- Ontario economy has peaked
- A swearing-in I’d love to see
- Stocks, loonie at a glance
- Rogers profit rises 2 per cent
- Comcast drops chase for Fox assets
Peak Ontario
Ontario’s economy has peaked.
This obviously isn’t Premier Doug Ford’s making, but it is something he and his young Progressive Conservative government will have to deal with.
Nor does it to suggest that the province is going to hell in a handbasket after three strong years. It’s simply headed for slower growth. Unless, of course, the Trump administration carries through with threats to punish auto imports with stiff tariffs, in which case hell in a handbasket may be applicable.
Recent numbers from Ontario’s Ministry of Finance show economic growth slowed in the first quarter.
Among other things, interprovincial exports may have climbed by 0.5 per cent, but those to other countries slipped 0.2 per cent, for a total gain of just 0.1 per cent.
And, of course, the housing market has seen a policy-induced slowdown aimed at easing inflated prices.
”Ontario’s economy expanded 1.4 per cent, annualized, in Q1, as lower net exports carved into solid gains in consumer spending and business investment,” noted Bank of Montreal senior economist Robert Kavcic.
Citing a “gradual cooling” in several indicators, he said BMO has already factored “cooler activity” into its projection for real GDP growth of 1.9 per cent this year.
“That would be down from a 2.7-per-cent run rate over the prior three years,” he said.
“Note that the province was assumed 2.2-per-cent growth in the 2018 budget, with a slowdown to 1.8 per cent by 2019.”
The great unknown is whether the Trump administration hits auto imports with tariffs of 25 per cent, a possibility after its levies on steel and aluminum.
We’ll learn more about that today as the U.S. Department of Commerce launches a public hearing.
“The hearing provides an opportunity for stakeholders to present information and advice relevant to the investigation on the effects of imports of automobiles and automotive parts on national security,” the department said.
“The investigation will consider all relevant facts and input from stakeholders compiled during the notice and comment process before reaching a final determination, which will be based on facts and the statutory requirements,” it added.
“Information from Thursday’s hearing and the more than 2,300 public comments submitted on this issue, in addition to rebuttal comments, will be considered in the Department of Commerce’s investigation and analysis.”
While some observers see the tariff threats as a negotiating ploy, particularly given the complex integration of the North American auto industry, others warn that President Donald Trump’s actions to date suggest they should be taken seriously.
Ontario would be in trouble were the tariffs to hit.
Indeed, noted Royal Bank of Canada senior economist Nathan Janzen, they could cut Canadian GDP by 0.5 per cent.
“Ontario accounts for about 90 per cent of Canada’s motor vehicle and parts production,” Mr. Janzen said Wednesday.
“I think it would be reasonable to assume the Ontario impact would be double or more the impact on Canada as a whole.”
Royce Mendes of CIBC World Markets, meanwhile, recently forecast that Canadian auto production would decline by more than 400,000 units a year if the U.S. hit all auto-exporting countries.
If it singled out Canada, that number would rise to about 900,000.
“After also accounting for a 10-per-cent tariff on parts, and the fact that reduced Canadian production would require fewer foreign inputs, we estimate the direct drag on GDP to be about 0.5 per cent and 1 per cent, respectively, for each scenario,” Mr. Mendes said of the Canadian economy.
“Almost all of the auto production occurs in Ontario, so it’s going to be a serious hit to the provincial economy,” he added in an interview Wednesday.
“It almost certainly means that the Ontario economy would at least be in a mild recession.”
Read more
- What if … Trump’s not bluffing, trade is crippled, Canada sinks into recession, markets are roiled, you pay more
- Justin Giovannetti: Doug Ford asks former B.C. premier Campbell, auditor to draft road maps for Ontario budget cuts
- Greg Keenan: Auto parts industry braces for downturn if U.S. moves on tariff threat
- Linda Hasenfratz: Trump’s tariffs are tipping us toward a recession
- Ontario’s Doug Ford may be in big trouble (and not know it)
A swearing-in I’d love to see
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Rogers profit rises
Rogers Communications Inc. reported unexpectedly strong wireless numbers for the second quarter, attributing a wave of new subscribers to better customer service and improvements to its network, The Globe and Mail’s Christine Dobby reports.
The Toronto-based cable, wireless and media company said Thursday it added 122,000 new wireless customers on contract in the three months ended June 30.
Revenue at the wireless business, the company’s biggest division, was up by 7 per cent to $2.21-billion and helped boost overall sales at Rogers to $3.76-billion. Profit increased by 2 per cent to $538-million, or $1.04 per share.
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