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In the last four years Canadians’ disposable income grew twice as fast as that of Americans, according to report from CIBC.

Since 2005, per capita real disposable income has risen by $2,600 in Canada, compared to $1,300 U.S. for Americans — a reversal of the trend seen in the 1990s when Americans’ income grew at a faster rate.

The key drivers behind the growth was Canadian’s labour income, which increased by 11% over the past four years, compared to 2% in America. Personal income grew largely due to the rise in real wages. Since 2005, real wages in Canada have risen by 10% — more than double the pace seen in the U.S.

The report also showed that the quality of new jobs in Canada was higher. Moreover, it pointed out that Canadians’ disposable income increased despite increases in tax contributions, while Americans’ tax cuts did not result in lager disposable income.

“Even putting aside the strengthening of the Canadian dollar, the Canada-U.S. per capita disposable income gap has widened by six percentage points since 2005,” says Tal. “The chief factor here was the much stronger increases in Canadian labour income which in turn, were boosted by a cocktail of faster job creation, higher wage gains and a healthier sectoral distribution of new jobs in Canada.”

The report noted that the recent surge in commodity prices was largely responsible for the increase in Canadian income. Positive gains in the Canadian labour market were heightened by commodity prices.

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BMO hires veteran telecoms analyst

BMO Capital Markets has hired Tim Long as senior equity analyst to the firm’s technology team.

Based in New York, Tim will cover companies in the wireless equipment and data networking industries.

“Tim’s experience and excellent reputation as a leading analyst will complement the highly focused approach we pursue in technology research,” said Jack Blackstock, co-head of equity research, BMO Capital

Long joins BMO Capital Markets from Banc of America Securities, where he was senior research analyst covering wireless equipment and data networking/wireline equipment. Long has more than 12 years of experience as an equity research analyst.

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Funded status up, but volatility remains

According to recent analysis by Mercer, the funded status of pension plans has improved significantly since the low point of December 2008. However, the funded status experienced another decrease in May 2009.

The funded status of pension plans of S&P 1500 companies deteriorated by $85 billion in May, creating an estimated aggregate deficit of $252 billion, up from $167 billion at the end of April.

“Markets are still volatile and unpredictable. The $85 billion loss in May shows that plan sponsors continue to be exposed to changes in the value of plan assets, predominantly equities, and changes in the value of plan liabilities, which behave like bonds,” says Adrian Hartshorn, a member of Mercer’s financial strategy group. “The challenge facing plan sponsors is determining the level at which to lock in any market gains.

In spite of the continued improvement in equity markets, the improvement in asset values was offset by an increase in liabilities caused by declining corporate bond yields. The final result was a decline in funded status.

“Despite the month-to-month volatility, the changes in funded status of plans will not be recognized in company financial statements until the next financial year end,” says Hartshorn. “Companies need to consider how best to set 2010 budgets in light of the recent market movements, and also how to increase the level of confidence in the budgets that are being set in light of the experience of 2008, when many budget estimates were blown out the water by market volatility.”

(06/09/09)