Briefly:

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(November 10, 2008) The U.S. Federal Reserve Board and the U.S. Treasury announced this morning that it will restructure its support to the American International Group (AIG) “to establish a more durable capital structure, resolve liquidity issues, facilitate AIG’s execution of the plan to sell certain businesses in an orderly manner, promote market stability and protect the interests of the U.S. government and taxpayers.”

The announcement to purchase $40 billion of newly created AIG preferred shares under the recently enacted $700-billion Troubled Asset Relief Program, more commonly known as the bailout package, also reduces the interest rates the company will pay to 300 basis points or 3% over Libor, the London Interbank Offered Rate, down from the current three-month rate of 8.5% over Libor.

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Housing starts strong in October

(November 10, 2008) Housing starts remained strong in October, despite extreme market volatility and decade-low sales in mutual funds.

The seasonally adjusted annual rate of housing starts shrunk to 211,800 units in October, down from 218,600 units in September, reported the Canada Mortgage and Housing Corporation (CMHC).

Only a slight decrease occurred in the month, due to declines in both single-detached and multiple starts, explained Bob Dugan, chief economist at CMHC’s Market Analysis Centre, in a news release.

October’s seasonally adjusted annual rate of urban starts moderated in three out of the five regions of Canada. Urban starts increased to 41,300 units in the Quebec region and 9,600 units in Atlantic Canada.

On the other end of the spectrum, urban starts declined to 27,900 units in British Columbia, 26,900 units in the Prairies and 78,900 units in Ontario. Single urban starts decreased in all regions in October, with the exception of Ontario, where they increased by 10.1%.

Rural starts were estimated at a seasonally adjusted annual rate of 27,200 units in October.

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Canada’s largest business association calls for action on labour shortage

(November 10, 2008) According to a report released by the Canadian Chamber of Commerce, by 2010, 75% of all new jobs created will be high-skilled, meaning that people without skills will be hard-pressed to find work, with only 6% of jobs expected to be open to those with less than a high school diploma.

The challenge for Canada is to act quickly and wisely to prosper from these changes rather than allow them to impede us, said Perrin Beatty, president and CEO of the Canadian Chamber, in a speech launching the report at the Durham Economic Prosperity Conference.

The report identifies key areas that, if acted upon now, will do much to build and maintain a competitive workforce for Canada’s businesses and economy.

These include:

• adjusting the Canadian pension regulations to provide greater flexibility, to allow phased retirement to become a more attractive option for older workers;
• leading in the removal of interprovincial barriers to labour mobility;
• developing measures to encourage greater investment in training by employers, especially by smaller businesses;
• modifying the Temporary Foreign Worker Program to help employers meet immediate skill requirements when qualified Canadian workers cannot be found;
• continuously improving Canada’s immigration system to keep Canada competitive in the world competition for skilled workers;
• benchmarking Canada’s immigration system against other nations strongly competing for immigrants (e.g., Australia and the U.K.); and
• reviewing and streamlining current processes to ensure that applications are processed within six to 12 months, starting with economic and business applicants.

(11/10/08)