Ontario blackout expected to have minimal impact on financial services industry, economy

(August 18, 2003) A massive power outage that left millions of Canadians and Americans in the dark had little impact on the financial services sector, with economists comparing its effects to that of a severe winter storm. The lights went out after the markets closed on Thursday. Trading resumed on Friday, although volume was much lighter than usual with many investors taking the day off.

Power was fully restored over the weekend. Ontario Premier Ernie Eves has asked businesses in the province to voluntarily reduce their electricity usage by 50% this week in an effort to avoid further disruptions.

“The costs to the economy will be minimal, temporary and amount to less than one full day of lost output, mimicking costs caused by a winter storm,” says RBC economist John Anania. “Most suspended economic activity will be recouped in the coming days as consumers and businesses increase consumption and production over average levels to make up for the temporary freeze on economic activity.”

“It is impossible to estimate the economic impact of the power outage until more information is available. However, it appears that the economic fallout will be limited,” says TD’s Craig Alexander.

In its weekly report, BMO Nesbitt Burns said the outage “will take a bit of heat out” of third-quarter growth, but added that early indications for the quarter look consistently positive.

Although stock markets were open Friday, most financial industry offices in the Toronto area were forced to close. But things are returning to normal today. “We are trying to get on top of any remaining business from Friday,” says Tamara Smith of IFIC.

IFIC normally releases its monthly mutual fund data on the 15th of every month. Those stats will be published today, Smith says.

The main Rogers campus in downtown Toronto was also without power on Friday, temporarily disrupting publication of Advisor.ca’s daily news bulletins and Web site.

Did the blackout affect you or your clients? Share your stories in the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca