ever had from your bank and see if they did offer you a rate that started with a three ... You have to make absolutely sure you might have access to those low rates.' Still, some experts argue that an era of higher rates is a necessary correction. Tal says Canadians were 'spoiled' by historically low rates during the pandemic, which overheated demand. 'I believe that higher rates, namely relative to what they were a few years ago, are here to stay,' he said. 'And that's actually a very healthy situation, because if there was something that was mispriced in the market for a long period of time, it was cash.' If rates hold steady, housing prices might not fall much further — except in the condo segment, which Tal describes as being in a 'deep recession' where pre-sale activity is 'basically dead." Instead, affordability might improve gradually, led by rising wages. 'Every homebuyer is willing to spend up to the maximum they can spend,' said UBC's Somerville. 'So if interest rates stay at this level, then prices will adjust relative to incomes in such a way over time to make housing plausible... The most likely way is prices stay flat while incomes catch up.' Villiard says Toronto's stirring market (outside of condos) has both buyers and sellers 'coming to the table being reasonable,' but a sustained rebound likely depends on macroeconomic clarity — especially on the trade front. 'The catalyst? A decision on the trade negotiations. That is really what we're all waiting to see,' she said. Tal agrees, noting that the Bank of Canada is playing it safe until there's more certainty on tariffs. 'They don't want to take any chances with Trump,' he said. 'They need more information to make a decision.' John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf. Download the Yahoo Finance app, available for Apple and Android. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
16 hours ago
- Business
- Yahoo
UK retail sales downturn stretches into tenth consecutive month
UK retail sales volumes experienced a drop in July 2025 marking the tenth consecutive month of decline amid subdued demand and economic uncertainty, according to the Confederation of British Industry's (CBI) monthly Distributive Trades Survey. The outlook indicates that this downward trend in annual sales volumes will continue at a similar rate into August. Retail sales volumes 'contracted at a strong rate' in July, although the pace of contraction was slow, with a weighted balance of -34% compared to -46% in June.. Retailers predict that the decline in sales will maintain a comparable pace in August at -31%. When evaluating sales against seasonal expectations, retailers considered July's performance as 'poor', but less so at -10% than in the previous month. Despite this slight improvement, projections for August suggest sales will fall further below what is typically expected for the season by -36%. Online retail sales experienced a slight increase in July, continuing a three-month trend of growth. This modest rise is expected to persist at 4% into August. CBI principal economist Martin Sartorius said: 'Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024. These trends of weak demand and uncertainty were mirrored across the wider distribution sector, with wholesale and motor trades also seeing declining sales.' Wholesale trade saw a decrease in sales volumes by -32% for July, maintaining nearly the same rate as observed in June (-34%). Anticipations for August forecast a similar pace of decline of -30%. The motor trade sector faced its most severe annual reduction in sales volumes since June 2020 during July at -77%, down from -37% in June, with motor traders bracing for another steep decline of -57% in August. Overall distribution sales volumes, which include retail, wholesale, and motor trades, dropped sharply in July at an unchanged rate of -39% from the previous month. The outlook for August suggests a marginally slower contraction of -34%. 'With long-term strategic ambitions outlined, the government must now seek to build shorter term confidence in its growth mission. It can do this by collaborating with business to deliver an Autumn Budget that acknowledges the burden firms are facing and sets clear policy delivery targets. This includes providing clarity on how the government will deliver its action plan to tackle regulatory barriers to growth, position businesses to invest in the people they need through a flexible Growth and Skills Levy, and find an appropriate landing zone for the Employment Rights Bill,' Sartorius stated. "UK retail sales downturn stretches into tenth consecutive month" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Al Jazeera
5 days ago
- Business
- Al Jazeera
American Airlines restores economic forecast amid economic uncertainty
American Airlines has restored its full-year outlook as broader economic uncertainty continues to weigh on domestic consumer demand across the travel industry. The Fort Worth, Texas-based carrier on Thursday offered a wide range for its full-year forecast on the heels of its earnings report, saying the broader economic uncertainty is hobbling consumer spending. The airline had suspended financial guidance in April. The airline says it expects an adjusted loss per share of 20 cents a share to a profit of 80 cents a share in 2025. The midpoint of the forecast is 30 cents per share, compared with analysts' average estimate of 61 cents a share, according to LSEG data. American, which generates more than two-thirds of its passenger revenue from the US domestic market, said that if domestic travel demand continues to strengthen, it expects to hit the top end of its outlook. But if the economy weakens, it only expects to be at the bottom end of the forecast. 'The domestic network has been under stress because of the uncertainty in the economy and the reluctance of domestic passengers to get in the game,' CEO Robert Isom told analysts on an earnings call. American said tepid domestic travel demand affected its bookings in July. Isom, however, said the performance is expected to improve sequentially in August and September. 'We expect that July will be the low point,' he said. The company expects its domestic unit revenue, or revenue generated from each seat, to remain lower year-over-year in the third quarter. Its non-fuel operating costs are estimated to be up as much as 4.5 percent in the September quarter. American expects an adjusted loss per share in the range of 10 cents to 60 cents in the third quarter, compared with analysts' estimates of a loss of 7 cents, according to data compiled by LSEG. The company's outlook contrasts with upbeat forecasts of rival Delta and United Airlines. Alaska Air Group has also reported improvements in passenger traffic and pricing power. Most US airlines withdrew their financial forecasts in April as President Donald Trump's trade war created the biggest uncertainty for the industry since the COVID-19 pandemic. While some have reinstated their expectations, there is lingering uncertainty as to how the economy will fare in an ever-evolving tariff landscape. Demand in the domestic travel market has remained subdued, with budget travellers approaching their plans with caution, hurting carriers that primarily service the US domestic market and price-sensitive customers. Even summer, typically the peak money-making season for airlines, is falling short this year, with unsold standard economy seats forcing carriers to cut fares. It dented the second-quarter earnings of Southwest Airlines, the largest US domestic airline. At American, the domestic market was the weakest in the second quarter, with its unit revenue declining 6.4 percent from a year ago. The company's unit revenue in international markets was up, led by a 5 percent annual jump in the transatlantic market. On Wall Street, the stock is taking a hit and was down 7.2 percent from the market open as of 11:30am in New York (15:30 GMT).
CTV News
5 days ago
- Business
- CTV News
American Airlines restores 2025 forecast, flags economic worries for keeping it broad
An American Airlines passenger jet takes off from Miami International Airport in Miami on June 3, 2016. (AP Photo/Alan Diaz) American Airlines restored its financial forecast for 2025 on Thursday and cited economic uncertainty for keeping its expectations broad - from a potential loss to a profit. The carrier's shares fell nearly six per cent before the market open as the forecast underscored the challenges airlines are facing in the domestic market, where travel spending remains tepid amid sweeping U.S. tariffs and budget cuts. American generates more than two-thirds of its passenger revenue from the domestic market and expects a per-share loss of 20 cents to a profit of 80 cents in 2025. 'The company believes the top end of the range is achievable if demand in the domestic market continues to strengthen and only expects to be at the bottom end of the range if there were to be macro weaknesses that are not seen today,' the carrier said. Most U.S. airlines withdrew their financial forecasts in April. While some have reinstated their expectations, they remain cautious about how the economy will fare in an ever-evolving tariff landscape. Demand in the domestic travel market has remained subdued with budget travelers approaching their plans with caution. American, which had enhanced its focus on the U.S. domestic market, sees itself more exposed to the trend. Soft demand has also hurt earnings of Southwest Airlines, the largest U.S. domestic airline, as summer, typically the peak money-making season for airlines, is falling short this year, with unsold standard economy seats forcing carriers to cut fares. Domestic market was the weakest in the second quarter, with American's unit revenue, a proxy for pricing power, declining 6.4 per cent from a year ago. Meanwhile, its unit revenue in international markets was up, led by a five per cent annual jump in the transatlantic market. For the third quarter, American expects adjusted loss per share in the range of 10 cents to 60 cents, compared with analysts' estimates of 7 cents, according to data compiled by LSEG. The U.S. carrier reported a net income of US$599 million, or 91 cents per share for quarter ended June 30, compared with US$717 million, or US$1.01 per share, a year earlier. Its total operating revenue marginally rose to about US$14.4 billion. --- Reporting by Shivansh Tiwary in Bengaluru and Rajesh Kumar Singh in Chicago; Editing by Arun Koyyur
Yahoo
6 days ago
- Automotive
- Yahoo
UK vehicle production falls again
UK vehicle manufacturing was down 11.9% in first half amid global trade disruption and economic uncertainty. UK new vehicle manufacturing declined by 11.9% to 417,232 units in the first six months of the year, according to figures published today by the Society of Motor Manufacturers and Traders (SMMT). However, the decline was softened by a 6.6% increase in car production in June, although this was in comparison with last year when model changeovers and supply chain issues depleted output. As a result, year-to-date car output declined by 7.3% as 385,810 cars rolled off factory lines. Restructuring at commercial vehicle production plants, meanwhile (Luton Stellantis/Vauxhall closure), resulted in a first-half volume fall of 45.4% to 31,422 units. While overall output fell, electrified car production rose by 1.8% to 160,107 units – delivering a record share of output for the first half of the year, with hybrid, plug-in hybrid and battery electric vehicles accounting for more than two in five (41.5%) units produced in the UK in 2025. Switch Auto Insurance and Save Today! Affordable Auto Insurance, Customized for You The Insurance Savings You Expect Great Rates and Award-Winning Service UK car production remains export-focused, with some 76.9% of output headed overseas year-to-date and greater certainty now returning to key markets. The EU remains the main destination for UK car exports (54.4% share), followed by the US (15.9%) China (7.5%), Turkey (4.1%) and Japan (2.7%), with these five destinations alone accounting for more than eight in 10 overseas sales. Despite three straight months of declining export volumes culminating in an -18.7% drop in June, the US maintained its position as the UK's biggest single export market underscoring the importance of the UK-US trade deal. The SMMT said that deal, which came into force on 30 June, gives the UK reduced tariff rates into the US automotive market, which can become a basis for future growth. Mike Hawes, SMMT Chief Executive, said: 'Global economic uncertainty and trade protectionism have taken their toll on automotive production across the globe, with the UK no exception. 'The figures are not, therefore, unexpected but remain very disappointing. However, there are foundations for a return to growth. The industry is moving to the technologies that will be the future of mobility, our engineering excellence, highly-skilled workforce and global reputation are strengths, and we have an Industrial Strategy with advanced manufacturing and automotive at its core. 'With rapid delivery and the right conditions, UK Automotive can reverse the current decline and deliver the jobs, economic growth and decarbonisation that Britain needs.' "UK vehicle production falls again" was originally created and published by Just Auto, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
