According to a report by CIBC World Markets, Alberta has the strongest projected growth along with good demographics and immigration trends, making it the most favorable place in Canada for small businesses to flourish.
The Deputy Chief Economist at CIBC Benjamin Tal believes that these characteristics “offer a steady stream of future entrepreneurs and workers to drive operations in tomorrow’s small and medium enterprises.”
“The province does lack an advantage in export orientation, with a concentration in Alberta’s outbound flows in larger, energy-focused firms,” he added.
As per the report, small businesses in Canada have been growing since recession. The number of small firms with 20-49 employees has increased by 18%, those with 10-19 employees has gone up by 12.5%, while those with less than 10 employees is up by 10.3%.
CIBC had released its report early on Monday, identifying Alberta and British Columbia as the top two places in Canada that provide the maximum advantages to start-up businesses.
According to Tal, “Looking back at the recent history, we see that small business activity outperformed the broader economy in the earlier part of the recovery, but now at the more mature stage of the cycle, things are changing and small businesses are the ones lagging the economy as a whole. Exports have been on the upswing, helped along the way by a meaningful drop in the Canadian dollar below parity. Just as small and medium enterprises are less responsive to a rise in the value of the loonie, they are just as insensitive to Canadian dollar weakness.”
The report also established the importance of small businesses in the Canadian economy. According to it, they make up for nearly 40% of the GDP in the private sector.
“While economic conditions have deteriorated for them recently, small businesses have been contributing a greater-than-normal share of hiring recently. That’s partly because hiring in the rest of the economy has been muted, but small businesses have also been adding to their workforce at a greater rate than they have historically,” says Tal.
Another research report was released on Monday by the Business Development Bank of Canada. This report titled ‘The Five Dos and Five Don’ts of Successful Businesses’ provides tips on how Canadian businesses can be successful.
The report identifies the following five key rules to success: innovation; asking for outside advice; having a solid plan and measuring progress; building strong relationships with suppliers; and hiring the best people and keeping them engaged.
Source: Calgary Herald
For almost a year, the Bank of Canada has been expecting key pieces of the economy to fall into place. Unfortunately, this hasn’t happened.
Instead of the long-anticipated rebound in exports and business investment, growth has been low as every forecast, whether for Canada or globally, failed to deliver as advertised.
“Right now, we do not have a sustainable growth picture in Canada,” Stephen Poloz, the central bank governor, said Wednesday in an unusually blunt assessment of the economy.
The hoped-for sustained recovery in the United States and Europe, crucial for a rotation back to this country and spurring moves into new markets, and taking the weight of growth off Canadian consumers, has yet to take hold.
“The most important thing has been the failure of exports to recover,” he told reporters in Ottawa, after delivering the bank’s latest interest rate decision — no surprise, no change — and releasing its closely watched quarterly economic outlook, which pushed back any significant improvement until “around mid-2016.”
“There’s no question that with higher global prices for energy, higher Canadian terms of trade, that’s one positive, natural force that’s working its way through our economy. Over time, we know the energy sector will get bigger and bigger, as a share. But it seems unlikely that it will be sufficient to fill the entire wedge of exports from the other sectors,” said Mr. Poloz, 58.
The current economic environment in Canada is part of the “serial disappointment” that has been playing out globally, he said, and one he has witnessed since taking over from Mark Carney in June 2013.
In its latest assessment, the Bank of Canada said previous concerns that weak price gains could lead to a round of deflation have dissipated — along with the likelihood that borrowing costs might decline rather than rise. This pattern has not been seen since September 2010 when policymakers cut their trendsetting interest rate to 1%.
Instead, Mr. Poloz and his policy team maintained their wait-and-see stance, leaving that key rate unchanged and maintaining a neutral stance on future movements. Stating that the forecasts could change, the economists have ruled out any change in borrowing costs until mid-to-late 2015.
The quarterly Monetary Policy Report, released at the same time as the interest rate decision, noted the bank “is neutral to the timing and direction of the next change to the policy rate, which will depend on how new information influences the outlook and assessment of risks.”
That statement could be seen as uncharacteristically blunt for Canadian central bankers.
“One has to give Stephen Poloz credit for penning meaty policy press statements. Nothing opaque about this. The bank has managed to provide investors with a clue that the odds of a rate cut are actually the same as those of a hike,” said David Rosenberg, chief economist at Gluskin Sheff and Associates.
Avery Shenfeld, chief economist at CIBC World Markets, said Mr. Poloz and his team “didn’t say anything specifically about the Canadian dollar, but they said that anything that hurt our competitiveness would be a risk to getting exports going. You can read between the lines: A stronger currency would be one of those risk factors we would rather not face.”
Mr. Shenfeld added: “We’ve been relying on debt-financed household spending and homebuilding to drive the economy.”
The bank said the Canadian economy is expected to grow 2.2% in 2014. Policymakers had earlier forecasts a 2.3% gain in GDP, after a 2% increase in 2013.
Globally, growth will be limited to 2.9% this year, down from the previous 3.3% estimate, the bank said. The United States — the largest market for Canadian goods and service — is estimated to advance 1.6%, considerably lower than the 2.8% forecast in the bank’s report in April, with severe weather conditions in the first quarter of this year blamed.
The eurozone, which climbed out of recession in 2013, is expected manage growth of 0.9% this year, again, at a lower rate than policymakers had anticipated in the spring. Similarly, but at a lesser degree for China, the 2024 advance was lowered to 7.2% from 7.3%.
“Given the downgrade to the global outlook, economic activity in Canada is projected to be a little weaker than previously forecast,” policymakers said Wednesday. “However, the bank still expects that the lower Canadian dollar and a projected strengthening in global demand will lead to a pickup in Canadian exports, investments and eventually, a more sustainable growth track.”
Those same policymakers have pushed back their timetables for eliminating the country’s economic slack and reaching their inflation targets to “around mid-2016,” from their “early 2016” forecast in the previous report in April — a threshold level that had already been revised from a mid-2015 projection in the bank’s quarterly report before that.
Both the Consumer Price Index and the so-called core inflation reading, which strips out many volatile items, are produced monthly by Statistics Canada. Policymakers follow those inflation trends, with the ideal level being 2%, midway between a broader range of 1% to 3%. CPI has recently overtaken the 2% point and the core rate has been closing in on that level.
“Over the next two years, inflation is projected to fluctuate around 2% as the temporary effects ease and the downward pressure from economic slack and heightened retail competition gradually dissipates. Given the downgrade to the global outlook, economic activity in Canada is now projected to be a little weaker than previously forecasts,” the bank said.
Source: Financial Post
Quebec has a great record when it comes to finding new ways of doing things. However, one sector that continues to search for a solution is Quebec’s higher education system – the prime question for many people in the previous election, some 19 months back. This time though, it has been conspicuous by its absence.
Despite that, the question remains unanswered – How does an individual pay for a university system that offers both access and quality? Although this debate is not a new subject for Quebec or for the rest of the world, Quebec must emerge with the answer.
Committed citizens speak of a renaissance for Montreal, which happens to be Canada’s second largest city. However, despite having over 225,000 students at the universities and Cégeps, Montreal still hires less university graduates annually than any other major city in Canada.
It would be impossible to think of a similar renaissance for Quebec without finding some noteworthy funding solutions first. Until then, Quebec needs to find ways to keep its university system and economic future strong. In addition, Quebec also needs to find ways of retaining the talented students it attracts, once these students graduate. According to the president of Concordia University in Montreal, Alan Shepard, Quebec could achieve this in three possible ways.
The first method involves facilitating student immigration and seeking help from universities for this. This means that the authorities must simplify the bureaucratic processes. By connecting these students to the commercial and civic realms of Quebec and teaching them French, the universities could retain these students.
The second proposal entails providing additional physical spaces, linked together by networks, which would enable students to take control of their creativity and innovations. For example, Concordia launched District 3 in 2012. This multi-disciplinary incubator enabled Concordia’s students and alumni to work side-by-side for coming up with solutions or ways to build their own businesses.
The third method entails providing tax incentives for promoting a culture of innovation even further. Last summer, for example, Governor Andrew Cuomo commenced New York’s incubator networks with Start-Up New York, which offered tax credits to businesses that got established on or near a university campus and also supported the university’s mission.
Currently, universities favour merit and access along with the highest ideals of learning. If Quebec could harness these and make them drivers of civic and economic equality, their contribution to Quebec’s future could be invaluable.
Source: The Globe and Mail and Alan Shepard
As wealthy Americans continue to forge ahead of several of their global peers, the American middle class – for long the most affluent in the world – seems to have lost that distinction, according to an analysis conducted by New York Times.
The analysis, based on surveys conducted over the past 35 years, shows that citizens of other advanced countries have obtained considerably larger raises over the past three decades across the lower-and-middle-income tiers. In addition, Canadian middle class incomes (after tax) are higher than in the United States – this, after falling significantly behind US middle class income standards in 2000. The numbers suggest that high and rising income inequalities are to blame for this decline in American middle class income levels.
Most economic experts cite statistics like the per capita gross domestic product to show that the US has maintained its lead as the world’s richest country. However, these figures do not focus on the distribution of the income, as much as they do on averages. As most recent income gains usually flow to a relatively smaller group of high-earning households, it is clear that most Americans are not at par with their counterparts around the globe.
Three factors could be behind this phenomenon. Firstly, educational attainment has slackened in the US as opposed to other parts of the industrialized world. This has made it harder for the American economy to retain its control over high-skilled, well-paying jobs. While American aged from 55 to 65 years have above average literacy, numeracy and technology skills as compared to 55-to-65-year-olds in the rest of the industrialized world, Americans from 16 to 24 years of age rank closer to the bottom among rich countries.
The second factor contributing to this is that companies in the US distribute a smaller share of their wealth to the middle class and the poor as opposed to companies elsewhere in the industrialized world. Finally, the governments in Canada and Western Europe are aggressively ensuring that they redistribute income to raise the take-home pay of low-and-middle-income households.
Despite this drop in income levels for the American middle class and the poor, the fact remains that the US continues to register stronger economic growth. Americans still earn 20 percent more than their Canadian counterparts do. They also earn about 26 percent more than their British counterparts and 50 percent more than their Dutch counterparts do. However, it appears that only a small percentage of American households is benefiting from this growth of the world’s most prosperous economy.
Source: The New York Times
Once again, Canada added jobs in March and saw the overall unemployment rate drop to 6.9 percent.
The latest numbers are spurring further hope of recovery, as experts’ economic predictions were surpassed. Overall, Canada added 43,000 new jobs last month, though most of those are part-time.
Additionally, most of the new positions are in the public sector, rather than driven by private companies.
British Columbia had the highest growth, with 18,000 new positions. Quebec and Ontario had the second and third most new jobs in March, at 15,100 and 13,400, respectively.
B.C.’s numbers were the highest since the fall of 2012, and the unemployment rate of 5.8 percent makes it the fourth most-employed province behind Saskatchewan, Alberta and Manitoba.
Despite the preponderance of part-time positions, economists are pleased that the numbers for March reflect a boost in employment for young Canadians, aged 15-24. They are also stronger than expected during winter months when the economy overall tends to slow down.
Source: Vancouver Sun