Every week we here at the Current bring your the worlds biggest business stories. This week: the EU grows, the UK could raise rates, air Canada profits, Telus cuts jobs, Indonesia grows, China manufacturing stalls, Canada adds jobs, Keystone XL is rejected and the Fed could raise rates.
The EU has predicted that the eurozone’s recovery should continue next year. The EU will grow by 1.9% this year, 2.0% in 2016 and 2.1% the following year. The eurozone (which only includes countries which use the euro) will grow by 1.6% this year, 1.8% next year and 1.9% the following year. Low oil prices and a weaker euro will allow European manufactures and exporters to remain competitive according the EU. The ECB’s bond-buying program is also credited with boosting economic outlook. Despite this the EU also warned that China’s slowdown and increased international tensions in Ukraine, Syria and elsewhere, could damper the renewed growth.
UK could raise rates
Canadian born Bank of England Governor Mark Carney has indicated that UK interest rates may rise in 2016. Such a rise would strengthen the pound and make money more expensive to borrow. On Thursday the bank announced that interest rates would, for the time being, remain at 0.5%. The British economy is set to grow by 2.7% this year, and if other economic indicators follow suit then it would be the right time to raise rates. However inflation remains hovering around the 0% mark, below the 2% usually targeted by central banks.
Air Canada profits
Low fuel prices have boosted the profits of Air Canada in the third quarter of this year by $457 million. Passenger revenue was also up $3.7 billion, an increase of 6.9%.
Telus cuts jobs
Telus has announced plans to axe 1 500 jobs in order to cut costs by $125 million and raise dividends by 10%. Revenue for the Vancouver based telecoms giant is up 4.2% from last year.
South East Asia’s largest economy, Indonesia, grew by 4.73% in the third quarter of this year following 4.67% growth the previous quarter. President Joko Widodo has promised to increase growth to 7%, and is in his first year as president.
Chinese manufacturing contracted for the third consecutive month while growth sits at 6.9% – the lowest level since the financial crisis. China has cut interest rates 5 times this year already to try to increase growth. The country is aiming to transition from an export oriented economy to more consumer and services led.
What’s she Yellen about?
The US economy added 271 000 jobs in October, exceeding the 185 000 jobs economists had predicted. Joblessness is at the lowest point in nearly eight years at just 5%. Average wages also grew by 2.5% to $25.20. Positive economic performance could encourage the Federal Reserve to raise rates. Janet Yellen, Chair of the Fed, told a Congressional committee that the bank could raise interest rates in December.
Canada adds jobs
Canada added 44 000 jobs in October dropping the unemployment rate to just 7%. 18 million Canadians are currently employed, a record high. Ontario, BC, New Brunswick and Manitoba all added jobs while Alberta lost 11 000 – due largely to low oil prices.
Keystone XL rejected
The Obama administration has rejected the Keystone XL pipeline saying that it would not make a meaningful contribution to the US economy. President Obama said that the pipeline “will not serve the national interest of the United States.” Despite the decision supporters of the pipeline insist that the project, or a similar project, may go through eventually. New Prime Minister Justin Trudeau expressed disappointment at the US decision.
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