Posthaste: Business insolvencies in Canada rise for first time in almost two decades
Grim news for oil producers today. In its World Energy Outlook, International Energy Agency predicts that while oil demand will remain robust to 2025, after that growth will ‘slow to a crawl,’ Bloomberg reports. The current growth rate of 1 million barrels a day will dwindle to just 100,000 barrels a day in the 2030s, at which time the use of fossil fuels cars will have peaked, said the IEA. On the bright side, depleted oil reserves will still need to be replaced and that will drive the price of oil from US$60 today to US$90 in 2030 and US$103 a barrel in 2040.
Canada’s slowing economy has led to the first year-to-year rise in business insolvencies in almost 20 years, according to new data from the Office of the Superintendent of Bankruptcy. Businesses that have failed in the past 12 months are up 4.1% from the year before. “After nearly two decades of business insolvencies consistently on the decline year over year, we are seeing an upward trend that will likely extend into at least next year,” said David Lewis, of the Canadian Association of Insolvency and Restructuring Professionals. Mining, oil and gas, information and cultural industries were the main drivers, with both sectors seeing an increase in insolvency filings of over 40%. But “the data shows a broad spectrum of businesses across the country that are challenged by the current economic climate. It is not simply the businesses in energy-producing regions that are struggling,” said Lewis. Consumer insolvencies also rose by 8.5% and the data show the rate of increase is accelerating. “The credit bubble is certainly close to bursting for many more households and we expect the increase in personal insolvencies to continue and potentially accelerate over the next few years,” said CAIRP’s André Bolduc.
Here’s what you need to know this morning:
U.S. Federal Reserve Chair Jerome Powell addresses Congressional Joint Economic Committee at 11 a.m. ET
U.S. House Intelligence Committee begins open hearings on impeachment inquiry
International Energy Agency releases World Energy Outlook
Ontario Economic Summit begins in Toronto
The Canadian Association of Oilwell Drilling Contractors State of the Industry Luncheon in Calgary featuring keynote by Alberta Premier Jason Kenney and release of the 2020 drilling forecast.
Bennett Jones economic outlook in Calgary featuring David Dodge, former governor of the Bank of Canada
Jean Charest delivers a keynote address in Ottawa at the Canadian Aerospace Summit calling for changes to the federal cabinet and warning federal and provincial politicians about the consequences if they fail to live up to their commitments to support Canada’s aerospace sector
B.C. Forests, Lands and Natural Resources Minister Doug Donaldson hosts a conference call to provide an update on the forestry trade mission underway in China and Japan
Notable earnings: Canada Goose, Home Capital Group, Loblaw, Stelco, CAE, Cisco Systems
Today’s data: U.S. CPI
British Columbia’s forestry industry is undergoing a crisis that few in the country are aware of, say insiders. A mountain pine beetle epidemic, record forest fires and a long-running trade dispute with the U.S. have taken a devastating toll on the sector. At least nine sawmills in B.C. this year have been shuttered while an estimated 47 others have cut shifts, leaving many remote communities economically stranded, writes the Financial Post’s Gabriel Friedman. An estimated 8,000 people, about 15% of those employed by the industry, have been hit by cuts in a massive blow to the province, which produces about half of Canada’s lumber with an annual export value of $14.2 billion.