Member Login
Username
Forgot Password
GO

CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY
Volume 16, Issue 34, September 8, 2016

Inside This Issue:

• Save the Date: Seminar on the Secrets of Power Negotiating® and Developing Persuasive Proposals – November 23
• Last Call for Seminar on the Future of E-Commerce/Digital - Next Tuesday September 13th
• Help Honour the Memory of Some Industry Friends & Enjoy a Day on the Golf Course at the Industry Memorial Golf Classic on September 27th
• Come Hear Bernie Owens, President of TIMBER MART, Speak at CHHMA Breakfast – October 26 in Montreal
• Sears Canada Reports $91.6 Million Loss in Second Quarter
• HBC Loss Widens in Q2 on Real Estate Joint Ventures but Retailer Boosts Operating Profit
• Dollarama Posts Better than Expected Profit in Q2 after Adding 13 New Stores
• Lowe’s Introduces Autonomous Service Robots to Stores in San Francisco Bay Area
• Alibaba Group and Canadian Government Sign Cooperation Agreement to Connect Small Businesses with Chinese Consumers
• Canadian Building Permits Rise, Break Two-Month Slide
• Bank of Canada Keeps Rate Unchanged, Sees Substantial Rebound Later this Year
• Toronto Home Sales Up 23.5% in August, Realtors Vow to Study Foreign Investors
• Canada’s Economy Keeps Dragging — and Government Policies are Making it Worse
• Latest U.S. Economic News


Association News

Save the Date: Seminar on the Secrets of Power Negotiating® and Developing Persuasive Proposals – November 23, 2016

Attention: CHHMA Members

Interested in improving business results and profitability? Can you and members of your organization develop persuasive proposals and negotiate effectively? Are you sure?

Effective proposal development and negotiating skills are essential for everyone.

Save the Date: November 23, 2016

The CHHMA has organized a special tailored one-day seminar for association members featuring negotiating expert Michael E. Sloopka.

When: November 23, 2016 – 8:30 a.m. to 4:30 p.m.(Continental Breakfast at 8:00 a.m. and Lunch at 12 noon)

Where: Corporate Event Centre at the Centre for Health & Safety Innovation (CHSI), 5110 Creekbank Road, Mississauga, Ontario

Who Should Attend: Senior management, sales management, all levels of sales and marketing personnel, and relevant cross-functional staff

Investment Required: $399.00, plus $29.95 for course materials (HST not included)

What You Will Learn: The morning session will focus on teaching attendees topline negotiating strategies, tactics, techniques, and powerful tips. The afternoon session will focus on teaching attendees a proven formula for developing more persuasive proposals that also impact your company’s line item and business reviews, as well as its new product launches.

Don’t miss out on the benefits and return on investment from attending this cost-effective one-day seminar that will help improve your business results and outcomes. Spread the word to members of your organization who can also benefit from improving their negotiating and proposal development skills.

Additional details will be provided within the coming weeks.



Last Call for Seminar on the Future of E-Commerce/Digital - Next Tuesday Sept. 13th

The CHHMA along with the Canadian Office Products Association (COPA) are pleased to be bringing you a seminar on the future of e-commerce/digital to be presented by the RetailNet Group next Tuesday, September 13, 2016, 9:00 a.m. – 11:00 a.m., at the Centre for Health & Safety Innovation (CHSI), 5110 Creekbank Rd., Mississauga. The cost to attend for CHHMA Members is $99.00 + HST.

The  digital world continues to transform retail in and out of the physical store and this trend will continue well beyond 2020. Traditional brick and mortar retailers are evolving their e-commerce operations and global third party marketplaces are fundamentally disrupting the retail landscape, resulting in a completely reshaped retail environment that will require distinct capabilities to compete.

In order to position for growth in this new seamless, digitally integrated retail environment, retailers and suppliers need to understand how fast e-commerce is growing, and get answers to crucial questions related to e-commerce and the digital transformation, including:

• How fast is e-commerce forecast to grow around the globe and in Canada?
• What is the size of the e-commerce opportunity?
• Which retailers are leading the change and driving the innovation?
• What capabilities will be critical for retailers and suppliers to win in the future digital landscape?
• How will e-commerce impact logistics and fulfillment business models of the future?

The seminar will explore how fast e-commerce is growing, the top e-commerce initiatives that retailers around the globe are working on today, and the future prevalent e-commerce fulfillment models. Participants will learn why retailers and brands need to build their roadmap of the table stakes and differentiating capabilities to carry them through the e-commerce and digital transformation.

About the Speaker
Chelsea Gross is an Analyst in the Advisory team at RNG, helping retailers and brands prepare for future retail scenarios. Chelsea specializes in the analysis of food progressive grocery retailers and new store innovation. Recent projects include the Future of the Supercenter, Consumer 2020, and the Digitally-Integrated Store.

Chelsea is replacing our original RNG speaker Hannah Donoghue and we look forward to hearing her game-changing information on this important topic – which you will not want to miss!

So if you have not registered someone from your company to attend this seminar, please consider doing so in the next day or two.

For all the information and to register online, click here.

Click here for a PDF registration form.  



Help Honour the Memory of Some Industry Friends & Enjoy a Day on the Golf Course at the Industry Memorial Golf Classic on September 27th  


The 15th Annual Industry Memorial Golf Classic is taking place on Tuesday, September 27th at the Blue Springs Golf Club in Acton, Ontario.

The event is held on behalf of the hardware and housewares industry and it honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend.

This year’s honourees are: David Holden (Hamilton Beach), Leonard Lee (Lee Valley Tools) and Warren Parr (D.H. Howden/TSC Stores).

Past honourees include: David Fry, Ted Kennedy, Geoff Somers, Ray Ceolin, Tom Ross, Bruce Webster, 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.

The event will start off with registration and breakfast at 8:00 a.m. with a 9:00 a.m. tee off. Dinner will commence at around 2:30 p.m.

For full details and to register online, click here

Click here for a PDF registration form

Money raised from the event will go towards the CHHMA Scholarship Program which provides support for children of CHHMA member company employees to attend university or college.  So please consider sponsoring a hole and/or donating an item for the silent auction for this worthwhile cause.

Click here for a PDF silent auction pledge form.



Come Hear Bernie Owens, President of TIMBER MART, Speak at CHHMA Breakfast – October 26 in Montreal

The CHHMA is pleased to be presenting Mr. Bernie Owens, President of TIMBER MART, at a CHHMA Breakfast Seminar on the morning of October 26 at the Hôtel Holiday Inn Montréal-Longueuil.

Mr. Owens began his career in the building-supply industry over thirty years ago, serving a long tenure at building-material manufacturer, CertainTeed – a subsidiary of multinational corporation, Saint-Gobain.Throughout his 21 years at CertainTeed, Mr. Owens served various roles including, General Manager - Finish Products for North America and Vice President of Sales for the company’s gypsum and insulation business units. Over the years, Owens adopted global best practices and fostered relationships with buying groups and building-material suppliers nationwide. Owens also went on to further his studies in business at international business school, INSEAD and York University’s Schulich School of Business.

Today, as the president of TIMBER MART, Mr. Owens leads the organization with a global industry perspective, fresh ideas, clear vision, and a relentless drive to make TIMBER MART the buying group of choice for Canadian independent building material and hardware entrepreneurs.

We look forward to hearing from Mr. Owens and his inside look into how he’s led TIMBER MART through some of their biggest organizational changes over the last three years. He'll explain how he’s leveraged change for TIMBER MART to become a best-in-class organization today – and supports Canadian independent entrepreneurs with a buying group that is better, faster and lower cost than ever before.

After the presentation, there will be a Question and Answer Period. Mr. Owens will also be accompanied by members of his management team.  

Click here for all the details and to register.



Industry News

Sears Canada Reports $91.6 Million Loss in Second Quarter

Sears Canada reported on Wednesday a $91.6 million loss in its second quarter, which included severance and other costs associated with the retailer’s efforts to revitalize its business.

Last year’s second quarter was profitable due to a one-time gain of $67.2 million from the sale and leaseback of two logistics centres in Alberta and Ontario. No real estate gains were recorded in this year’s second quarter.

Net loss in this year’s second quarter amounted to 90 cents per share, compared with net earnings of $13.5 million or 13 cents per share in last year’s second quarter.

Revenue and store sales were down for a variety of reasons, including fewer transactions of appliances and other big-ticket items due to the termination of a credit card agreement and less revenue than expected from a merchandise agreement.

Bank of Nova Scotia said in October it would buy JPMorgan & Chase Co’s Canadian credit card portfolio associated with Sears Canada.

Total revenue declined by 15% to $648.5 million, from $768.8 million, while same-store sales declined by 5.5% overall.

The company said it cut $128-million in costs for the first half of this year and said it was planning cost cuts at the higher end of its previously announced $127-million-$155-million forecast.

Source: The Canadian Press, Reuters 



HBC Loss Widens in Q2 on Real Estate Joint Ventures but Retailer Boosts Operating Profit

The Hudson’s Bay Company posted on Tuesday a net loss of $142 million in the second quarter amid increased costs from its real estate joint ventures.

The retailer has grown dramatically in the last year, acquiring German department store chain Galeria Kaufhof, online retailer Gilt and forming joint ventures with RioCan Real Estate Investment Trust and Simon Property Group in order to tie the company’s retail businesses to top-tier real estate investments.

Last year, HBC governor and real estate investor Richard Baker engineered a partnership with Toronto-based RioCan REIT and Simon Property Group to form joint venture deals worth $4.2 billion. In purchasing Kaufhof, HBC bought its 135 retail locations from Metro AG for $3.36 billion and simultaneously sold 40 pieces of Kaufhof’s real estate holdings to the Simon group for $3.3 billion.

HBC plans to open up to 20 stores in the Netherlands. In addition, the first five Saks OFF 5TH stores in Germany are expected to open next summer.

HBC’s net loss in the period ended July 30, which amounted to a loss of 78 cents per share, compared with net earnings of $59 million (a profit of 28 cents per share) in the same period of 2015, which included a pre-tax gain of $133 million related to the creation of the joint ventures. The normalized net loss in the quarter was $122 million, compared with a loss of $61 million in the same period of 2015.

“We don’t have the benefit from the pre-tax gain last year on the sale of the properties into the joint ventures,” Hudson’s Bay chief executive Jerry Storch said.

“Secondly, the rents from the joint venture are flat throughout the year no matter how big the quarter is, even though the most profitable quarters are the third and fourth quarters. So earlier in the year, the expenses are higher relative to the income and later in the year the income is much higher relative to the rent.”

Storch was more keen to focus on the company’s operating profit. Adjusted earnings before interest, taxes, depreciation and amortization climbed 60% to $81 million, compared with $52 million a year ago.

Operating profit excluding rent grew to $263 million, up 113.8% from last year’s $123 million, thanks to HBC’s European operations.

“None of our competitors” grew by those measures in the most recent quarter, a challenging period for U.S. retailers, Storch said. “They all declined by 15 to 20 %. We are the only retailer in our class who grew (operating earnings) in the quarter.”

Last month, veteran U.S. department store retailer Macy’s Inc. announced it would close 100 of its stores, about 15% of its network, after its sixth-straight quarterly decline in sales.

Consolidated retail sales in the second quarter at HBC rose 60% to $3.25 billion from $2.04 billion a year ago, largely due to the additional revenue from Kaufhof and Gilt.com.

Same-store sales rose 1.9% but fell by 1.3% on a constant currency basis.

That played out in its stores as a 1.1% gain at its department stores, offset by a 0.9% decline at HBC Europe and a sharp 11.4% decline at its normally robust off-price business unit, which includes Saks off Fifth and Gilt.

Storch said the comparable decline was due to a very high comparable gain in the same period a year ago.

Management also implemented a less promotional pricing structure at Saks Off Fifth and an improved return policy at Gilt, and both measures improved the businesses’ profitability and gross margin rate.

“Some of the unprofitable sales where we sold product on a high promotion, some of those sales are no longer happening,” Storch said. “Over the long-term with our customers, it’s the right thing to do.”

HBC said it expects sales for the fiscal year 2016 to “trend towards the bottom end” of its forecast of $14.9-billion to $15.9-billion due to the “overall retail environment.”

Source: The Financial Post, Reuters 



Dollarama Posts Better than Expected Profit in Q2 after Adding 13 New Stores

Dollarama Inc. reported last Thursday a better-than-expected profit in its second quarter ended July 31, as sales got a boost from more shoppers visiting its stores.

The company’s results come in contrast to those from U.S. dollar store operators, who have been struggling with increased competition from Wal-Mart and lower food prices.

Dollarama, which raised its price ceiling to $4 from $3 during the second quarter ended July 31, said traffic rose 1% from a year earlier.

“The traffic growth was particularly telling given some investor concern heading into the quarter, given the recent performance of Wal-Mart in Canada,” Raymond James analyst Kenric Tyghe wrote in a note.

Walmart Canada reported a much smaller rise in second-quarter same-store sales due to intense competition from companies such as Loblaw Co Ltd and Sobeys Inc, who took price cuts on some products to fend off competition.

Shares of Dollarama rose as much as 2.7% to $99.48 in early trading last Thursday.

The Montreal-based retailer said it opened 13 stores in the second quarter, bringing the total number of stores to 1,051.

The company’s general, administrative and store operating expenses rose about 7%. However, the expenses as part of sales were 15.2%, compared with 15.9% a year earlier.

Gross margins remained flat at 38.4%.

Dollarama said same-store sales rose 5.7%, compared with 7.9% last year.

The company’s net income rose 11.4% to $106.4-million ($81.1-million U.S.), or 88 Canadian cents per share.

Revenue rose 11.6% to $729-million from $653.3 million.

Analysts on average had expected a profit of 84 Canadian cents per share and revenue of $726.55-million.

“The careful execution of our merchandising strategy and the implementation of operational improvements have made us stronger as we grow,” said Dollarama chief executive Neil Rossy. “We also continue to reach new customers in an efficient manner, while providing a consistent shopping experience across our network of stores.”

Meanwhile, management also said it has been exploring the possibility of selling products online, though it wouldn’t revise its business model anytime soon as Canadian shoppers spend more money at the growing number of discount retail stores across the country.

“At this stage we continue to proactively explore e-commerce options that would complement our business model,” said Dollarama’s chief financial officer Michael Ross in a conference call following the release of the second-quarter results. “Our priority very much remains an enhancement of our in-store customer experience.”

Dollarama confirms it has been working with the Montreal-based Orckestra e-commerce company, though it only is a research stage and has no immediate plans to launch into online retail.

“Competition will always intensify, the consumer will always ask for more and we cannot assume otherwise,” Ross commented.

If Dollarama did begin selling online, it would likely be for a customer buying in bulk, not picking up a single box of tissue paper, he added.

“It’s more to look for ways to service customers who are looking for things in a Dollarama that we can’t service at the store level,” Ross said. “If a customer wants hundreds of an item, they would have to go to multiple stores and that’s simply impractical.”

Source: Reuters, The Financial Post



Lowe’s Introduces Autonomous Service Robots to Stores in San Francisco Bay Area

Robots are increasingly common in warehouses and stores. Now Lowe's will start rolling out autonomous retail service robots that can help manage inventory and show customers where to find products.

E-commerce companies already use robots for materials transport and picking orders , but brick-and-mortar stores don't want to be left out of the automation trend. Now Lowe's joins the growing list of retailers that are using artificial intelligence to help with both logistics and customer service. The home improvement retailer will start rolling out autonomous retail service robots to 11 San Francisco Bay area stores over the next seven months.

Lowe's partnered with Silicon Valley technology firm Fellow Robots to develop LoweBot, a 5-foot-tall NAVii machine that can navigate itself through store aisles while avoiding obstacles. The two companies have previously worked together to develop a similar robot that has been tested for the last two years in Orchard Supply Hardware, a chain owned by Lowe's.

"For nearly two years, we’ve studied how robots in our San Jose Orchard Supply Hardware store can help customers more effectively navigate the store to find products and assist employees with inventory scanning," said Kyle Nel, executive director of Lowe’s Innovation Labs, the company’s disruptive innovation hub. "Now, we are taking those learnings and applying them to a focused group of Lowe’s stores to see how the technology supports a broader customer and employee base."

At first, the robot seems like it's just a novelty designed to draw people into stores. (And that is probably at least partially true.) However, it's more complicated than a self-service kiosk. Much like human employees, it will greet customers, ask if they need help finding anything in the store, and then walk them to the correct location. The robot uses a 3D scanner for human body frame detection, and it engages with customers through speech recognition and a screen that displays detailed product information. It's not clear whether Lowe's will make its robots multi-lingual, but NAVii robots can be programmed to understand as many as 25 languages.

It can also scan inventory on the shelves and remember inventory details on a daily basis. Lowe's plans to use the data the robot collects to help the company find and detect inventory patterns that can influence business decisions.

“We develop technology that is scalable, which is the number one pain point for bringing new technology into the retail channel. Our robotic and software platform is robust enough to manage the complex and large inventory that these retailers have, and we work closely with our partners to understand their use case to tailor our offering. Our goal is to solve the biggest challenges our clients face, like checking inventory and customer service, while also having the ability to react and make quick iterations to our system to fulfill the unique needs of our partners,” said Marco Mascorro, co-founder and CEO of Fellow Robots.

According to a Deloitte report on 2016 retail trends, robots are increasingly common in warehouses and stores. In addition to using automated machines behind the scenes, retailers are introducing robotic shopping carts and customer-facing robots.

Robots have recently appeared in stores such as Target and Best Buy, and SoftBank's humanoid Pepper -- which has been popular in Japan -- made its North American debut this summer.

Source: Lowe’s Companies, Inc., ZDNet



Government & Legislative News

Alibaba Group and Canadian Government Sign Cooperation Agreement to Connect Small Businesses with Chinese Consumers

Alibaba Group Executive Chairman Jack Ma and Canadian Prime Minister Justin Trudeau unveiled last weekend a declaration of cooperation that will strengthen efforts to promote trade between Canadian small and medium sized businesses and Chinese consumers.

Both Mr. Ma and Prime Minister Trudeau said at a ceremony at Alibaba Group’s head office that the cooperation agreement empowers the Canadian Trade Commissioner Service and Alibaba to work together to expand the two-way flow of goods, services and people. The two sides will strategize on how to use e-commerce to stimulate trade, with opportunities for Canadian small and medium-sized exporters.

“Today, I am pleased we are formalizing our efforts to have Alibaba serve as the gateway to China for Canadian businesses of all sizes,” Mr. Ma said. “Our agreements today represent a great opportunity for Canada and for China. It is a new chapter in our future together.”

“Today is a very good day for Canadian businesses. They now have a permanent e-home on the world's biggest online shopping site - Alibaba - and with it, the ability to reach over 400 million Chinese consumers. There is significant potential for further business development with Alibaba, which would encourage Chinese tourism to Canada, create jobs at home and strengthen our middle-class,” said Trudeau.

Mr. Ma and Prime Minister Trudeau launched the Canadian Pavilion on Alibaba’s shopping platform, Tmall Global. The Canadian Pavilion makes it possible for Canadian businesses large and small to directly reach Chinese consumers. It was launched with more than 30 businesses participating, selling more than 100 products. It will feature special promotions for unique Canadian products such as apparel, ice wine, maple syrup, seafood and health products.

Trudeau says the hub on the world's largest online shopping site will clearly brand Canadian goods and services for Chinese consumers. He also expects the portal to promote tourism in Canada.

More than 30 Canadian brands have been selling their goods on Alibaba, including Jamieson Vitamins.

"We've been here for about two years now, so it hasn't been a long time," said Gregg Serles, Jamieson's vice-president of worldwide sales.

"But it certainly is one of the biggest opportunities in the word for us and our projects and obviously for Canadian products in general."

He said the hub will help Chinese shoppers locate Canadian products.

"I assure you that we will work hard to make sure that China's consumers love the Canadian products," Ma said.

Ma, one of China's best-known entrepreneurs, told the business crowd that Canada offers top-quality and healthy agricultural products and commodities as well as high tech, environmental tech, music, art and culture.

"These are exactly the types of products Chinese people want and need," said Ma, who also met with Stephen Harper when he was prime minister.

Experts believe Alibaba has a lot to offer Canadian merchants.

Dominic Barton, the global managing director of consulting company McKinsey & Co., said in a recent interview that Alibaba has done tremendous things for China by allowing small mom-and-pop companies there to do business with the rest of the Asian country.

"I think it's been revolutionary good, if I could call it that, from that point of view of just allowing small companies to participate in a big market," said Barton, a global expert hand-picked by Ottawa to help lift Canada's lacklustre growth.

"And in my view, there's no reason why you can't extend that out to [small and medium-sized enterprises] in other parts of the world."  Alibaba has launched Tmalls in about a dozen countries, including Korea, Australia and the United States.

Other observers are not so sure that it will help Canadian firms.

Alex He, a research fellow at the Centre for International Governance Innovation think tank, said Ma has been very active in trying to sell his business model to the whole world as a way to help midsized and small businesses.

"And at the same time, he can make money from that," He said.

He noted that Alibaba has come in for criticism in China that the model allows for the sale of fake goods, which can be very difficult to return.

"Jack Ma's model is very successful, I'm just not sure if they can succeed outside of China."

Source: Business Wire, The Canadian Press          



Economic News

Canadian Building Permits Rise, Break Two-Month Slide 

The value of Canadian building permits issued in July rose by 0.8% to $6.5 billion from June, led by authorizations to construct non-residential buildings, Statistics Canada said on Thursday.  Ontario and Alberta led the national increase.

The increase was less than the 3.0% month-on-month advance predicted by analysts in a Reuters poll. Permits had dropped by 5.3% in June and 2.1% in May.

The value of residential building permits was down 2.0% to $4.0 billion in July, the fourth consecutive monthly decrease. Lower construction intentions were posted in five provinces, with British Columbia, Ontario and Quebec leading the decline.

The value of permits for single-family dwellings declined 3.0% to $2.4 billion in July, following a 4.8% increase in June. Every province, except Nova Scotia and Manitoba, posted a decrease. The largest drop was reported in Ontario, followed by British Columbia and Alberta.

Construction intentions for multi-family dwellings edged down 0.4% to $1.7 billion in July, the fifth decline since the beginning of 2016. The value of permits was down in four provinces, with British Columbia and Quebec reporting the largest decreases.

Municipalities approved the construction of 15,388 new dwellings in July, 2.2% more than in June, when the number of new units approved was at its lowest since December 2012. The advance in July was attributable to multi-family dwellings, up 3.9% to 9,652 new units. In contrast, the number of single-family homes declined 0.5% to 5,736 new dwellings.

In the non-residential sector, the value of building permits advanced 5.6% to $2.4 billion. The gain followed two consecutive months of declines. Increases were reported in four provinces, most notably Ontario.

In July, all three non-residential components posted higher construction intentions, with institutional structures leading the advance, followed by industrial buildings.

The value of permits for institutional buildings rose 9.6% to $740 million in July, the third increase in four months.  The advance was largely the result of higher construction intentions for medical facilities and, to a lesser extent, retirement residences. Gains in Ontario offset declines observed in six provinces, led by Saskatchewan.

In the industrial component, the value of permits advanced 17.1% to $418 million, following five consecutive monthly declines. The increase stemmed from higher construction intentions for transportation terminals and, to a lesser degree, maintenance-related buildings. The value of building permits was up in four provinces, most notably Ontario, followed by Alberta and Manitoba.

The value of commercial building permits edged up 0.3% to $1.3 billion in July. Higher construction intentions for office buildings and retail complexes were mostly responsible for the gain.  Increases were registered in seven provinces, with Ontario reporting the largest advance.

Regionally, higher construction intentions were reported in four provinces in July, led by Ontario, followed by Alberta and Manitoba.

The value of building permits in Ontario was up 11.1% to $2.8 billion, following an 8.2% decline in June. The gain was attributable to higher construction intentions for non-residential buildings, led by institutional structures, followed by commercial and industrial buildings. The advance was moderated by a 2.6% decrease in the value of residential dwelling permits.

Following two consecutive monthly declines, the value of building permits in Alberta rose 7.4% to $951 million in July. All components were up, except single-family dwellings. The gain was largely the result of higher construction intentions for multi-family dwellings and industrial buildings.

In Manitoba, the value of building permits increased 17.6% to $230 million. Every component registered a gain, led by industrial buildings and multi-family dwellings.

Conversely, Saskatchewan and Quebec posted the largest declines. In Saskatchewan, the value of building permits was down 44.3%, offsetting the notable advance in June. In Quebec, the 10.1% drop followed two consecutive monthly increases.

Source: Statistics Canada, Reuters



Bank of Canada Keeps Rate Unchanged, Sees Substantial Rebound Later this Year  

The Bank of Canada is still anticipating a “substantial rebound” in the second half of this year as the economy gets a lift from federal spending, rebuilding from the Alberta wildfires and recovering oil production.

The central bank opted once again Wednesday to keep its key overnight interest rate at 0.5%, where it has sat for the past 14 months.

“The overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate,” the bank said in a statement.

On the plus side, the bank pointed to recovering oil production and the increase in the Canada Child Benefit, brought in by the federal government, which is expected to boost consumer spending.

But the economy continues to disappoint Bank of Canada Governor Stephen Poloz and his central bank colleagues. The bank acknowledged that the global growth is not picking up as fast as it had expected in July, when it released it released its last set of forecasts. The main culprit was a contraction in U.S. business and residential investment in the second quarter.

The bank also expressed concern about all-important Canadian exports, which bounced back in July, but are still struggling to regain earlier losses. “The ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July,” according to the statement.

“To some extent, the bank is simply acknowledging reality,” Bank of Montreal chief economist Douglas Porter said in a research note. “Even with the rebound in the latest monthly report, there is little debate that non-resource exports have been a disappointment this year, and the bank has finally admitted that fact.”

Canada’s economy actually shrank in the second quarter, by 1.6%, mainly due to the effect of the wildfires on oil production in and around Fort McMurray, Alta.

However, many economists expect a rebound of about 3.5% in GDP in the third quarter of this year, as oilsands production resumes and reconstruction work begins in Fort McMurray and the surrounding areas damaged by the wildfires..

In spite of the bank’s optimism, some economists are already scaling back their expectations for next year and beyond. In a report released Wednesday, CIBC chief economist Avery Shenfeld said Canada’s economy won’t hit 2% growth until 2019 at the earliest. CIBC is now forecasting growth of 1.8% next year, down from 2.1% and 1.9% in 2018.

“Anemic capital spending plans, even outside the energy sector, suggest that the draw of a cheaper Canadian dollar isn’t yet enough to offset sluggish global growth and the resulting lack of pressure to add fresh capacity,” Mr. Shenfeld said.

CIBC doesn’t expect the central bank to raise the overnight rate until mid-2018.

In its statement, the Bank of Canada also gave a nod to an apparent cooling in the once red-hot Vancouver housing market. Sales have plummeted in recent months – an apparent response to a new 15% tax on foreign buyers and a dearth of buyers able to afford the city’s inflated prices.

But the bank continues to fret about the dangers of high household debt levels.

“While there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise,” the bank said.

Source: The Globe and Mail, The Financial Post



Toronto Home Sales Up 23.5% in August, Realtors Vow to Study Foreign Investors 

Toronto realtors say an extra two working days in August created a major boost for sales of existing homes in the month even in the face of a continued shortage of listings.

The Toronto Real Estate Board (TREB) said Wednesday there were 9,813 sales through the Multiple Listing Service last month, a 23.5% increase from a year ago. The majority of sales were on working days and without the two extra ones August, 2016, sales would have risen about 13% from a year ago.

With the focus in Vancouver on foreign investors and their impact on their market, Toronto realtors say they will study the issue on their own in the coming months. Last month, British Columbia began taxing foreign investors an extra 15% on property taxes and some have linked that move to a major decline in August sales in the province’s largest city.

“TREB will also be releasing new third-party research, and consumer and realtor survey results throughout the fall and winter, with discussions focusing on foreign buying activity and issues affecting the supply of ownership housing,” said Jason Mercer, director of market analysis, with the board, in a statement.

Toronto’s 905 region is now clearly outpacing the 416 area in every housing category. The average detached home sold for $905,610 last month in the suburbs, a 23.3% increase from a year ago. Semi-detached homes were up 20.6% and townhouses 18.4% compared to the same period a year ago, in the 905 area.

“The conditions underlying strong demand for ownership housing remained in place, including a relatively strong regional economy, growth in average earnings and low borrowing costs. Unfortunately, we did not see any relief on the listings front, with the number of new listings down compared to last year. This situation continued to underpin very strong home price growth, irrespective of home type or area,” said Larry Cerqua, president of the board, in a release.

TREB said its home price composite benchmark for all housing in August was up 17.2% on a year-over-year basis. The average sale price for all home types rose 17.7% to $710,410.

In the city of Toronto, the average detached home sold for $1,206,637 last month, an 18.3% increase from a year ago. The average semi-detached home sold for $774,700, a 16.4% increase during the same period.  Condominiums rose 9.8% from a year ago as the average reached $446,612.

The board said housing sales are clearly on their way to another record showing.

“Population in the GTA continues to grow. The resulting growth in households coupled with favourable economic conditions and low borrowing costs means that we remain on track for another record year for home sales,” said TREB’s Mercer.

Source: Article by Garry Marr, The Financial Post



Canada’s Economy Keeps Dragging — and Government Policies are Making it Worse

Statistics Canada reported last week that second-quarter GDP fell 0.4% nationally, which is not particularly alarming in and of itself since all of the drop was due to the May wildfires in the Fort McMurray area. Already, the Macdonald-Laurier Institute leading indicator shows the underlying trend of the economy righted itself in June and July, auguring a recovery in the second half of the year. However, this is no reason to be sanguine: Growth rates are likely to prove uninspiring, as the North American economy remains stuck in the slow lane. Meanwhile, our governments’ monetary and fiscal prescriptions are proving ineffective, and possibly dangerously counterproductive.

More worrisome than tepid overall growth is the source of the weakness. Business investment and exports remain a drag on growth. The investment slump is especially noteworthy for its implications for long-term productivity growth. While much of Canada’s slump can be attributed to plunging oil prices, that does not explain the U.S. slack. Furthermore, Canada’s expected upturn in manufacturing output and investment hasn’t materialized, despite the boost from lower energy prices and the lower dollar.

Not all of Canada’s economic luck has been bad. While wildfires set back growth, Canada’s lumber and auto industries benefited from one-time factors. Our lumber industry is booming, as U.S. restrictions on our softwood exports expired, while a new agreement was supposed to be negotiated. With those talks floundering, the U.S. is likely to impose new restrictions in the near term, adding further to the cross-border trade friction begun after the Obama administration blocked Canada’s Keystone XL pipeline. Ontario’s auto industry has also grown rapidly over the past year after the retooling of some plants. However, auto sales in the U.S. appear to be past their peak, clouding the outlook for auto production on top of our steadily eroding share of North American auto assemblies as new plants migrate south. Outside of autos, manufacturing in Ontario has slumped across the board.

The lacklustre performance of Canada’s economy mirrors that of the U.S., where GDP rose only 1.2% in the past four quarters. Business investment in the U.S. has fallen for three straight quarters while exports have retreated in three of the last four. Overall, both of these key sectors have shrunk by just over 1% in the past year (for the Trump crowd, imports have risen only 0.4%, so import penetration has played almost no role in the slowdown).

Business investment has been the missing piece in the economic growth jigsaw for most of the major G7 nations since the recession hit in 2008. Canada had been the one exception, thanks to our once-booming oil industry, giving us the fastest post-2009 recovery in the G7. After oil prices collapsed, Canada joined the crowded ranks of countries with weak investment.

It is difficult to see a sustained upturn in growth without a boost from business investment, and that does not appear to be in the offing. The legendary economist Gary Becker blamed persistently slow investment growth in the U.S. after 2008 on the raft of new regulations brought in by the Obama administration on everything from housing to banking to energy and the environment. Regulation also has hampered investment in Canada. In the west, approval for pipelines and gas terminals keep getting delayed, while the explosion of regulations in Ontario over the past decade, on top of its soaring cost of energy, has been accompanied by businesses’ reluctance to invest and commit to growth.

Slower business investment has insidious effects on the economy. Not only does it weaken growth in the short term, but it inhibits the growth of productivity needed to boost our long-term potential.  In turn, persistently weak investment and productivity growth has implications for the conduct of macroeconomic policy. In its annual report, the Bank for International Settlements (BIS) (which operates as the central bank for monetary authorities around the world) highlighted how governments have reached the limits of the stimulus possible from monetary and fiscal policy when productivity is stagnant.

The BIS advocates structural reforms to boost growth potential, arguing that chronic slow growth in the western world reflects supply-side constraints that can only be addressed by removing impediments to growth and deregulation. As symptomatic of supply constraints on growth, it cites both persistent current account trade deficits and lower unemployment rates than GDP growth normally implies in Canada, the U.S. and the U.K. This contradicts the conventional view that habitual slow growth reflects a deficiency of demand that can be addressed with yet another round of expansive (and expensive) fiscal and monetary policies. The key is how to interpret historically low interest rates: Are they the welcome result of disinflationary pressures from weak growth, or are they unsustainable because they fuel “financial imbalances that, at some point, will cause serious economic damage,” as the BIS report speculates?

The BIS recommends the reorientation of both monetary and fiscal policies away from a fixation on short-term stimulus to a focus on stability in asset markets and the balance sheets of the public and private sectors. It acknowledges this might not lift growth in the short term.  But the relentless focus on short-run changes in aggregate demand since 2008 failed to improve long-term growth, while creating imbalances that risk precipitating another financial crisis even while impairing governments’ capacity to respond.

Source: Article by Philip Cross, Special to The Financial Post 
     


Latest U.S. Economic News  
       

U.S. Employment Growth Slows More than Expected, Wage Growth Moderates, Putting Rate Hike into Question
U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage gains moderated, which could effectively rule out an interest rate increase from the Federal Reserve this month.

Nonfarm payrolls rose by 151,000 jobs last month after an upwardly revised 275,000 increase in July, with hiring in manufacturing and construction sectors declining, the Labor Department said last Friday. The U.S. unemployment rate was unchanged at 4.9% as more people entered the labour market.

Economists polled by Reuters had forecast payrolls rising 180,000 last month and the unemployment rate slipping one-tenth of a percentage point to 4.8%.

Last month’s jobs gains, however, could still be sufficient to push the Fed to raise interest rates in December. The rise in payrolls reinforces views that the U.S. economy has regained speed after almost stalling in the first half of the year.

The report comes more than two weeks before the U.S. central bank’s Sept. 20-21 policy meeting. Rate hike probabilities for both the September and December meetings rose after remarks last Friday by Fed Chair Janet Yellen that the case for raising rates had strengthened in recent months.

The Fed lifted its benchmark overnight interest rate at the end of last year for the first time in nearly a decade, but has held it steady since amid concerns over persistently low inflation.

The step-down in employment comes after the U.S. economy created a total of 546,000 jobs in June and July.

With the labour market near full employment and the U.S. economy’s recovery from the 2007-09 recession showing signs of aging, a slowdown in job growth is normal. Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.

The smaller-than-expected rise in payrolls also likely reflects difficulties adjusting the data for seasonal fluctuations. Over the last several years, the government’s August payrolls estimates have been weak only to be subsequently revised higher.

The timing of the next rate hike could also be determined by wage growth. Average hourly earnings increased three cents or 0.1% in August after a solid 0.3% rise in July.

The moderation in gains, which reflects a calendar quirk, pulled down the year-on-year gain to 2.4% from 2.6% in July.

Americans worked fewer hours last month, with the average workweek dipping to 34.3 hours from 34.4 hours in July.

Other details of the report showed the labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, unchanged at 62.8% last month.

The participation rate remains near multi-decade lows, in part reflecting demographic changes, and economists say this partially explains why wage growth has been sluggish.

The solid payrolls gain added to July consumer spending, residential construction and durable goods orders in suggesting a pick up in economic growth after output rose 1.0% in the first half of the year.

The Atlanta Fed is forecasting U.S. GDP rising at a 3.2% annual rate in the third quarter.

Last month, manufacturing sector employment fell 14,000 after rising for two straight months. Construction payrolls slipped 6,000, while mining shed a further 4,000 jobs in August.

Government payrolls rose 25,000 in August, extending the streak of job gains in the public sector to four months.

Source: Reuters

U.S. Pending Home Sales Jump in July
Contracts to buy previously owned U.S. homes surged in July after two straight months of declines as demand rose almost across the board, suggesting the housing market remains on solid ground despite last month's drop in home resales.

The National Association of Realtors (NAR) said reported last week that its Pending Home Sales Index, based on contracts signed last month, increased 1.3% to 111.3, the second highest reading in over a decade.

Pending home contracts become sales after a month or two, and last month's implied a pickup in home resales after they declined 3.2% in July. Economists had forecast pending home sales rising 0.6% last month.

Demand for U.S. housing is being driven by the labour market, which is steadily generating steady increases in wages as it nears full employment. Data on house prices, residential construction, new home sales and home builders' confidence have been upbeat in recent months.

Pending home sales rose 1.4% from a year ago. Contracts increased 0.8% in the Northeast and jumped 7.3% in the West. They gained 0.8% in the South, but fell 2.9% in the Midwest. 

Source: Reuters                       
 
  

 Upcoming CHHMA Events 

Future of E-Commerce/Digital Seminar
Tuesday, September 13, 2016
Centre for Health & Safety Innovation, Mississauga, Ontario


Industry Memorial Golf Classic

Tuesday, September 27, 2016
Blue Springs Golf Club, Acton, Ontario

Bernie Owens (TIMBER MART) Breakfast Seminar
Wednesday, October 26, 2016
Hôtel Holiday Inn Montréal-Longueuil, Longueuil, Québec

Secrets of Power Negotiating & Developing Persuasive Proposals One-Day Seminar
Featuring Negotiating Expert Michael E. Sloopka

Wednesday, November 23, 2016
Corporate Event Centre at CHSI, Mississauga, Ontario

CHHMA Industry Calendar

To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 ext.21.


CHHMA Links


Freight Logistics Savings
No Obligation Consultation



Discount Cellular
Phone Rates



Long Distance &
Telecommunications Savings



Discount Gas & Diesel Rates


Logo Apparel &
Promotional Products




Office Product Discounts


"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

If you would no longer like to receive our newsletter, please click here: Unsubscribe

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca