CHHMA - EYE ON OUR INDUSTRY
Volume 14, Issue 34, September 10, 2014
Inside This Issue:
• Home Hardware’s Bruce Webster Being Honoured at Industry Memorial Golf Classic
- Last Call
• Read About the 2014 CHHMA Scholarship Award Recipients
• Home Depot Confirms Data Breach in Canada, U.S. Stores
• Canadian Tire to Add Digital Option to Its Canadian Tire Money Program
• Dollar General Corp Goes Hostile with $9.1-Billion Family Dollar Bid
• Housing Starts Cool in August, Expected to Moderate Further
• Toronto, Vancouver Condos Push Canadian Building Permits to Record
• Canadians Finding it Harder to Move-Up to Bigger Homes
• Canadian Economy Sheds 11,000 Jobs in August with Record Drop in the
Private-Sector
• Fourth Quarter Hiring Outlook Falls
• U.S. Jobs Growth Smallest in Eight Months as Labour Force Shrinks
Association News
Home Hardware's Bruce Webster Being Honoured at Industry Memorial Golf Classic - Last Call
Terry Davis, Ray Gabel, Joel Marks, John Dyksterhuis and several of the buyers from Home Hardware will be in attendance at the 13th Annual Industry Memorial Golf Classic taking place on Wednesday, October 1st at the Blue Springs Golf Club in Acton, Ontario.
The Home Hardware executives will be on hand to help honour their former colleague who passed away just prior to last year’s event.
Bruce Webster spent most of his career in the home improvement industry. He worked at many companies, including being a buyer at Homecare and Cashway. He then joined TSC Stores as a senior category manager, and finished his career as a product manager at Home Hardware Stores.
Register now to attend the Industry Memorial Golf Classic held on behalf of the hardware and housewares industry and which honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend.
The other honourees this year are:
Tom Ross - Served for 33 years as the Executive Director of the Canadian Retail Hardware Association (CRHA). Tom passed away on June 26 of this year.
Ray Ceolin – Over his 40 year career, was an active member of the hardware and housewares community. Together with his brother Leo, they built a successful sales agency, Phaeton Limited, representing varied lines through many classes of trade. Ray passed away in October of 2012.
Past honourees include: Chris Hrushowy, Mike Pullen, Jim Ypma, Bill Caldwell, Brayl Copp, Ed Hardison, Stuart North, Joseph Kuchar, Shelly Lush, Jack Pountney, Christof Vanooteghem, Ian Hay, Trygve Husebye, Bernie Carpenter, Don McDonald, Les Groves, Bob Hilton, Doug Straus, Mel Boshart, George Giles and Ed Barnes.
The day allows family, friends and colleagues to honour these gentlemen while enjoying a fun day out on the golf course followed by a dinner and silent auction.
Registration and lunch starts at 10:30 a.m. with a shotgun start at noon. Dinner will commence at around 6:00 p.m.
For further details and to register, please click here.
Money raised from hole sponsorships and the silent auction will go towards the CHHMA Scholarship Program which provides support for children of CHHMA member company employees to attend university or college.
Consider donating an item or items for the silent auction. Housewares or hardware products, golf items or any item interesting and/or unique would be sincerely appreciated. Whether or not you can attend the event, your donation will contribute to the Scholarship Program which has benefited 70 young people since 2001.
Click here for a silent auction pledge form.
Read About the 2014 CHHMA Scholarship Award Recipients
As mentioned over the past couple of weeks, the CHHMA Board of Directors is pleased to announce the following five scholarship award recipients for 2014:
Graeme Blondon – son of Neil Blondon of Knape & Vogt.
Ben Zvikler – son of Ilan Zvikler of Taymor Industries Ltd.
Steven Winter – son of Lawrence Winter of Recochem Inc.
Jenny Gu – daughter of Da Ren Gu of Recochem Inc.
Jillian Newton – daughter of Tom Newton of Loxcreen Canada
We would like to once again congratulate the winners for their outstanding achievements and to the member companies for encouraging their employee participation.
For further information on each recipient and their plans, go to: http://www.chhma.ca/Public/2014-Scholarship-Winners
Since 2001, the CHHMA has awarded $150,000 towards scholarships and some 75 young people have benefited from the scholarship program. Recipients receive $1,000 per year for the first two years of study at an accredited post-secondary institution.
Industry News
Home Depot Confirms Data Breach in Canada, U.S. Stores
Home Depot Inc. confirmed Monday that its payment systems have suffered a security breach, and Canadian clients are among those affected.
The chain said the breach “could potentially impact customers using payment cards” in U.S. and Canadian stores, but there is no evidence the breach hit online customers or stores in Mexico.
Home Depot, which has been tight-lipped since it revealed last week it was investigating unusual activity that suggested a potential breach, said Monday that it still doesn’t know the “full scope, scale and impact of the breach.” It said there is no evidence that PIN numbers associated with the debit cards have been compromised. Its investigation is focusing on transactions from April onward.
Home Depot has 2,266 stores, and 180 of those are in Canada. A Home Depot spokeswoman said the company cannot say how many Canadian customers may have been affected because it does not yet know “many details or the scale of the incident.”
But the company said it has taken “aggressive” steps to address the “malware” and protect its customers’ data. It is also offering free identity protection, and credit monitoring to any customer who has used a payment card at a Home Depot store since April of this year.
Home Depot chief executive officer Frank Blake said in a statement that “we owe it to our customers to alert them that we now have enough evidence to confirm that a breach has indeed occurred. It is important to emphasize that no customer will be responsible for fraudulent charges to their accounts.”
The company said its internal technology security team has been working around the clock with outside security organizations, its banking partners, and the United States Secret Service to “gather facts and provide information to customers.”
The possible breach was first reported last Tuesday by the security news website Krebs on Security, run by computer security expert Brian Krebs. He said several banks had reported seeing evidence that Home Depot outlets “may be the source of a massive new batch of stolen credit and debit cards.”
In a posting, Mr. Krebs said analysis of card data posted on a “cybercrime store” website suggests that a spate of stolen credit card information recently put up for sale came from Home Depot.
Mr. Krebs said banks believe the breach may have begun in April or May. If that is the case “this breach could be many times larger than Target, which had 40 million credit and debit cards stolen over a three-week period.”
Just before Christmas last year, Target said that credit and debit card information on millions of customers had been stolen. The breach, and the work to rectify it, cut into the company’s fourth-quarter profit. Some of Target’s Canadian customers were affected by that breach.
Target has since spent US$146 million to resolve data breach-related issues since the fourth quarter of 2013. Most of these expenses were for settling actual and potential breach-related claims, mainly by payment card networks.
The largest known breach at a U.S. retailer was uncovered in 2007 at TJX Cos Inc, operator of the T.J. Maxx and Marshalls chains, which had more than 90 million credit cards stolen over about 18 months.
Mr. Krebs said in a posting on Monday that sources had told him the Home Depot breach was helped by a new variant of the “BlackPOS” malware that stole account data from Target.
“It doesn’t exactly say a lot of good things about their data security systems if something was able to go on for months and they didn’t notice,” said Kenneth Dort, partner at intellectual property practice group, Drinker Biddle & Reath LLP.
Source: The Globe and Mail, Reuters
Canadian Tire to Add Digital Option to Its Canadian Tire Money Program
Canadian Tire money, known for its fictional Scottish character Sandy McTire, is going digital.
Canadian Tire said on Tuesday it's expanding its rewards program next month by offering a digital option to customers who want to collect and redeem Canadian Tire money on a card or smartphone.
But the retailer wants its customers to know that the addition of the new digital option does not mean it's getting rid of its much-loved Canadian Tire paper currency.
Canadian Tire announced it is introducing My Canadian Tire 'Money'™, an easier way to collect and redeem Canadian Tire 'Money'. The program will launch in Nova Scotia on October 10 and to customers nationally on October 28, 2014. The digital rewards program will complement paper Canadian Tire 'Money', which will remain in circulation.
"It's a much easier option for Canadians, especially those who prefer digital forms of rewards," said Carol Deacon, senior vice-president of loyalty and digital at Canadian Tire.
"But we do know that a lot of Canadians like paper money in its current form today and will continue to offer it as an option," Deacon said.
Deacon said Canadian Tire didn't consider eliminating paper currency because it knows Canadians cherish the paper bills, first introduced in 1958.
"It's part of our heritage," she said. "It's been around for 50 years. It's really a second currency for Canadians."
Canadian Tire money was created by Muriel Billes, wife of Canadian Tire's co-founder A.J. Billes.
The bills are available in denominations of 5, 10, 25, 50, $1 and $2 and allow consumers to redeem towards eligible purchases.
There has been more than $1 billion of Canadian Tire money in circulation since its inception.
Chief operating officer Allan MacDonald said the new program allows customers to easily manage their account and redeem rewards on their smartphone or online.
“As Canada’s oldest loyalty program, we know Canadian Tire ’Money’ holds an extraordinary place in the hearts of Canadians,” said MacDonald. “We’re building on it by introducing another way to reward loyal customers who prefer the ease and convenience of digital currency and rewards, further improving the Canadian Tire shopping experience and ultimately helping our customers tackle the jobs and joys of everyday life in Canada.”
He said Canadian Tire learned many lessons about what it wanted its digital rewards program to look like after a pilot version was launched in Nova Scotia in 2012.
It found that those who had a loyalty card did not necessarily buy more items during each trip, but they shopped with frequency.
The digital loyalty program also allowed Canadian Tire to send customers tailored deals and specials based on their shopping patterns. For instance, the retailer was able to learn that if one family had children who were hockey players, it would send specials on hockey equipment at the start of a season directly to them via the app or email.
This allowed the retailer to ensure there was enough product in local stores to meet expected demand.
MacDonald said customers who pay with credit, debit or cash will receive a base rate of 0.4% of Canadian Tire money in paper or digital currency on all purchases. Those with a Canadian Tire Options Mastercard will receive 4%. With paper Canadian Tire money, customers had received a rebate based on a sliding scale of purchases made with cash or debit.
To fully take advantage of the program's benefits and features, customers are being encouraged to download Canadian Tire's enhanced Mobile App. The updated version, available for download at launch, allows users to collect, redeem and manage their e-Canadian Tire 'Money', view bonus offers, review transactions, and return products in-store without presenting a receipt.
To join the program, customers can register through the Canadian Tire Mobile App, at canadiantire.ca with a card available in-store, or by applying for the Options MasterCard.
Existing Canadian Tire Options MasterCard cardholders and participants in the Canadian Tire 'Money' Advantage loyalty program in Nova Scotia will automatically have their loyalty program changed to My Canadian Tire 'Money', the retailer said.
Source: Canadian Tire, The Canadian Press
Dollar General Corp Goes Hostile with $9.1-Billion Family Dollar Bid
Dollar General Corp took its US$9.1 billion offer for Family Dollar Stores Inc. hostile, directly approaching the shareholders of its smaller rival after being spurned twice by the company.
Dollar General said on Wednesday it had started a tender offer to buy all shares of Family Dollar for US$80 per share.
Family Dollar rejected Dollar General’s sweetened takeover bid last week, saying the offer still did not address antitrust concerns.
Dollar General has downplayed those concerns by committing to sell up to 1,500 stores to clear any competition review and also offered to pay US$500 million as break-up fee if the deal were to fall apart.
The company said on Wednesday it would stick to those terms.
“We now can begin the antitrust review process and will have an opportunity to present our position directly to the FTC (Federal Trade Commission),” Dollar General Chief Executive Rick Dreiling said.
Family Dollar’s shares closed at US$78.70 on Tuesday, valuing the company at US$8.97 billion. The company’s CEO, Howard Levine, is the largest shareholder with an 8.17% stake as of Aug. 5.
Nelson Peltz’s Trian Fund Management L.P. had a 7.34% stake as of July 27, while John Paulson’s Paulson & Co Inc. reported a 7.04% stake on June 30.
Dollar General’s tender offer is scheduled to expire on Oct. 8 unless extended, the company said.
Reuters reported on Tuesday that Dollar General would go hostile with its offer, citing people familiar with the matter.
Source: Reuters
Economic News
Housing Starts Cool in August, Expected to Moderate Further
Canadian housing starts cooled more than expected in August, while the previous month was also revised slightly lower, data showed on Tuesday, setting the stage for what is widely expected to be a slowing housing market as 2014 draws to a close.
Canada Mortgage and Housing Corporation (CMHC) data showed the seasonally adjusted annualized rate (SAAR) of housing starts slipped 3.7% to 192,368 last month from a downwardly revised 199,813 units in July.
That was shy of analysts’ forecasts for 195,000. July was originally reported as 200,098.
The small drop brought the six-month moving average to 189,837, little changed in the last 12 months despite a big slowdown in the harsh winter months and a roaring bounce back in the spring and early summer.
“The currently elevated level of inventory of newly completed and unoccupied condominiums, and units under construction, supports CMHC’s view that condominium starts will likely see a declining trend over the coming months as developers and builders seek to limit risks of over-building,” said Bob Dugan, CMHC’s chief economist. “However, there may still be some variability from month to month as the number of presales for some planned condominium projects reaches sufficient levels to trigger project start,” added Dugan.
“The persistence of unsustainably lean mortgage rates has likely bolstered housing demand in recent months, and even with the dip in August, starts remain elevated relative to the rate of household formation,” Laura Cooper, an economist at Royal Bank of Canada, said in a research note.
Canada’s housing market has defied expectations for a slowdown or crash but most economists expect homebuilding and sales to slow when mortgage rates rise. Mortgage rates remain low and borrowers are taking on near record levels of household debt to get into the market.
“The Bank of Canada may be looking for a rotation away from housing and the consumer, but low rates continue to support residential investment,” CIBC World Markets economist Nick Exarhos said in a research note.
“But despite recent resiliency, we still expect housing’s contribution to growth to slowly wane as we progress through this business cycle, with affordability concerns and a weak labour market putting pressure on the building sector going forward,”
The drop was nearly across the board, as the SAAR of urban starts decreased 3.8% to 175,668 in August, from 182,524 in July. Multiple urban starts in August dropped 4.0% to 110,842 units while the single-detached urban starts segment fell 3.3% to 64,826 units.
Rural starts were estimated at a seasonally adjusted annual rate of 16,700 units in August, down 3.4% from 17,289 units in July.
August’s softness was led by a big drop in starts in Ontario and the Atlantic, with a smaller decline in Quebec. Starts rose sharply in the Prairie provinces and in British Columbia.
Despite the small drop in August, economists are penciling in a strong year for home building in 2014.
“On account of the robust readings for housing starts so far this year, we have revised our forecast up to 188,000 units for 2014, a pace matching that of 2013, before underlying conditions shift and slow activity to 177,000 next year, with a similar moderating trend anticipated in the resale market,” RBC’s Cooper said.
Source: CMHC, Reuters
Toronto, Vancouver Condos Push Canadian Building Permits to Record
Canadian building permits jumped to a surprise record in July, led by Toronto and Vancouver condominiums and apartments, at a time when the central bank says high home prices and indebted consumers remain a key risk to the economy.
Statistics Canada reported on Monday that municipalities issued building permits worth $9.2 billion dollars in July, up 11.8% from June and the fourth consecutive monthly advance. The increase in July was mainly attributable to higher construction intentions for multi-family dwellings in Ontario and British Columbia as well as institutional buildings in Manitoba.
Residential and non-residential permits both reached records, rising 18.0% and 5.2% respectively.
Total permits in Toronto rose 29.6% to $1.65 billion while Vancouver surged 46.1% to $718 million.
The gain in Toronto was driven by higher construction intentions for multi-family dwellings and, to a lesser extent, institutional buildings, Statistics Canada said. The increase in Vancouver came mainly from multi-family dwellings.
The gain in non-residential activity was led by government spending, rather than the business investment Bank of Canada Governor Stephen Poloz said is needed to bring about a sustainable recovery.
Bank of Canada policy makers said last week that risks posed by “imbalances” in household finances remain, as they kept their key interest rate at 1%. Home sales and prices have shown unexpected strength this year as the lowest mortgage rates in decades spur demand. Policy makers including Finance Minister Joe Oliver have singled out the surge in condominium construction in Toronto and Vancouver for concern.
The value of residential building permits increased for the fifth consecutive month, up 18.0% to $5.0 billion in July. Gains were posted in seven provinces, led by Ontario and British Columbia, with Alberta a distant third. The largest decline occurred in Nova Scotia.
The value of building permits for multi-family dwellings rose 43.4% to $2.5 billion in July, after a 4.5% decrease the previous month. This gain was primarily the result of higher construction intentions for apartment and apartment-condominium projects in Ontario, British Columbia and, to a lesser extent, Alberta.
Canadian municipalities issued permits for single-family dwellings worth $2.4 billion in July, a slight decrease of 0.5%, after three consecutive monthly increases. The value of single-family dwelling permits declined in five provinces, with the largest decrease occurring in Ontario. Alberta saw the largest increase, followed by Saskatchewan and Nova Scotia.
At the national level, municipalities approved permits for the construction of 20,511 new dwellings, up 21.4% from June. This increase was attributable to multi-family dwellings, which rose 35.2% to 14,050 units. In contrast, the number of single-family dwellings edged down 0.6% to 6,461 units.
In the non-residential sector, the value of permits rose 5.2% to a record high $4.2 billion. This represented a fourth consecutive monthly increase. Gains were recorded in six provinces, with Manitoba accounting for most of the increase. In contrast, the largest decline occurred in Alberta, followed by Quebec. Both provinces posted large gains the previous month.
The value of permits for institutional buildings rose 28.4% to $1.8 billion in July, following a large increase the previous month. This gain was primarily the result of higher construction intentions for medical facilities in Quebec and Manitoba, as well as educational institutions in Alberta.
In the commercial component, the value of building permits rose 2.6% to $1.8 billion in July, following a 2.3% decrease in June. Gains were reported in five provinces, led by Ontario and Quebec. Higher construction intentions for warehouses and, to a lesser degree, retail and wholesale outlets were mainly responsible for the increase at the national level.
Construction intentions for industrial buildings fell 32.6% to $511 million in July, ending a string of three consecutive monthly gains. Lower construction intentions for communication buildings in Quebec and utility buildings in Ontario and Alberta accounted for most of the decline.
The value of permits increased in five provinces, with the largest gain in Ontario, followed by British Columbia and Manitoba.
Most of the gain in Ontario and British Columbia was attributable to multi-family dwellings, while the increase in Manitoba came from the institutional component and, to a lesser extent, the commercial component.
Quebec posted the largest decline, followed by Newfoundland and Labrador and Nova Scotia. The decrease in Quebec was mainly because of a 65.3% decline in construction intentions for industrial buildings. Newfoundland and Labrador's decrease was attributable to lower construction intentions for commercial buildings, while in Nova Scotia, lower construction intentions for multi-family dwellings were responsible for the decrease.
Source: Statistics Canada, Bloomberg News
Canadians Finding it Harder to Move-Up to Bigger Homes
Having trouble moving into a bigger home? You’re not alone.
Prices of bigger and more expensive homes in Canada are rising significantly faster than those of cheaper properties, Canadian Imperial Bank of Commerce economist Benjamin Tal has found. The phenomenon is limiting peoples’ ability to trade up, and causing many to choose to renovate their existing home instead.
The trend is pronounced in cities including Toronto, Ottawa, Calgary and Edmonton. Spending on home renovations as a percentage of total residential investment is at its highest level on record.
And the “move up” market is becoming paralyzed at the same time that tighter mortgage rules and higher home prices have knocked many potential first-time buyers out of the market, Mr. Tal says. “The homeownership rate among Canadians aged 25-35 (first-time homebuyers) has fallen from 55% in 2012 to the current 50%,” he says in a report released on Monday. The rate has remained stable for people over age 35.
These factors will influence prices. Because many people will be staying put in low-to-mid-range-priced houses and condos, the supply of available units will be lower than it otherwise would be, which Mr. Tal says will work to limit downward pressure on prices.
And he reiterated his view that restrictions in supply coupled with affordability pressures means that Canada’s homeownership rate, at close to 70%, has probably peaked for the time being.
He says while average prices have risen about 5% on a national basis, the percentage hides a reality that shows prices have stalled in some markets and are even falling in Saint John and Quebec City.
He notes that from the first quarter of 2010 to the first quarter of 2014, 27% of home sales saw prices rise slower than the rate of inflation. He said sales of units in the low to mid range of the market have actually fallen since 2010.
Low to mid-range homes are priced under $600,000 in Vancouver, under $500,000 in Toronto and under $350,000 in Calgary. In the upper end of the market, sales have been rising rapidly. That upper end is described as over $1.1-million in Toronto and Vancouver and over $600,000 in Calgary.
Mr. Tal says the issue has been affordability on the low end of the market and points to federal regulations that restricted government-backed insured mortgages to 25-year amortizations, a sharp drop from the 40-year amortizations that existed before they crackdown on housing by Ottawa. Longer amortizations lower monthly mortgage payments at the expense of larger interest payments over the life of a mortgage.
He says the more expensive a property is the faster its price tends to be rising. Mr. Tal adds someone trying to move from say a $600,000 property in Toronto to a $900,000 property ends up having to pay not only for the jump in category but for the fact that “the move-up property has risen faster than the price of their own property.”
The economist maintains this trend is true in all the five cities studied, which also included Edmonton and Ottawa.
Canadians faced with this inability to ”move up” have turned to the renovation market with spending on home renovations as a share of total residential investment about 46% over the past five years — the highest on record.
“The picture that emerges is of a much more static market than perceived by many,” says Mr. Tal, who thinks the higher end of the market might end up more vulnerable to price adjustments.
Source: The Financial Post, The Globe and Mail
Canadian Economy Sheds 11,000 Jobs in August with Record Drop in the Private-Sector
The Canadian economy shed 11,000 jobs last month, more evidence of a weak labour market as the private sector posted a record drop in payrolls.
The country’s unemployment rate remained at 7% in August, Statistics Canada reported last Friday.
The numbers showed that private-sector hiring tumbled last month. Private companies shed 111,800 positions, the steepest decline on record, as the manufacturing, trade and financial services sectors cut jobs. The public sector added 14,000 jobs and self employment rose by 86,900.
Smoothing out monthly volatility, job creation in Canada has been weak, with average gains of less than 13,000 per month this year. Over the past year, part-time positions have comprised 81% of the 81,000 job gains.
“The loss of private sector and full-time jobs is concerning,” noted Krishen Rangasamy, senior economist at National Bank Financial, adding that the employment picture should improve with better corporate profits and firming economic growth.
For now, employment in the private sector “has been relatively flat since the fall of 2013,” Statscan noted.
The latest reading comes after the agency was forced to make a big revision its July jobs numbers. That month saw a gain of 41,700 positions rather than the 200 jobs that Statscan had originally reported, a mistake it attributed to human error and a redesign of its survey.
For August, economists had been expecting 10,000 new jobs with the unemployment rate unchanged.
Employment fell among young people and women aged 25 to 54 last month. It rose among core-aged men.
Among provinces, Alberta and Newfoundland saw job losses while employment rose in Nova Scotia and New Brunswick.
By sector, goods producing jobs rose by only 10,000 overall, as gains of 24,400 in construction were offset by a drop of 11,000 in manufacturing and in the number workers in natural resources industries, down 2,100.
The services sector lost 21,000 positions in August, led by a drop of 26,500 workers in trade industries. Transportation and housing payrolls fell by 14,700, while there was a 13,500 decline in the number of people employed by finance, insurance real estate and leasing operations. Information, culture and recreation outlets shed 10,600 positions and workers in educational services were down by 7,100. Overall, there were 27,000 fewer people employed in wholesale and retail trade during the month.
Professional, scientific and technical services added 21,300 to their payrolls, and public administration increased by 20,500 last month, while accommodation and food services gained 6,900.
Meanwhile, Derek Holt, VP at Scotiank Economics, urged clients to approach Statistics Canada’s latest reading on the country’s labour market with caution, calling some details in the report “very fishy.”
The fall of 111,800 in the number of private-sector employees amounted to 1.0%, equaling the record month-on-month drop in April 1982. Overall, 97,800 employees lost their jobs, while the number of self-employed rose by 86,900.
“Apparently private payroll employees were just crushed last month via a drop of 97,800 and this was almost fully offset by a coincidental surge of 86,900 in the number of self-employed,” Holt commented. “That’s statistically possible I suppose but it looks very fishy to me.”
Holt added: “The rise in the number of self-employed and the 111,800 drop in private payrolls are both monthly records in figures stretching back to the survey’s inception in 1976. What an utterly fascinating pair of coincidences.”
Gluskin-Sheff chief economist David Rosenberg also said Friday’s report did “not quite pass the smell test.”
Rosenberg, like Holt, casts a critical eye at the largest monthly decline in private sector jobs on record — even bigger than biggest decline at the peak of the recession (100,000 jobs lost in January 2009).
“The loss of a record number of private sector jobs during an expansion seems odd to say the least,” wrote Rosenberg in his morning note.
At the same time, “self-employment jumped 87,000 to mark its largest increase on record.”
“Of the decline in private sector employment, the vast majority of it occurred in Ontario (-43,000) and Quebec (-36,000) with no clear industry being the driver. This all seems very strange and leads us to take the report with a giant grain of salt.”
Source: Statistics Canada, The Financial Post, The Globe and Mail
Fourth Quarter Hiring Outlook Falls
Canadian employers are more reticent about expanding payrolls, with the hiring outlook falling to its lowest level in more than four years according to a new survey.
Manpower Canada’s latest quarterly employment survey shows fourth-quarter hiring plans are down from both the prior quarter and last year’s levels.
The restraint echoes a Statistics Canada report last week that showed the economy shed 11,000 jobs last month as the private sector slashed jobs. Manpower’s survey shows regional differences remain, with employers in the West more upbeat than those in Ontario and eastwards. Moreover, global competition and rising costs for inputs such as gasoline and hydro mean many employers are focusing more on productivity and controlling costs than adding to headcount.
“Employers are cautious in this environment, so they’re using variable labour, part-time labour and not putting people full time on their payrolls because of that caution,” said Byrne Luft, vice-president of operations for Manpower Canada, a staffing firm, in a statement.
"The hiring climate is expected to be more modest in the fourth quarter, with the weakest net employment outlook we've seen since the second quarter of 2010," Byrne added. "Although the political environments in Quebec and Ontario have stabilized after their provincial elections, it has not yet translated to an uptick in the general mood."
Twelve per cent of Canadian employers plan to boost staffing levels in the October-to-December period, while 7% see job cuts, the survey of more than 1,900 employers shows. Eight in 10 expect current staffing levels to be unchanged and 2% are unsure about hiring plans.
Plans remain strongest in the West, with employers in Ontario and Quebec more wary of making new hires. Caution has also grown in Atlantic Canada, where intentions fell to the lowest level since regional analysis began in 2004.
Tight margins, inflation and competitive pressures especially among manufacturers “are not a formula for generating jobs,” Mr. Luft said. Rather, the focus “has been about productivity and efficiency in every industry right across the board.”
By sector, public administration, at 16%, had the most favourable net employment outlook. That is down by 1 percentage point from the third quarter, but a 10 percentage point jump from a year earlier.
Transportation and public utilities followed with 13%, and the finance insurance and real estate sector, which also had the most favorable quarter-over-quarter change, was 12%.
Non-durables manufacturing had the softest outlook at just 1%, while the construction, and wholesale and retail trade sectors both came in at 5%.
Another factor may be at play, at least in Ontario where the country’s most populous province saw a minimum-wage hike take effect this summer. “A lot of businesses put the brakes on bringing on a new staff in order to see how they got through the first season under this,” said Kithio Mwanzia, interim chief executive officer at the Greater Niagara Chamber of Commerce.
Among cities, Red Deer, Alta., and Victoria have among the brightest outlooks while the Cape Breton, N.S., area has the weakest. (A separate survey on the Canadian job market, released in August by Express Employment Professionals, showed Wood Buffalo, Alta., and Grande Prairie, in Alta., along with Regina currently have the strongest demand for workers).
Source: The Globe and Mail, Reuters
U.S. Jobs Growth Smallest in Eight Months as Labour Force Shrinks
U.S. job growth slowed down sharply in August and more Americans gave up the hunt for work, giving a cautious Federal Reserve more reasons to wait a bit longer before raising interest rates.
Nonfarm payrolls increased 142,000 last month, the smallest increase in eight months, the Labor Department said last Friday. The unemployment rate fell one-tenth of a percentage point to 6.1% as people dropped out of the labour force.
June and July data were revised to show 28,000 fewer jobs created than previously reported, lending the weaker tone. In addition, manufacturing saw no job growth and retail payrolls declined for the first time since February.
Economists had expected payrolls to increase 225,000 in August and the unemployment rate to fall to 6.1%.
The surprise slowdown in job growth is at odds with labour market indicators such as first-time applications for unemployment benefits, which are hovering near their pre-recession levels.
In addition, manufacturing and service sector surveys showed strong employment growth in August and household perceptions of the labour market brightened significantly, which economists said were consistent with tightening conditions.
Some economists had cautioned that August’s employment report could miss expectations because of seasonal factors. An upward revision to August data is most likely.
August’s employment report supports the Fed’s cautious approach to monetary policy.
Fed Chairman Janet Yellen is concerned about sluggish wage growth, the still-elevated numbers of Americans working part-time even though they want full-time employment, and Americans still suffering from a long spell of joblessness.
The U.S. central bank has pointed to these metrics as evidence of “significant underutilization” of labour market resources that merits a stimulative monetary policy.
The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell to 62.8% in August from 62.9% in July.
However, a broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell to 12.0%, the lowest level since October 2009, from 12.2% in July. The number of long-term unemployed Americans was the lowest since January 2009.
Average hourly earnings rose 6 cents in August. They were up 2.1% from a year ago.
The jobs data comes ahead of a Fed policy meeting on Sept. 16-17. The central bank has kept benchmark lending rates near zero since December 2008 and financial markets do not foresee an increase until around the middle of next year.
The job gains in August were spread broadly across the economy. The private sector accounted for the bulk of the increase in payrolls, advancing 134,000 after rising 213,000 in July.
Government employment increased 8,000 as state governments hired teachers at the start of the new school year.
Manufacturing added no jobs in August. That followed July’s hefty 28,000 jobs, which reflected a decision by automakers to keep assembly lines running in the summer. Auto payrolls fell 4,600.
Construction employment advanced 20,000, rising for an eighth straight month.
The length of the average workweek held steady at 34.5 hours for a sixth month in a row.
Source: Reuters
Upcoming CHHMA Events
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Industry Memorial Golf Classic
Wednesday, October 1, 2014
Blue Springs Golf Club, Acton, Ontario
Industry Cocktail
Thursday, December 11, 2014
Casino de Montreal, Montreal, Quebec
Canada Night
Held in Conjunction with the International Home+Housewares Show
Sunday, March 8, 2015
InterContinental Hotel, Chicago, Illinois
CHHMA Ontario Golf Tournament
Tuesday, May 26, 2015
Angus Glen Golf Club, Markham, Ontario
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CHHMA Industry Calendar
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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca
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