Every week we bring you the biggest currency, business and travel stories. This week: Pearson workers strike, Canada’s economy is booming, the loonie is up, Air France-KLM buy Virgin, a Brexit transition should only last to 2022, Spain’s economy recovers to pre-2008 levels, and US growth up.
Canada’s economy booming
Canada’s economy is growing at its fastest pace in 17 years. May represented the seventh consecutive month of growth with a 0.6% increase in GDP. Economists had predicted a 0.2% growth. Over the last 12 months GDP has grown by 4.6%. Oil and gas grew by 7.6%, manufacturing by 1.1%, goods-producing industries by 1.6%. The service industry grew by just 0.2%. Real estate and renting fell by 0.2% while construction fell by 0.6% – both of which may be related to the Bank of Canada’s decision to raise interest rates.
The strong growth numbers could help convince the Bank of Canada to raise rates again in October. According to the Financial Post “Markets see a 73.6 per cent chance of a rate increase at the bank’s October meeting, up from a 67.2 per cent ahead of the data. Traders see 37.7 per cent odds the bank will move as soon as its next meeting in September.” However the strengthening dollar and low inflation could indicate that a rate rise is not necessary just yet.
Strike at Pearson Airport
700 baggage handlers and ground crew workers have gone on strike at Pearson Airport. The workers walked off the job on Thursday after 95% voted in favour of rejecting an offer from Swissport. Swissport services over 30 airlines. The Greater Toronto Airports Authority said it had contingency plans. There have been some delays but the union claims that they do not intend to cause any delays. Any delays, the union says, were caused by contract workers brought in by Swissport. If you are flying out of Pearson arrive extra early just in case.
Air France-KLM buys 31% of Virgin
Richard Branson’s Virgin Atlantic group will now control just 20% of the company that Branson founded. Delta Airlines will retain a 49% stake. Branson assured customers and shareholders that he would remain involved in the company and that it was an “extremely beneficial” move for Virgin.
Amazon CEO Jeff Bezos became the world’s richest man on Thursday as stock in his company hit a new high. Amazon’s stock hit a high of $1,083.31 before falling to $1,046. Bezos owns 17% of the company as well as the Washington Post. Bill Gates was briefly the second richest man according to Forbes who note that he would be well in front if not for the charitable causes he promotes. Later on Thursday Amazon announced that their quarterly revenue fell 77% due to heavy investment in video content and emerging economies, causing the share price to fall to $1,014.75.
Brexit transition to last to 2022
Philip Hammond, Chancellor of the Exchequer, has said that any transition deal must end before the next general election in 2022. Britain will formally leave the EU on 29 March 2019, but the proposition of a ‘transition’ step has proven popular amongst business and political leaders in order to mitigate the expected negative consequences. Brexit will dominate discussion about the GBP over the next five years.
The Spanish economy grew 0.9% in the second quarter of 2017 thanks to increased exports and household spending. The growth means that the economy has finally recovered to the size it was prior to the 2008 crisis. The EU bailed the country out in 2012. Stronger growth across the EU could strengthen the EUR.
Second quarter growth in the US
US second quarter growth grew to an annualised rate of 2.6% but first quarter growth was revised down from 1.4% to 1.2%.
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