Canada

Canada’s unemployment rate rose for the third time in four months, but rising wages and a strong US labor report prompted some economists to express caution on the pace of Bank of Canada rate cuts, Bloomberg News reported. The country added 26,700 positions in May and the jobless rate rose 0.1 percentage points to 6.2%, Statistics Canada reported, roughly in line with expectations in a Bloomberg survey of economists. The unemployment rate has risen 1.1 percentage points since April last year.

Canadian cannabis retail chain Four20 Premium Markets, one of the largest dispensaries in Alberta, has announced plans to file for bankruptcy, BusinessofCannabis.com reported. The parent companies of the 35-store retail chain, 420 Premium Markets Ltd., 420 Investments Ltd. and Green Rock Cannabis, filed a ‘notice of intent’ to file for bankruptcy under. According to Stratcann, the notice was filed on May 29, 2024, following an extended and costly legal battle with Tilray.

The Bank of Canada cut interest rates by a quarter of a percentage point, making it the first Group of Seven central bank to kick off an easing cycle, Bloomberg News reported. Policymakers led by Governor Tiff Macklem lowered the benchmark overnight rate to 4.75% on Wednesday, as widely expected by markets and economists in a Bloomberg survey. Officials say they’re more confident that inflation is headed to the 2% target, and said it’s “reasonable to expect further cuts,” if progress continues.

The parent company of Montreal’s Just For Laughs comedy festival, Groupe Juste Pour Rire Inc., has agreed to sell select assets as part of a court-directed bankruptcy protection, the Hollywood Reporter reported. Quebec City-based ComediHa! announced it picked up unspecified assets as part of a sale and solicitation process initiated Just for Laughs as it looks to restructure. The sales agreement awaits the approval of the Québec Superior Court, with a hearing set for June 3. Until that court date, both parties said they will not comment publicly on the proposed asset sale.

An Ontario judge issued an order on Tuesday that recognizes and enforces Red Lobster’s U.S. bankruptcy protection proceedings in Canada, the Canadian Press reported. The order from Judge Michael Penny was requested by lawyers for the beleaguered seafood restaurant chain's Canadian business, who told a virtual court their client is working to steady its operations. "Everything we are trying to do today is to stabilize the business," said Linc Rogers, a lawyer representing Red Lobster Canada, Inc.

While expectations for lower borrowing costs are building, it will take as long as three quarters for interest-rate cuts “to really bear fruit” for bank customers, according to a Bank of Nova Scotia executive, Bloomberg News reported. “There’s some talk about rate decreases in June and July,” Scotiabank Chief Risk Officer Phil Thomas said Tuesday on the lender’s fiscal second-quarter earnings call, referring to moves by the Bank of Canada.

Canadian consumer spending sharply rebounded last month, according to preliminary data, after weaker-than-expected retail sales in the first quarter, Bloomberg News reported. Receipts for retailers jumped 0.7% in April, the fastest pace since September, according to the advance estimate from Statistics Canada released Friday. That followed a 0.2% drop in March. With a larger-than-forecast decline in March, retail sales were down 0.2% overall in the first quarter. Despite the April bounce, retail sales are still below levels seen in December.

Canada’s banking watchdog warned that many homeowners who took out mortgages when rates were near zero during the pandemic will soon face a reckoning as those loans renew, Bloomberg News reported. The “payment shock” faced by some borrowers is among the most important risks currently in the financial system, according to the latest risk outlook from the Office of the Superintendent of Financial Institutions, released Wednesday. The regulator said that 76% of outstanding residential mortgages as of February will be coming up for renewal by the end of 2026.

Canada’s annual rate of core inflation eased for a fourth straight month, bolstering a case for policymakers to begin an easing cycle in the coming months, but a slight increase in the monthly pace may keep a June rate cut from being a certainty, Bloomberg News reported. The Bank of Canada’s two core inflation measures slowed in April to an average yearly pace of 2.75%, down from 3.05% a month earlier, Statistics Canada reported Tuesday in Ottawa. That’s slightly slower than the 2.8% expected in a Bloomberg survey of economists.

Canadian business insolvencies have climbed to levels not seen since the financial crisis of 2008, driven by indebted companies struggling with interest rates and softened consumer demand. But even those official insolvency statistics don’t tell the full picture, according to a commentary in The Globe and Mail. Economists and professionals who work with small and medium-sized businesses warn that the actual number of businesses that fail is much higher, with other data suggesting the problem is growing.