Currency exchange rates are affected by the global economy. That’s why every week at theCurrent we bring you the world’s biggest business stories. This week: the Alberta wildfire, the loonie and TSX fall, Canada loses jobs, and US job growth falters.
Alberta wildfire hits oil production
The human toll from the Alberta wildfire is still being tallied, but thousands of people have been displaced. It could be made worse by the mounting economic cost, which will hit the region – already suffering from low oil prices – hard. Oil sands production has been halted as a precautionary measure, and in order to make work camps available for people forced to evacuate from Fort McMurray. So far the wildfire has cut production by 1 million barrels per day. (Source: http://www.latimes.com/world/mexico-americas/la-fg-fort-mcmurray-oil-20160507-story.html)
Alberta wildfire could cause $9 billion in damage
The wildfire is likely to become the largest natural disaster in Canadian history in monetary terms. Insurance companies could be forced to pay out as much as $9 billion in damages. The entire area of Fort McMurray has been evacuated and extensive damage could mean that some businesses will never recover, hurting employment in an area that has already been hit hard by collapsing oil prices. (Source: http://www.cbc.ca/news/business/fort-mcmurray-insurance-cost-1.3568113)
The S&P/TSX composite index fell 157.95 points due to losses in the mining, mineral and energy sectors. Chinese data indicated that the world’s second largest economy, and a major consumer of raw materials, is slowing down, and the country’s manufacturing sector is contracting. The number hit the Canadian and Australian economies particularly hard causing the CAD to fall to 78.66 cents after reaching 80 cents last week – still better than just a short few months ago. Crude oil contributed to the loonie’s decline as it fell $1.13 per barrel. (http://www.theglobeandmail.com/globe-investor/inside-the-market/market-updates/the-close-tsx-rises-pares-weekly-loss-as-gold-jumps/article29926279/)
Canada loses jobs
Canada’s economy lost 2,100 jobs last month, but the employment rate remained stable at 7.1%. 35,000 jobs were added in the service sector, but the gains were offset by job losses in the goods-producing sector. Alberta lost 20,800 jobs, due primarily to low oil prices and the knock-on economic effects. Next door in BC, 13,000 jobs were added, and on the east coast Newfoundland and Labrador added 6,100 jobs. Canada had added 40,000 jobs in March, so the losses were not unexpected or particularly significant. However, manufacturing losses are concerning. 50,000 jobs have been lost in the manufacturing sector since December, despite the low loonie. (Source: http://www.wsj.com/articles/canada-shed-2-100-jobs-in-april-jobless-rate-remains-unchanged-1462539162)
US job growth falters
US job growth also faltered last month, but remained much more positive than in Canada. The world’s largest economy added 160,000 jobs in April, compared to 208,000 in March – a figure which was revised down from the previous estimate of 242,000. The slowdown suggests that the Fed will continue to postpone raising interest rates for the time being (although it is far from a sure thing). Despite this the USD gained against the British pound and the euro. (Source: http://www.bbc.co.uk/news/business-36229086)
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